Assessing effort sharing for greenhouse gas emission reductions 

However, the "capability and responsibility of countries to respond to emission reductions vary, in particular between developing and developed countries," the authors point out. 

A "differentiation of commitments to reduce emissions needs to take place," they thus claim. 

A cap-and-trade system would help achieve this by "separating the issues of efficiency and equity in mitigation efforts" and "turning the question of equity between countries to a question of how initial allocation of emission rights should be made," the experts argue. 

Nevertheless, the VTT researchers admit that the fundamental problem with their approach is the "trade-off between the ability to consider national circumstances and a straightforward and transparent procedure to define the emission allocation". 

For a climate change mitigation strategy to be as cost-effective as possible, the authors predict that most of the emission reductions would have to come "from the energy sector and industry, due to the phasing out of fossil fuels". But to succeed at reducing greenhouse gas emissions significantly, they insist that "large involvement from all economic sectors is needed too". 

The experts also expect mitigation costs to increase in future, as "more expensive mitigation efforts will have to be carried out with higher economic growth and energy demand". 

Furthermore, market imperfections are likely to result in "a doubling of global mitigation costs in 2020" if efficient allowance markets are to be created, they say. 

Given future uncertainties, the authors admit that it is almost impossible to "predict the actual effort levels of different countries". But they emphasise the importance of having "detailed and reliable assumptions for the mitigation potential of different countries" to help make accurate predictions. 

The researchers believe "most developing countries would financially benefit from a cap-and-trade system". 

Nevertheless, "market imperfections might distort the efficiency" of such a system and the ability to ensure "equity and efficiency" in greenhouse gas reductions might not last, the authors conclude.