IPCC Fourth Assessment Report: Climate Change 2007
Climate Change 2007: Working Group III: Mitigation of Climate Change Cost-effectiveness

A cost-effective international agreement would minimize global and national costs and provide participating sovereign nations with sufficient flexibility to reach their commitments in a fashion tailored to their national needs and priorities. To achieve this, agreements would need to avoid being prescriptive in its actions but, instead, leave room for the implementation of the target, (e.g. while reducing emissions in different sectors or reducing the emissions of different gases, they should not create significant distortions in competitiveness between countries).

Many analysts argue that the most cost-effect system would be one which enables emission trading with the broadest possible participation of countries. Such a system would allow the emission reductions to occur in those countries, sectors and gases where they can be achieved at the lowest cost. An approach based on specific policies and measures would have to be designed carefully to be as efficient as an emission trading system. The flexibility provided to private actors in a trading regime also increases the system’s cost-effectiveness.