Restricted Linking in Emissions Trading Systems: Options, Benefits, and Challenges

This research paper examines three mechanisms—quotas, exchange rates, and discount rates—designed to restrict the flow of units between emissions trading systems (ETSs) to mitigate the risks associated with full linking.

• Linking emissions trading systems (ETSs) provides economic, political, and administrative advantages, but presents significant challenges including impacts on overall ambition, financial flows, investment location and nature, a reduction in regulatory autonomy, and the need for harmonization of design elements.
• The authors analyze three specific options for restricted linking—quotas, exchange rates, and discount rates—to manage the flow of units between jurisdictions.
• Restricted linking options do not provide the same benefits as full linking, but they prevent certain major pitfalls and provide adjustable levers if linking concerns become more significant than expected.

APA

Stockholm Environment Institute (2017). Restricted Linking in Emissions Trading Systems: Options, Benefits, and Challenges. https://www.sei.org/publications/restricted-linking-emissions-trading-systems-options-benefits-challenges/

Chicago

Stockholm Environment Institute. Restricted Linking in Emissions Trading Systems: Options, Benefits, and Challenges. 2017. https://www.sei.org/publications/restricted-linking-emissions-trading-systems-options-benefits-challenges/.

Wikipedia

{{cite report |author=Stockholm Environment Institute |title=Restricted Linking in Emissions Trading Systems: Options, Benefits, and Challenges |date=10 July 2017 |url=https://www.sei.org/publications/restricted-linking-emissions-trading-systems-options-benefits-challenges/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{stockholmenvironmentinstitute2017restricted, author = {{Stockholm Environment Institute}}, title = {{Restricted Linking in Emissions Trading Systems: Options, Benefits, and Challenges}}, institution = {Stockholm Environment Institute}, year = {2017}, month = jul, url = {https://www.sei.org/publications/restricted-linking-emissions-trading-systems-options-benefits-challenges/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }