Emission trading systems in transportation

Emissions trading systems (ETSs) apply a market-oriented approach to the control of pollutant emissions, affording flexibility to emitters to decide when and where emissions will be abated. Most ETSs to date have applied to a limited number of stationary sources in industry and the power sector, where emissions can be easily monitored and the ETS itself more easily administered. Still, the appeal of emissions trading as a market-based policy instrument has also prompted their deployment to reduce emissions from the transportation sector, usually by including fuels upstream as these enter into the market. Following a short introduction to the concept of emissions trading, this chapter provides an overview of four case studies where emissions trading has been applied to transportation: the New Zealand ETS; the Western Climate Initiative; the Transport and Climate Initiative; and the Carbon Offsetting and Reduction Scheme for International Aviation. It concludes with a brief analysis of lessons learned and prospects for expanded use of emissions trading to manage emissions from transportation.