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An Upstream/Downstream Hybrid Approach to Greenhouse Gas Emissions Trading

June 2000 | Tim Hargrave

Part of the Airlie Carbon Trading Papers, this report examines alternative approaches to expanding the coverage of a downstream trading system by bringing in facilities from farther upstream. It calls attention to a number of issues that would need to be addressed in integrating upstream and downstream facilities into a single system, most notably the challenge of ensuring that all carbon is accounted for once and only once. The paper concludes that an upstream/downstream hybrid is feasible and should be implemented at the following points: large industrial point sources, electric power generators, oil refiners, natural gas processing plants and local distribution companies selling natural gas. Such a system would be preferred to a downstream system covering large point sources complemented by non-trading policies and measures.

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