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As far as I have understood emission right certificates are some kind of currency. Each company may emit as much of say CO2 as its certificates allow. Certificates may be traded, i.e. bought and sold. If a company emits more than it is allowed to it pays a fine (to the country where the pollution occurs).

My question is: How is it prevented that a wealthy company in a rich country buys lots of certificates (to a modest price) from a poorer company in a poorer country which in turn is forced to emit more pollutants than it is allowed to (because it sold all its certificates) - but its country doesn't force it to pay the fine.

Thus the intended effect of emission right certificates would be undermined. By which measures is this tried to be avoided?

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There can be civil or criminal penalties applied for non-compliance.

See for example: https://www.gov.uk/government/publications/environment-agency-enforcement-and-sanctions-policy/annex-2-climate-change-schemes-the-environment-agencys-approach-to-applying-civil-penalties

https://www.daera-ni.gov.uk/articles/euets-fees-charges-and-civil-penalties

International trading schemes depend on international law. Membership of such schemes will depend on accepting an adjudication body to rule on breaches, as with any other international contractual agreement.

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  • $\begingroup$ That mean certificates may only between traded between countries that signed the same trading scheme? $\endgroup$ – Hans-Peter Stricker May 14 at 13:40
  • $\begingroup$ Pretty much, though it can be a two-tier trading scheme, with one tier for internal trading between member nations, and a second tier covering cross-border trade between any member nation and a non-member nation. $\endgroup$ – EnergyNumbers May 14 at 13:43
  • $\begingroup$ How does the second tier work? Does it say with which non-member nations their may be trading? Or what? $\endgroup$ – Hans-Peter Stricker May 15 at 7:46
  • $\begingroup$ Is there a list of countries with which no EU country (i.e. its companies) may trade emission rights? $\endgroup$ – Hans-Peter Stricker May 15 at 7:48

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