The cost-effectiveness of the Kyoto Protocol and any similar non-global treaty would be enhanced by attracting as many new countries as possible to integrational emissions trading and achieving these additions as soon as possible. This paper focuses on two forms of compensation that can be used...

In 2005 EU will launch its emissions trading system (ETS) under which energy intensive firms within EU may trade carbon emission allowances. This system is by many seen as instrumental for EU’s ability to fulfill its Kyoto commitment. At the same time, in what seems to be an ambition to go one...