Organizing emissions trading: the barrier of domestic permit allocation

This paper uses a barrier model of politics to analyse the issue of permit allocation as a major political obstacle to organizing (inter)national gree nhouse gas emissions trading. It is argued that permit allocation constitut es a barrier, because - among other things - various types of emitters have conflicting interests in trying to lobby for as much allocated permits as possible and because international differences in domestic permit allocatio n procedures are perceived to potentially distort inter-firm competitivenes s relations. Permit allocation is circumvented by applying intergovernmenta l or project-based emissions trading. The project-approach is preferable, i n particular because it avoids the trading of 'hot air'. (C) 2000 Elsevier Science Ltd. All rights reserved.