Improving Cost-effectiveness and Facilitating Participation of Developing Countries in International Emissions Trading

This paper discusses ways in which the next climate agreement ­ a renegotiated <p> Kyoto Protocol or a second-period agreement ­ can be made more cost-effective. The <p> discussion focuses on the design of international emissions trading to facilitate early <p> participation by developing countries. Four aspects are highlighted: the design of <p> compensation rules, the need to regulate the use of the CDM, the effect of allowing <p> borrowing and the implications of a Commitment Period Reserve.