The objective of the study was to find policy options on national and European level based on the results of the international climate negotiations and recent trends in European climate policy. We analyzed the reduction target laid down in the Kyoto Protocol and discussed ways of implementing them in effective and cost-efficient ways. In the process, we accounted for transaction costs and legal issues. We identified areas of national and European climate policy in which emissions trading could be used as one of the three Kyoto Mechanisms (International Emissions Trading, Joint Implementation and the Clean Development Mechanism). In relation to this project, an international conference was organized under the title "Flexible Mechanisms for an Efficient Climate Policy". It took place in Stuttgart in July 1999. At the conference, international experts presented their experiences with emissions trading in other areas and discussed the role emissions trading could play in a future climate policy.