Arctic Yearbook 2015 - Page 425

425 Arctic Yearbook 2015 element to providing right price signals to market participants as well as to potential investors for technology development. Investors have been skeptical about market efficiency of the EU-ETS, because the carbon market is considered as a relatively thin market, compared to the stock market. Few transactions take place, so that the carbon market has often been volatile and less liquid, reflecting policy risks and uncertainty about allocation plans from phase I to phase III. However, regardless of the criticism, EU-ETS has offered opportunities for the firms under CO2 regulation to reduce abatement costs. In particular, EU-ETS allows market players to trade the permits within the same commitment period and this flexibility provides less incentive to switch between spot and futures. Kim and Lee (2015) and Lean et al. (2010) point out, in a short period, how there may exist arbitrage opportunities in the EU-ETS, but arbitrage opportunities in the EU-ETS will disappear in a long-term commitment period, as long as the market is efficient. Korea launched an emissions trading scheme in 2015, which is a significant milestone in cutting greenhouse gas emissions and bolstering its clean technology. California and Québec have linked their cap-and-trade systems. China plans to implement a national emissions trading system as early as 2016. As articulated by the World Bank, carbon pricing is expanding. Carbon pricing is an essential element of the policy mix towards sustainable development and a green economy, not only for the Arctic community, but also for our future of global community. The 21st COP of UNFCCC is expected to provide momentum to open a new paradigm for global commitments towards green economy. We are confronting challenges at the new nexus of energy and climate security. Since the Arctic is vulnerable to climate change and energy security, we should try our best efforts to initiate constructive dialogues, to promote public-private partnerships and to enhance interdisciplinary collaboration on Arctic research and policy development. Notes 1. The national targets for emission reductions for 2020 (compared to 1990 benchmark figures) in Nordic countries are as follows: Denmark (40%), Iceland (15%), Norway (30%), and Swed en (40%). Finland participates in the European Union Emissions Trading (EU-ETS). The nat ional target outside ETS is 16% below 2015 level. 2. LULUCF = Land use, land use change and forestry References Congressional Budget Office. (2015) An Update to the Budget and Economic Outlook: 2015 to 2025. Kim, Hyo-Sun and Lee, Sungro. (2015) Testing Market Efficiency of Spot and Futures Prices in European Carbon Market, Asian Pacific Journal of EU Studies. 13(1): 109 – 119. Kim