Kyoto provided a cap on total emissions and delineated the basis for creating the property right, or commodity. Other key ingredients now needed include participants' baseline emission rates, initial allowance allocations, and protocols for monitoring emissions and calculating the benefits of emission avoidance or sequestration programmes. Drawing on the lessons from the introduction and evolution of new markets, there are 12 steps to implementation. Clearly specify allocation and monitoring procedures. Employ existing exchange and trading systems.
Emissions trading is an environmental and economic winner.
The seven-stage process enables us to describe a common dialectic of how markets evolve. So it must be near the top of the menu of policy options needed to prevent the costly threat of climate change. Little harm would have been done. Making moves We must act now to take the vital first step to implement a voluntary trade regime with binding emission limits. This needs to provide sufficiently flexible incentives so that the private sector taps into an unparalleled wealth of specialized knowledge and entrepreneurial creativity.