Emission Market at the End of the Commitment Period
We have several emission trading schemes at work currently and one eminent market among them is the one for GHG emissions under Kyoto Protocol starting 2009. For emissions to be tradable, property right must be securely set. Especially monitoring has to be reliable and timely, and leakage must be taken care of adequately. But this in turn implies that there is a discrepancy between the period where the amount of emission is ascertained and the period during which trading is supposedly bringing efficiency to the emission reduction. For instance, EU-ETS ended its first trading period at the end of 2007, but the emission level becomes available only after several months passed. Therefore, the so-called trueup period is necessary so that trading has to go on until the emission data are finalized. In the case of EU-ETS, the emission until 2007 can be traded till April 2008, and similar trueup period is set aside for the first commitment period of Kyoto Protocol.
KeywordsKyoto Protocol Market Maker Emission Trading Scheme Market Order Commitment Period
- Almgren, Robert, and Neil Criss, 2000, Optimal execution of portfolio transactions, Journal of Risk, 3, 5–39.Google Scholar
- Ryosuke Ishii, 2008, Optimal Execution in a Market with Small Investors, KIER discussion paper series, Kyoto Institute of Economic Research, Discussion Paper No.653.Google Scholar
- Huberman, Gur, and Werner Stanzl, 2000, Optimal liquidity trading, Yale ICF Working Paper No. 00–21.Google Scholar
- Obizhaeva, Anna, and Jiang Wang, 2005, Optimal trading strategy and supply/demand dynamics, AFA 2006 Boston Meetings Paper.Google Scholar