Climate change is an environmental problem of unprecedented complexity, not just in terms of its physical, social, economic and political impacts, but particularly in terms of the range of policy instruments being designed by countries to reduce greenhouse gas emissions. Climate Change and Carbon Markets aims to provide an accessible and practical guide to cutting edge market-based mechanisms which will reduce greenhouse gas emissions. This book is a guide for national and international policy-makers and industry professionals, who need to understand the carbon markets established pursuant to the Kyoto Protocol, one of the most complex agreements ever negotiated. The book sets out how carbon markets will function by explaining the rules, institutions and procedures of the Kyoto mechanisms, including: emissions trading, joint implementation (JI) and the Clean Development Mechanism (CDM). It also provides an in-depth explanation of the EU Emissions Allowance Trading Scheme, emerging mechanisms in the US and developing countries, and how these will link up. For policy-makers, researchers and scholars; industry practitioners, companies, market service providers, technical and legal consultants, NGOs and all stakeholder organizations engaged in the Kyoto markets, this is the authoritative and comprehensive practical guide to this rapidly evolving area. Contains the full text of the key European Union documents setting up the EU Emissions Allowance Trading Scheme and the Linking Directive.

The European Union's Emission Trading Scheme (EU ETS) is the world's first multinational cap-and-trade system for greenhouse gases. As an agreement between sovereign nations with diverse historical, institutional, and economic circumstances, it can be seen as a prototype for an eventual global climate regime. Interestingly, the problems that are often seen as dooming a global trading system - international financial flows and institutional readiness - haven't appeared in the EU ETS, at least not yet. The more serious problems that emerge from the brief experience of the EU ETS are those of (1) developing a central coordinating organization, (2) devising side benefits to encourage participation, and (3) dealing with the interrelated issues of harmonization, differentiation, and stringency. The pre-existing organizational structure and membership benefits of the European Union provided convenient and almost accidental solutions to the need for a central institution and side benefits, but these solutions will not work on a global scale and there are no obvious substitutes. Furthermore, the EU ETS is only beginning to test the practicality of harmonizing allocations within the trading system, differentiating responsibilities among participants, and increasing the stringency of emissions caps. The trial period of the EU ETS punted on these problems, as was appropriate for a trial period, but they are now being addressed seriously. From a global perspective, the answers that are being worked out in Europe will say a great deal about what will be feasible on a broader, global scale.

The purpose of this report is to provide a detailed, up-to-date and critical analysis of the New Basel Capital Accord framework. It focuses on the limitations and pitfalls that may deserve further investigation, particularly at the European level. Moreover, it provides a provisional assessment of its effects on small- and medium-sized European banks, as well as small- and medium-sized European enterprises. It examines the procyclicality of the new Accord and offers mechanisms to counter it. Finally, it addresses the challenges of implementing the new rules at the EU level.