Domestic Transferable Permits for Environmental Management: Design and Implementation (Energy Market Reform)

✍ Scribed by OECD

• Publisher: OECD Publishing
• Year: 2001
• Tongue: English
• Leaves: 110
• Category: Library

✦ Synopsis

To address many of the environmental challenges that face us today, including climate change, countries are striving to deploy efficient and effective tools for environmental management at the national level. Tradable/transferable permits are one such

✦ Table of Contents

Foreword
Table of contents
Introduction
Note
Chapter 1. Origins, Aims and Approaches
Brief Historical Overview
Aims and Expected Benefits
Four Main Aims
Expected Economic Benefits
Figure 1. 50 per cent Reduction in Emissions (after Godard and Henry, 1998)
Box 1. Impact of Asymmetries on Tax Treatment
Figure 2. The Impact of Differences of Taxation of Inputs Linked to Emissions
Basic Definitions and Concepts
Four Main Families of Transferable Permit
Table 1. Credits, Quotas, Averaging and New Rights
Different Forms of Flexibility
Box 2. The Netting Programme in the United States
Notes
Chapter 2. Key Variables in the Design of a Transferable Permits System
Aims and Basic Characteristics of the System
Aims
Permit Components
Box 3. Attempts to Regulate Overfishing
Box 4. Setting Quotas in Absolute or Relative Terms to Regulate Overfishing
Box 5. Impact of Targets in Relative Units on Uncertainty of Emission Levels
Box 6. Duration of Permits and Fisheries Regulation
Table 2. Combinations of User Rights and Transfer Rights Options
Scope of Application
Box 7. The Geographical Dimension of Using TPs to Combat Acid Rain
Participants
Figure 3. Possible Distortion of Optimal Cap when the Permit Market is Open to Non-Users
Box 8. Voluntary Participation in the Acid Rain Program
Design Options for the System
Initial Permit Allocation
Box 9. Auctioning Techniques
Organisation of Temporal and Spatial Flexibility
Figure 4. Smoothing Emission Reductions Subject to Ceilings P1, P2 and P3 over Several Periods
Box 10. The Preference for Internal Transfers as Shown by the US Experience
Box 11. The US System of Offsets
Organisation of Transfers
Box 12. Forward Transactions in the Acid Rain Program
Combination with Other Instruments
Means of Application
Means of Information
Compliance Checks and Incentives to Encourage Compliance with the Rules
Provisions to Promote Participation by Agents
Two Examples of Transferable Permit Programmes
Table 3. A Summary Comparison of the Acid Rain Programme and the RECLAIM Programme
Notes
Chapter 3. Implementation Issues and Constraints
Issues Relating to Competitiveness and Market Power
The Environment and Competitiveness
Key Variables with Regard to Competitiveness
Box 13. Impacts of Free Versus Charged Allocation of TPs on Products Costs
Box 14. A Case where it may be Economically Advantageous to Choose Non-Transferable Quotas
Issues Relating to Compatibility with Institutional Framework for Public Policies and with Existing Instruments
Three Problems of Compatibility
The Challenges of Institutional Compatibility
The Challenges of Transitional Compatibility
The Challenges of Combinatory Compatibility
Issues Relating to Distributive Aspects
From Theoretical Possibilities to the Political Economy of Decision-Making
Nature and Determinants of Distributive Effects
Figure 5. Allocative and Distributive Effects in a Trading Economy
Figure 6. Distributive Effects of TPs at the Level of Local Competition
Issues Relating to Social Impacts and Political Acceptability
Box 15. Distribution of Additional Permits to Secure Approval for a TP Programme
On the “Right to Pollute”
On the Right to Sell a “Right to Pollute”
The Controversy over Acquired Rights
Box 16. The Controversy over Acquired Rights
The Principle of Non-Transferability of Administrative Authorisations
Fears of the Local Population
The Fear of a Loss of Market Power on the Part of Different Actors
The Fear of Compromising Corporate Reputation
Choice of Words
Notes
Chapter 4 Making an Informed Decision to Introduce Transferable Permits
The Nature of the Problem
Aims and the Target
Characteristics of the Environment
Box 17. Thermal Pollution of Rivers
Source Characteristics
The Existing Institutional Context
Box 18. The First Phase of US Experience Prior to 1990
Table 4. Options for the Introduction of Transferable Permits
Favourable Economic Circumstances
Modest or Insignificant Transaction Costs
Threshold Effects or the Prospect of Rapid Growth in Environmental Damage
Figure 7. Uncertainty Effect Related to the Marginal Cost of Pollution Reduction
Diversity of the Economic Situations of Decentralised Agents
Insignificant Risks of Market Power
Incentive Taxes, Financial Mechanisms or Tradable Permits?
Chapter 5. Directions for the Development of a Transferable Permits System
Strategic Directions for Determining the Nature of Transferable Permit Systems
Ensuring the Legal and Economic Security of Permits and the Adaptability of the Programme
Limiting Transaction Costs, Avoiding Unwarranted Obstacles to Transfers
Correcting Factors that Cause Distortion
Encouraging Temporal Flexibility
Adopting Procedures and Rules that Encourage Dynamic Efficiency and Innovation
The Process of Designing and Introducing Transferable Permits
A Problem-Solving Approach to Raise Interest and Motivation Among Stakeholders
Box 19. A Few Examples of the Concerns of the Actors Involved in Choosing a Policy Instrument
Box 20. What the Various Actors Found in the Acid Rain Program Adopted in the United States in 1990
A Strategic Approach
Facilitating the Acquisition of Experience
Notes
Conclusion
Bibliography