Structural configurations and options for extensions of tradable emission permit systems.

Summary The need for global action to limit greenhouse gas emissions is recognized by the majority of countries, but the inability of the international climate regime to provide global regulation of GHG emissions into the atmosphere has led to the failure of the top-down approach. This impossible consensus has led to a breaking point in the structure of the global climate regime, as evidenced by the development, prior to the Paris Agreement, of a bottom-up approach, based on polycentric and multi-level climate governance. It is in this context that the nineteen tradable emission permit systems currently operating in the world are emerging and developing at different administrative levels. In fact, no homogeneity is sought in the design of these regulatory mechanisms. The structural choices are dependent on the political and economic characteristics and constraints of the geographical area to which they belong. The configurations and effects of expanding tradable permit systems are still debated and this thesis provides recommendations on how such expansions and connections could take place.Based on analyses of the empirical literature and simulations using a partial equilibrium model for the energy sector (POLES model), we advocate the implementation of sectoral partitioning mechanisms and restrictions on permit trading. Indeed, in a context characterized by heterogeneous constructions of tradable emission permit systems, a non-universal diffusion of these markets and a non-integral inclusion of all sectors of the economy, we conclude that two types of adjustments are essential. First, we demonstrate the need for a sectoral configuration and partitioning of the markets, in order to foster innovation, limit the impact on international competitiveness, and bring the system into line with related policy requirements. Second, we justify the interest of restrictive mechanisms for international trade in tradable emission permits. In particular, they allow a better redistribution of the gains linked to the trade, while reducing the total cost of climate policy and the quantities of GHGs emitted compared to a pure segmentation of the markets.Finally, the existence of several carbon prices seems unavoidable in the current context of heterogeneous global climate governance and a multiplicity of national policy objectives. Encouraging the development of different prices by sector and by country would, under certain conditions, promote political acceptability, strengthen environmental effectiveness and improve the economic efficiency of emission permit systems.