Assume you are a senior researcher with the United Nations Framework Convention on Climate Change (UNFCCC). The Head of the research branch has requested a briefing note on the possibility of linking the European Union (EU)Emissions trading scheme (ETS) with the New Zealand (NZ)ETS. She has asked for precise and concise answer to the following two questions(assume the linking is direct and bilateral).

a. In dot points what is the key motivation for linking two emissions trading schemes?

b. Assume the initial price of carbon is higher in the EU ETS. Do NZ ETS net buyers of emissions permits gain or lose? Do EU ETS net sellersof emissions permits gains or lose? Briefly explain