In order to implement its obligation to reduce greenhouse gas emissions, as required under the Kyoto Protocol, the European Community created a Directive establishing a community-wide greenhouse gas trading system. Initial experiences with this new marketbased mechanism have been gathered since the beginning of the first trading period (2005-2007). Ecologic has been commissioned to support the drafting of the respective legal framework for the second trading period (2008-2012) and for future trading periods in Germany. The goal of the project is to optimise the legal and economic aspects of emissions trading.

The second trading period/allocation period (2008-2012) within the European emissions trading system will start on 1 January 2008. The first draft of the National Allocation Plan 2008-2012 of the German Federal Republic (NAP II) was transmitted on 30 June 2006 to the Commission. The required legal framework must now be established, according to the terms of the NAP II, the Community Law specifications and the previous experiences of the execution process. The goal is to promote an efficient and effective execution of emissions trading in Germany.

In this context, for this research project Ecologic will elaborate on each of the following aspects:

• Creation and advancement of the elements, which will be requested for the second trading period (2008-2012), considering the experiences of the allocation rules for the first trading period;
• Implementation and further development of the flexible mechanism Joint Implementation (JI) and Clean Development Mechanism (CDM);
• Further development of the emissions trading bottom-up for the Review-Process of the European Commission;
• Expansion of the emissions trading to further sectors (air traffic) and emissions gases;
• Revision and further development of the draft of the Act on climate-protection statistics;
• Investigation of energy law and energy policy, which are linked to climate-protection;
• Exploration of opportunities to link te European Emissions Trading Scheme to emerging trading schemes outside the EU, especially in the US.