International permit trading: Creating a sustainable system

This paper first outlines how a global permit scheme would work in theory and identifies potential problems. An alternative system which could still be implemented consistently with the Kyoto Protocol (but importantly without the fixed emission targets) is then outlined. I should stress that the problems identified for a global permit trading scheme may or may not cripple the scheme in the near term or at all, but under some circumstances global permit trading schemes are vulnerable to collapse because of reasons outlined below. The economic crisis in Asia has clearly illustrated how poorly the future can be predicted with any certainty, even over relatively short time frames. In climate change research the horizon is many decades and the uncertainties compound quickly. The success of any international policy regime should not be contingent on a particular prediction of the future but should be robust to a range of possible outcomes In fact you really want international agreements to hold together precisely in the cases of extreme pressure. Sustainability of an international agreement for environmental or any other policy, can only be achieved when the agreement provides clear incentives for all participants to adhere to the policy goals under a wide range of possible future scenarios. The main glue that currently binds the Kyoto Protocol together is political will which is fragile at best.