The European Commission did not publish a cost-benefit analysis for its 2020 climate package. This paper fills that gap, comparing the marginal costs and benefits of greenhouse gas emission reduction. The uncertainty about the marginal costs of climate change is large and skewed, and estimates...

The current EU proposal on greenhouse gas emission reduction has 28 targets for 2020: an EU-wide one for carbon dioxide emissions covered by the European Trading System, and one target for non-ETS emission per Member State. Implementation is necessarily more expensive than needed. I consider...

The EU has proposed four flexibility mechanisms for the regulation of greenhouse gas emissions in the period 2013-2020: (1) the Emissions Trade Scheme (ETS), a permit market between selected companies; (2) trade in non-ETS allotments between Member States; (3) the Clean Development Mechanism...

This paper considers the question under what conditions domestic markets of emission permits would and should merge to become an international market. Emission permits are licenses, and so governments would need to recognize other countries’ permits. In a two-county model, we find that it is...