ABSTRACT
Linkage of national climate policies is increasingly gaining relevance in the climate policy architecture, especially after the provisions introduced by the Paris Agreement. The European Union Emissions Trading Scheme (EU ETS), the largest and most consolidated system in the world, displays willingness to link with other compatible systems, which means other ETS systems with similar environmental integrity and system architecture could potentially link up. The EU ETS is the largest and most consolidated system in the world, which accounts for 45% of the EU’s emissions of power generation, energy-intensive industries and aviation sectors. Production sectors transform primary factors and intermediate inputs into goods and services in order to maximise profits, given the available technology and market prices. Producers receive payment in return of supplying those products to domestic or foreign agents. A constraint on emissions alters the relative economics of technologies as advanced technologies become available cost-effectively and competes with traditional energy technologies on an economic basis.
