The Kyoto Protocol of December 1997 allows emission trade between countries that have committed themselves to an emission ceiling. This paper considers two schemes of emission trading: trade between goverments and trade between emision sources. The two schemes are analyzed and the strengths and...

An annual discriminative and revenue-neutral auction is linked to the new Acid Rain Program which allows electric utilities all over the US to trade SO2 emission permits. This innovative SO2 auction distributes 2% of the permits in circulation and takes place at the Chicago Board of Trade.