Temporary emission allowances from afforestation and reforestation activities under the EU ETS

Abstract

The authors have assessed the regulatory framework set by the UNFCCC (United Nations Frame Convention on Climate Change), the Kyoto Protocol and its Flexible Mechanisms, including the CDM (Clean Development Mechanism), and the EU ETS (European Union Emissions Trading Scheme). After this general overview, the article shows how afforestation and reforestation activities have been incorporated into the CDM process and its current consideration under the EU ETS. Transaction costs of these types of CDM project activities are analyzed, together with the state of the temporary allowances market. Finally, taking into account the above mentioned elements, the authors draw several conclusions on the opportunity and expectations of the future development of this market.