Cap-and-trade schemes govern the allocation of scarce resources and therefore have an inherently political and normative dimension. In situations of scarcity, the principles determining who is entitled to what share of these limited resources are key questions of justice. However, existing cap-and-trade schemes are characterized by a wide range of sometimes contradicting justice principles. This research offers a comprehensive and systematic review of two key questions concerning justice approaches to cap-and-trade. Firstly, the existing literature has extensively debated the use of justice theories and principles guiding allowance allocation in emissions trading schemes, such as egalitarianism, utilitarianism, status quo, basic need, or maximin principles. However, an in-depth analysis of such approaches to justice in cap-and-trade systems in other issue areas, such as water quality trading or individual tradable quotas in fisheries, is thus far lacking. Our research analyses different interpretations of justice principles in cap-and-trade systems across issue areas. Secondly, studies of the equity implications of cap-and-trade systems tend to narrowly focus on initial allowance allocation; however the equity implications of cap-and-trade designs are much broader. For example, the potential equity implications of allowance pricing and transferability are rarely discussed. Thus, this study examines approaches to justice beyond the initial allowance allocation, including not only questions of whom to distribute allowances to and how much, but also who should be allowed to trade allowances and under what conditions. Essentially, these discussions underscore different notions of who ought to carry the greatest cost of abatement, and who ought to receive the greatest benefits from it.
