Should the rules of allocating emissions permits be harmonised?

The Kyoto Protocol is the first international environmental agreement that sets legally binding greenhouse gas emissions targets and timetables for An nex I countries. Its Article 17 authorizes emissions trading among Annex B countries. If properly designed, emissions trading can effectively reduce t heir abatement costs, while assisting Annex I countries in achieving their Kyoto obligations. If Annex B governments elect to allocate the assigned am ounts to their individual sub-national legal entities and authorize them to trade on the international emissions permits market, I argue that individu al governments should be left free to devise their own ways of allocating e missions permits. (C) 1999 Elsevier Science B.V. All rights reserved.