Marginal Abatement Costs of CO2 Emission Reductions, Geographical Flexibility and Concrete Ceilings: an Assessment Using the POLES Model

Institut d'Economie et de Politique de l'Energie, Université Pierre Mendès France, BP 47 38040 Grenoble Cedex 9, France
Energy Policy (Impact Factor: 2.58). 10/1999; 27(10):585-601. DOI: 10.1016/S0301-4215(99)00051-8
Source: RePEc


The Kyoto Protocol envisage the setting-up of flexibility mechanisms allowing Annex B countries to fulfil their commitments to reducing greenhouse gases with respect for the principle of economic efficiency. The current negotiations relate in particular to the possibility of setting up a system of tradable emissions permits for Annex B countries and also of introducing “ceilings” to trade. This paper analyses the stakes and economic potential of adopting this instrument, both for those countries that made commitments in Kyoto and for developing countries. It is based on a formal approach that allows for a consistent framework of analysis. The emission permit market, is, in fact, simulated on the basis of a reference scenario and of marginal abatement cost curves and estimated by the POLES model; after analysing these marginal abatement cost curves and comparing them with those produced by other models, we explore two different configurations for a competitive market: a market limited to the Annex B countries and a world market. The results produced by the model show that widening the market to include developing countries is more effective than the Annex B market solution; it reduces the cost of implementing Kyoto for OECD countries and at the same time allows the countries of the South to benefit from selling the permits. This research also shows that introducing restrictions on exchanges for Annex B countries could have a counter-productive redistribution effect, with the ethical argument that underlies that particular measure.

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    • "Klepper and Peterson [2] declared that the definition of regional MACCs just " sounded convincing " , mainly discussing the role fossil fuel prices played in differentiating MACCs at firm and regional level theoretically, and used general equilibrium DART model for empirical simulations. Criqui, Mima and Viguier [3] generated MACCs from EPPA and POLES, and concluded that although social economic parameters, technological improvement and substitution elasticity varied across models, the rank of regional MACCs didn't change. Elzen and Lucas [4] used FAIR model, which linked long-term global abatement targets with regional emission quotas and abatement costs, illustrating evaluating regimes need both an assessment of initial allocation and distribution of abatement costs. "
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    ABSTRACT: ScienceDirect 1876-6102 © 2014 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license ( Peer-review under responsibility of the Organizing Committee of ICAE2014 Abstract The Kyoto Protocol inspires the idea of establishing emissions trading scheme, regarding economic-effectiveness as a significant factor to achieve reduction targets and meet obligation. With this trend, marginal abatement cost curves (MACCs) have been used in climate policy analysis under general equilibrium framework, and have been proved a valid device to highlight the superiority of ETS. This paper focuses on the comparison of MACCs at industry level in China, derived by us from CGE, GCAM and TIMES respectively. It's clear that there is no dynamic adjustment process in these models, so we use linear interpolation method to introduce carbon tax to simulate actual situation. Meanwhile, we also take data from potential and cost study into account. To make our work more targeted, we pay close attention to energy-intensive industries with high carbon emissions level such as electricity, cement and steel, which are most likely to be covered in carbon market. The results indicate how MACCs change and illustrate why they change, depending on applied methodology and underlying assumptions. As we ignore the indirect effects, for instance, tax distortions and non-financial costs during above simulation, the emissions abatement cost we achieve by using integral calculus won't be equivalent to real cost. Therefore, it's a wise decision for government department and research institute to be cautious when using MACCs as basis of policy making and academic studies.
    Full-text · Article · Nov 2014 · Energy Procedia
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    • "They found that these MACs were robust to different abatement levels in other regions and different scopes of trading. Criqui et al. [36] derived MACs in 2010 from Prospective Outlook on Long-term Energy Systems model by imposing carbon tax. Compared with EPPA MACs, they showed that the order of the magnitude of marginal abatement costs in different regions almost stays the same. "
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    ABSTRACT: An equitable burden-sharing framework is essential for the successful collective efforts to cope with climate change. Various carbon emission rights allocation schemes have been proposed in the international community. This paper focuses on the comparison among different schemes with the Equitable Access to Sustainable Development (EASD) model. The EASD model consists of four modules: a global target module, an allocation module, a carbon equity module and an abatement costs module. EASD integrates 20 key allocation schemes. For a selected scheme, country-specific allowance trajectories are provided in accordance with the global emission pathway. Then the carbon equity after allocation is measured by carbon Gini coefficient defined by per capita cumulative emission from the global rather than the narrower national perspective. A reduction tradeoff relationship is also performed among country groups. With marginal abatement cost curves, regional abatement costs are further analyzed. Our studies show that EASD would be a powerful policy-tool to profoundly compare and assess emission rights allocation schemes.
    Full-text · Article · Oct 2014 · Applied Energy
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    • "For instance, Ellerman and Decaux [11], Morris et al. [12] extracted MACs from the Emissions Prediction and Policy Analysis model with emission constraints. Criqui et al. [13] produced MACs from the Prospective Outlook on Long-term Energy Systems model with carbon taxes. "
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    ABSTRACT: In the long-term stabilization targets of greenhouse gases concentrations, various carbon emission rights allocation schemes have been proposed. To compare and evaluate them, the most essential is the equityefficiency tradeoff. This paper measures the equity and the efficiency in the global rather than the narrower national perspective. Specifically, the equity of the first allocation is quantified by the carbon Gini coefficient defined by per capita cumulative emission, and the economic efficiency to accomplish obligations is described with the discounted global abatement costs. Under 20 key allocation schemes, the numerical comparison on the equity-efficiency tradeoff side is carried out through the Equitable Access to Sustainable Development model. Our studies indicate that the equity and the efficiency of future emission space allocation approximately show a three-stage relationship.
    Full-text · Article · Sep 2014 · Energy
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