ABSTRACT
Avoiding dangerous climate change will require a Global Deal that introduces a set of international institutions addressing the market failures giving rise to climate change (Edenhofer et al. 2008a, 2008b; Stern, 2007, 2008). A global carbon market could be a central element of such a Global Deal, addressing simultaneously the key issues of environmental effectiveness via the global cap, cost effectiveness by trading of permits and equity through fair allocation of emission permits. We aim at providing an overview of the rationale and elements of a Global Deal on climate change and the role of international emissions trading therein, with a particular focus on the options for developing country participation in international emissions trading, in particular China.
