배출권 거래제도의 원리와 영향, 그리고 배출권 거래제도에 대한 보호무역주의적 특성에 대해 분석한 영문 레포트입니다.
The operatiing mechanism of cap and trade system
Cap and trade protectionism
On November 12th, President Lee Myung Bak declared in a cabinet meeting “It is up to us the developed nations to reduce hazardous gas emissions.” The President continued that Korea will reduce its Greenhouse Gas emissions by 4% until 2020 in contrast to the 2005 level.
The environment has grown into a central issue in the global sphere. Efforts to ‘cap’ emissions have been implemented as taxes and fines in many developed nations around the world. However, the ‘cap’ itself has not been efficient until a second element was introduced into the pollution problem. Since the late 1960’s awareness about grave environmental pollution by human industrial activity has concerned economists in earnest. A market solution was proposed, and the second element of ‘trade’ was put under consideration. In this presentation, we will explore the history, the concept and the economic effects of emissions trading, or more simply put, ‘cap and trade.’
The cap and trade solution to air pollution abatement was first simulated between 1967 and 1970 by Ellison Burton and William Sanjour under the US National Air Pollution Control Administration. They used mathematical models of several cities and their emission sources in order to compare the cost and effectiveness of various control strategies. The study proved that there are simply more effective ways to reduce pollution and they were far superior to others.
This led to the concept of "cap and trade" as a means of achieving the "least cost solution" for a given level of abatement.
This is a brief history of the cap and trade policy under four distinct stages.
1. Gestation: Theoretical articulation of the instrument (by Coase, Crocker, Dales, Montgomery etc.) and, independent of the former, tinkering with "flexible regulation" at the US Environmental Protection Agency.
2. Proof of Principle: First developments towards trading of emission certificates based on the "offset-mechanism" taken up in Clean Air Act in 1977.
3. Prototype: Launching of a first "cap-and-trade" system as part of the US Acid Rain Program, officially announced as a paradigm shift in environmental policy, as prepared by "Project 88", a network-building effort to bring together environmental and industrial interests in the US.
4. Regime formation: branching out from the US clean air policy to global climate policy, and from there to the European Union, along with the expectation of an emerging global carbon market and the formation of the "carbon industry".