This course aims to familiarize students with the practice of, and the reasons for, defining legal “rights to pollute” – permits to emit pollutants – and of facilitating trading of those rights and permits in markets constructed for the purpose. It will describe the history of efforts to regulate the release of pollutants with special attention to the problem of greenhouse gases or “carbon dioxide equivalents”. It will explain the economic theory of efficient regulation and why economists argue that the most efficient regulation is either a tax or a pollution rights permitting and trading system. It will describe the history of research, development and implementation of tradable emissions schemes, with particular emphasis on those defined under the Kyoto Protocol and the European Union Emissions Trading System. It will explain derivatives and the workings of emissions permit markets, including the key functions of certification and monitoring. It will examine the experience and the empirical data on emissions trading systems. It will call on students to discuss and debate, and innovate regulatory and market instruments to address such issues as: a tax versus an emissions permitting system; how to make the initial allocation of permits; and, what role emissions trading should play in post-Kyoto international climate policy.

To be confirmed