Linking of emissions trading schemes (ETS) could lead to a larger, more efficient emission market and to more international cooperation on climate change mitigation. Before linking negotiations are initiated, the range of potential effects needs to be assessed in a limited and manageable time period – and in more detail than general economic literature reviews offer. The effects will depend on the systems and jurisdictions involved.
The manual focuses on assessing direct, bilateral full linking. Assessing indirect or restricted linking might require some adjustments to the assessment process.
Since there are a variety of objectives and risks associated with linking ETS, there is an urgent need to balance the objectives and to consider the potential impacts of linking. What can be said before linking on the effects of linking? This manual aims at providing decision makers interested in linking their jurisdictions` ETS with a partner ETS with both general guidance and hands-on information to back-up assessments on whether linking with a specific ETS would likely be beneficial and should therefore be considered or not.
The manual comprises information for identifying, prioritising and assessing the effects of linking ETS to the extent possible before linking takes place – and for the interested reader it further provides detailed hints for the operationalisation and quantification of appropriate indicators in the annexes. Such an ex-ante assessment is inevitable in the preparatory phase before or during ETS linking negotiations.