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Tanneries present heavy environmental impacts due to air emissions. Specific quality objectives are fixed by European Directives concerning air and, in particular, volatile organic compounds. The purpose of this paper is to present a proposal for the management of air emissions with a view to achieve quality standards in the Italy's largest tannery district by means of a tradable emissions permits (TEPs) system.

A methodological approach is presented and analysed. The proposed system is based on the “bubble” configuration, which appears to be an effective and feasible application based on the total maximum daily load criterion, supported by the air quality standards or the environmental risk assessment (ERA) procedure.

The TEP system favours technological improvements in the reduction of emissions. The system may not provide a solution to the unpleasant odours deriving from the tanneries, but its application supported by ERA will make it possible to define the admissible levels of air pollution and improve the general state of air quality.

Although the study is not exhaustive and requires further investigation in the economic, legal, administrative and air pollution sectors, it does give the basic elements for a preliminary analysis. The evident lack of experimental data concerning weather and climatic features, intrinsic to exposure assessment, has been pointed out.

This study proposes a methodological pathway aimed at defining the system of tradable permits by verifying the existence and availability of the necessary data. The proposed TEP system can be extended to other homogeneous industrial districts with an appropriate selection of one or more critical parameters.

This paper aims to calibrate carbon price trajectories that maximize social welfare where banking and borrowing rules are applied.

Typically, there has been a consensus that banking and borrowing rules within the cap-and-trade system improve social welfare. This additional flexibility can achieve compliance cost smoothing by transferring carbon permits inter-temporally; however, there is also a side effect. Regulated agents have the freedom to escape from the given emissions limit by reallocating previously granted permits.

The market system’s flexibility can cause environmental damage by deviating annual or periodic emission limits, which can invalidate the original purpose of cap-and-trade. This paper demonstrates how the socially desirable price trajectory differs from the one that favors the private sector.

Few studies have focused on the negative effects of combining the cap-and-trade with the inter-temporal regulation (banking and borrowing), which most policymakers and regulated firms can easily miss.

This study develops the economic rationale for the inclusion of new environmental financial assets, tradable pollution rights, in a well‐diversified portfolio. These new assets are generated and their valuation determined in the market‐incentive environmental regulatory approach called emissions trading, especially the cap‐and‐trade variant. This approach has been gaining wide acceptance and approval. A leading example is the sulfur dioxide market where tradable allowances are assets that may be held by private investors. Transactions in this market have reached volumes indicative of a high degree of liquidity. Comparable tradable rights in other pollutants are under active development. We explain the design and workings of these markets and demonstrate empirically, on the basis of time series data, that sulfur dioxide allowances have rates of return and yield distributions that make them candidates for inclusion in asset portfolios. We conjecture that other tradable pollution rights will exhibit similar properties when sufficient data are available. Financial analysts and accountants are likely to play an increasing role in advising investors about the role of these assets in a well‐diversified portfolio.

Purpose – The chapter reports a laboratory emissions trading experiment with imperfect enforcement that introduces environmental framing as a treatment variable.

Methodology – The research uses the methodology of laboratory experimental economics. In the current design, subjects self-reported their “emissions” at the end of each trading period and were inspected probabilistically and fined when they underreported.

Findings – Transaction volume and compliance rates were significantly lower in the environmentally framed condition, compared to the more standard neutrally framed control.

Practical implications – The latter result suggests that environmental framing reduced subjects' incentives to honestly report “pollution” to the experimental “regulator.” As experimenters employ more “framed field experiments” outside the lab, it may be important to evaluate such pure framing effects in the lab if a main research goal is to compare lab and field experiment outcomes.

Originality/value – Experimental economics research rarely manipulates environmental framing as a treatment variable. The substantial impact of framing on subject behavior documented in this study highlights its importance, particularly in the presence of moral concerns such as honest reporting.

The efficiency of the emission trading system (ETS) may help to control the total emission amount. The purpose of this paper is to investigate the generating cost issue in environmental/economic power dispatch, under the premise that the ETS has already been established.

The emission benefit and price level factors are introduced for transforming the bi‐objective optimization problem with the fuel cost and emission cost minimization into a single objective. In the developed mathematical model, both the total emission amount from all units and the permitted emission amount from each generating unit are taken into account. The successive linear programming method is employed to solve the optimization problem.

Simulation results of the IEEE 30‐bus test system show that a proper trading mechanism of emission permits is very important for generation companies to control the total emission amount and to reduce the overall generation cost.

Further research is needed to find out the impact on the generating cost caused by trading price fluctuation and the coping strategies.

The results can help to meet the requirements of current generating optimal dispatch.

The purpose of this paper is to evaluate the continued viability of the European Union emissions trading scheme (EU ETS) as a tool for climate control in the face of continued criticisms.

This evaluative study makes use of connected existing studies and other secondary data from economics, management, politics and law.

The study found that though there were various flaws in the scheme in its initial launching phase, the insights gained are being applied in the second and subsequent phase of the EU ETS. It is also ascertained that despite initial doubts, a market for carbon finance is successfully established in the EU albeit with various limitations. The scheme is also poised to link with other regional schemes to address climate control.

Though the study relied primarily on secondary data, the findings were sufficiently triangulated with perspectives from economics, politics, management and law. The findings would also provide useful and relevant information to those engage in the theory and practice of carbon finance.

This paper updates on the legal and economic significance of the EU ETS as a market mechanism to address climate change.

The discussion of how to manage air‐quality in a heavily polluted area like Los Angeles (LA), California, in an era of shrinking public budgets and a trend towards deregulation has led to the introduction of a new environmental policy tool: a tradeable emission permit approach (the so called RECLAIM‐program) to reduce SO_x‐ and NO‐emissions from stationary sources was introduced in 1994. This paper is an attempt to analyze and evaluate the first three years of the program, based on the official three year program audit (SCAQMD, 1998) and on a written company survey and personal interviews with experts, as well as administrators active in air quality management in Los Angeles (conducted by the authors between May 1996 and May 1998).

The purpose of this paper is to identify the (three) critical issues that will need to be addressed in a post‐2012 (post‐Kyoto) global agreement on climate change, sets out the options and difficulties in relation to them, and outlines a way forward on each.

The paper assesses proposals for national and international mitigation already put forward both by negotiating countries and by academics.

Global mitigation efforts have so far achieved little and negotiations are currently deadlocked. This lack of progress has led to an proliferation of alternative policy proposals for an international agreement, but only those proposals which build on international agreements to date have at the current time any reasonable prospect of guiding global mitigation effort post‐2012. There are three main issues that will need to be addressed within that framework: emission reduction targets for developed countries; the nature and extent of actions to limit emissions growth in developing countries; and the funding of emission reduction efforts in developing countries. Using a number of explicit assumptions, the paper identifies likely ranges for emission reduction targets for developed countries and emission growth limits for developing countries. The best (worst) case involves developed countries as a group reducing 2020 emissions by 20 per cent (10 per cent) over 1990 levels, and developing countries limiting annual average emissions growth between 2012 and 2020 to 1.5 per cent (3.5 per cent) a year. This is estimated to give global emissions in 2020 in the range of 47‐53 Gt CO₂‐e. The bottom end of this range is consistent with the long‐term goal of stabilizing the concentration of greenhouse gases in the range of 550 CO₂‐e ppm, provided there is rapid adjustment post‐2020. Crucial to reaching a deal at the ambitious end of this range will be reform of the clean development mechanism, and a commitment by developed countries to large public funding in support of developing country mitigation.

The paper accepts the current negotiating framework, and provides a systematic and quantified treatment of the critical issues which arise within it.

This chapter considers the application of climate mitigation policies to the aviation sector with reference to the inclusion of aviation in the EU Emissions Trading System (EU ETS). Assessments of the possible economic impacts of including aviation in the EU ETS are reviewed and an impact analysis using the macroeconometric E3ME model is conducted.

The aviation sector is a significant and rapidly increasing source of GHG emissions. Because international policy measures have not been agreed, the EU has incorporated aviation in the EU ETS. It is therefore important to consider the possible economic effects of the ETS on the aviation industry and the wider economy.

The paper describes the approach used by the EU to include aviation in the EU ETS. Assessments of economic impacts have been made, but have often been limited in their approach. The paper complements the existing literature by including an economic analysis using the E3ME macroeconometric model of the EU that covers 41 industrial sectors including aviation.

Microeconomic and macroeconomic assessments show the economic impacts of including the aviation sector in the EU ETS are small. The negative impacts, if any, on EU GDP and the air transport sector’s economic output are less than 0.1% and 1% respectively. Distortions in competition, both between countries and industrial sectors, are therefore likely to be small.

In the long term (beyond 2020), including aviation in the EU can be seen as a positive move. If and when aviation is fully included in the EU ETS, and when the cost impacts of GHG emissions through permit prices are made evident, it is anticipated that airlines will start monitoring and reducing their GHG emissions by investing in new, less carbon intensive technologies.

Curbing (without banning) potentially environmentally‐damaging activities that have global, rather than local, effects raises challenges analogous to those faced by a community lacking legislative powers that has to restrict access to a common pasture in order to make its use sustainable. A local community achieves autonomy in a matter such as this by consensual cooperation. In the absence of a world coercive authority, global environmental problems (in which a measure of world autonomy is needed) have to be met similarly by consensual co‐operation among governments. The conditions under which local consensual cooperation have been observed to be successful may also be relevant to global consensual cooperation. In particular there must be clear rules, and devices for interpreting them; they must be acceptable to all parties; and monitoring of compliance is crucial. Even in such cases of quasi‐voluntary compliance, graduated sanctions for infringement, or analogous arrangements, are quite likely to play a vital part. In an international regime for reducing greenhouse‐gas emissions, it is essential that rules should be devised that will appeal as fair and practically tolerable to opinion in both rich and poor countries and to both high and low per capita emitters. This will rule out a regime of uniform percentage reductions without balancing compensation. It will also rule out a regime based on equal per capita claims to engage in the restricted activity. It is desirable that the rules also act to make the allocation of the reductions in the potentially damaging activity efficient. This will favour rules under which financial signals reflecting marginal costs or benefits play some part in the allocation of any target aggregates. It will probably be essential, given prevalent views of justice and differing valuations of environmental goals between rich and poor nations, that the arrangements involve transfers of resources from richer, higher‐per‐capita polluting countries to poorer, lower per capita polluting countries. Nevertheless, reducing emissions sufficiently through a system of tradable quotas summing to the targeted total of emissions – which might seem to meet both this requirement and the need for efficient marginal incentives – has, in its simple form in which the quotas issued are proportional to countries’ populations, little chance of being acceptable to rich, high‐emitter nations. An attempt is made to explore solutions to these dilemmas, leading on from the arrangements made under the Kyoto protocol of the UN Framework Convention on Climate Change.