How can governments design market-based compliance schemes that achieve the desired greenhouse gas (GHG) emission reductions in the most effective way, while balancing their various economic and social priorities? What are the major design options governments should consider when setting up an emissions trading scheme (ETS)? What factors influence decisions about the sectoral and GHG coverage of the system, capping emissions, distributing emissions allowances, maintaining the desired price signal, and providing flexibility for system participants? What are the major trade-offs between these options? What lessons can be identified from past experiences for new governments considering or developing market-based compliance schemes?
