TH`ESE Docteur de l'Université Paris-Dauphine Morgan HERVÉ ...

climate policy context and then jump into the specifics of the EU ETS:
genesis, trial phase, Kyoto phase and post-Kyoto phase.
1.1.1 Climate change policy context
The Intergovernmental Panel on Climate Change (IPCC), a joint UN-WMO
scientific body, was established in 1988 to evaluate the threat of climate
change. IPCC’s four assessment reports (1990, 1995, 2001 and 2007) established
the need to reduce GHG emissions if humanity is to avoid any strong
adverse impacts of climate change. The conclusions of the latest bodywork
of the IPCC are unequivocal: climate change has already started and its
anthropogenic origin is now widely accepted. The international scientific
community is particularly worried about forthcoming manifestations of climate
change.
Adopted in late 1997, the Kyoto Protocol is an international agreement aiming
at fighting global warming. It entered into force in 2005. Simply stated,
the Kyoto Protocol splits the international community into two groups of
countries. On the one hand, there are the so-called ”Annex I countries”
which are the historical emitters of GHGs. These 37 industrialized countries
pledged to an average emissions reduction of six GHGs 1 by 5.2% from
the 1990 baseline year. On the other hand, the ”non-annex I countries”, low
income countries, are not bound by such emissions reduction effort. To facilitate
the emissions reduction process, the Kyoto Protocol has given Annex
Isignatorystatesthree”flexiblemechanisms” to curb their GHGs emissions.
First, international emissions trading is a state-level cap-and-trade mechanism.
The individual state-level emissions reduction objectives (from the
5.2% overall reduction) correspond to capped annual emissions levels in tons
of CO2-equivalent (CO2e). A GHGs emissions rights called an Assigned
Amount Unit (AAU) is assigned to each ton of CO2e. The international
emissions trading allows Annex I countries to trade AAUs among them.
Countries engage in trading so that emissions reductions are first achieved
in countries where the cost of abatement are the lowest. Therefore, emitting
countries for whom it is less costly to achieve emissions reduction would curb
emissions beyond their cap, and trade the thereby obtained excess AAUs
with countries where it is more expensive to reduce GHG emissions. Likewise,
countries for whom it is expected to be expensive to reduce emissions
would resort to this flexibility mechanism to reduce the cost of achieving
their Kyoto target.
Second, the clean development mechanism (CDM) is an offset mech-
1 Carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), sulphur hexafluoride
(SF6), hydrofluorocarbons (HFCs) and perfluorocarbons (PFCs).
8