Market‐based mechanisms for controlling global emissions of greenhouse gases

Increasing worldwide concern about global warming has led to intensified international efforts to reduce emissions of greenhouse gases. The most important outcome of these efforts is the United Nations Framework Convention on Climate Change, which came into force in March 1994. Although its signatories are expected to draw up plans to curb greenhouse gas emissions, the Convention does not specify how these emissions should be controlled. Since market‐based mechanisms for emissions control have been increasingly emphasized at both national and international levels, this paper discusses both their advantages over regulation and the main obstacles to their implementation. The ultimate aim of the paper is to propose possible baseline criteria for the formulation of a global tradable permit system to control carbon dioxide emissions.