Emissions trading is one of the most important policy instruments for combating climate change. The basic idea is simple, yet the functioning of the various emissions trading schemes is very complex. During the summer youth academy 2011 organized by GIZ and EPIZ Katharina Umpfenbach, Fellow at Ecologic Institute, held a seminar on the topic.

After environmental protection had been enforced through prohibitions, thresholds and other regulations over several decades, the introduction of emissions trading marked a turning point. The basic idea is simple: not the legislator, but the market should determine who can provide emission reductions at the lowest cost. For a comprehensive global problem like climate change, this seems particularly attractive. But how well does emissions trading work in practice? What are the implications for industrial, emerging and developing countries? Does emission trading contribute to sustainable development?