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Regional Carbon Dioxide Permit Trading in the United States: Coalition Choices for Pennsylvania
Abstract
An overview is given of the growing number of regional associations in which states have entered into voluntary arrangements to limit greenhouse gas (GHG) emissions. In particular, in the Regional Greenhouse Gas Initiative (RGGI), a number of northeastern states have joined to create a regional GHG cap and trade program, beginning with the utility industry. Analysis is made of the five key issues relating to these current and potential climate action associations: the extent of the total and individual state mitigation cost-savings across all sectors from potential emission permit trading coalitions; the size of permit markets associated with the various coalitions; the relative advantages of joining various coalitions for swing states such as Pennsylvania; the implications of the exercise of market power in the permit market; and the total and individual state/country cost-savings from extending the coalition beyond US borders. It is shown that overall efficieny gains from trading with a system of flexible state caps, with greater overall cost savings increasing with increasing geographic scope.
... Goulder and Schein (2013) further point out that the implementation and regulation of carbon trading policies are more complex, and may face problems such as market manipulation and price volatility and have an impact on enterprise performance. However, the mainstream view in the academic community confirms the effectiveness of the carbon regulatory system to reduce emissions from the financing costs, decision-making costs, and agency costs: in terms of debt costs, carbon-intensive enterprises will bear a greater violation of the emission costs and the risk of default emissions (Ren et al., 2023); in terms of decision-making costs, carbon trading policy can be used to alleviate the constraints of innovative financing by improving the accuracy and transparency of information (Ferrer et al., 2019); in terms of agency costs, stakeholders can realize lowcost regulation of climate physical risks and governance performance through market signals (Rose et al., 2005), and the negative relationship between agency costs and trading prices will increase the incentives for firms to enter the carbon market (Zhu, 2017). ...
Facing the double constraints of the “double carbon” target and high-quality economic development, carbon trading policy is an important tool for realizing the emission reduction commitment; based on the perspective of microenterprises, the specific mechanism and spatial effect of carbon trading policy still need to be evaluated. Taking China’s carbon emissions trading pilot as a quasi-natural experiment, this paper empirically investigates the impact of carbon trading policy on the carbon emission intensity of pilot enterprises and its mechanism of action, and its impact on the carbon emission intensity of neighboring enterprises, based on the multi-temporal double-difference model, moderating effect model, and spatial Durbin model with the A-share-listed enterprises in the period of 2009–2019 as the samples. It is found that: 1) Carbon trading policy will reduce the carbon emission intensity of enterprises to different degrees, and there are significant differences under different ownership types, degrees of marketization and the level of digitization. 2) Under the influence of environmental uncertainty, ESG disclosure will weaken the effectiveness of carbon emission reduction in the pre-pilot stage of the policy; with the gradual improvement of the carbon trading policy and ESG disclosure mechanism, ESG ratings will positively regulate the inhibitory effect of the carbon trading policy on the carbon emission intensity of enterprises through multiple paths. 3) Carbon trading policy effectively reduces multiple negative spillovers through the demonstration effect and competition effect of neighboring enterprises, driving the carbon emission reduction behavior of non-pilot enterprise. The research in this paper enriches the research paradigm of carbon emission intensity influencing factors, provides reference suggestions for the government to improve its policies, and better contributes to the realization of the “dual-carbon” vision in China as soon as possible.
... In the context of unilateral or uneven climate policies, the fears of competitiveness deterioration could be particularly problematic for developed countries of distinct "regional" character, like Australia, Canada, and the U.S., partly because their provincial (or state) governments under the federal system are vested with significant political authority, and partly because energy-intensive industries are not spread evenly throughout these countries. Therefore, deterioration in the international competitiveness of energy-intensive sectors, while potentially economically disruptive in any country, could impose regionally uneven impacts on these countries (Rose and Zhang, 2004;Rose et al., 2006;Garnaut, 2008;Rivers, 2010). ...
This monograph provides a comprehensive review of the literature on competitiveness and leakage concerns associated with differentiated climate abatement commitments among countries. The literature reviewed is not exhausted, but it is sufficient to provide a balanced view of both academics and policy circles. Section 2 discusses main channels of carbon leakage. Section 3 discusses how to identify the sectors at a risk of carbon leakage. Section 4 examines ex ante estimates of potential carbon leakage rates, and explains why they differ from ex post results of environmental tax reforms and greenhouse gas emissions trading schemes that have been implemented in the European Union. Section 5 discusses broad policy options to address competitiveness and leakage concerns, and compares which anti-leakage policy, border adjustments or output-based allocation, is more effective to limiting carbon leakages or mitigating production loss in the sectors affected. Given that border carbon adjustment measures were incorporated in the U.S. proposed congressional climate bills to level the carbon playing field and could have potential conflicts with World Trade Organization (WTO) provisions and practical difficulties associated with their implementation, Section 6 discuses in great detail the WTO consistency, the effectiveness and methodological challenges of border carbon adjustment measures. The monograph ends with some concluding remarks.
... This could be particularly problematic for developed countries of distinct ''regional'' character, like Australia, Canada, and the U.S., partly because their provincial (or state) governments under the federal system are vested with significant political authority, and partly because energy-intensive industries are not spread evenly throughout these countries. Therefore, deterioration in the international competitiveness of energy-intensive sectors, while potentially economically disruptive in any country, could impose regionally uneven impacts on these countries (Rose and Zhang, 2004;Rose et al., 2006;Garnaut, 2008;Rivers, 2010). ...
... The model can be solved either as a system of simultaneous equations (equilibrium) or as a nonlinear program (optimization). It has been applied to the analysis of C&T associated with the international compliance to the Kyoto Protocol, EUTS, RGGI, ten U.S. Environmental Protection Agency (EPA) regions covering all states of the United States, Pacific Rim states and countries (see Rose et al. 1998;Zhang 2000;Rose and Zhang 2004;Rose, Peterson, and Zhang 2006;Rose and Wei 2008). This C&T model has also been applied at the state level and in conjunction with the policy-making process to examine coverage of all GHG emissions statewide (see, e.g., Minnesota Climate Change Advisory Group [MCCAG], 2008; Florida Governor's Action Team on Energy and Climate Change [FGAT], 2008). ...
Like most other states in the U.S., Michigan recently began addressing the problem of climate change. The Michigan initiative involves combining a stakeholder process and technical analyses to formulate a climate action plan. This paper reports on how regional scientists collaborating with facilitators of the policy-making process and state government decision-makers addressed two key aspects. First is the choice and design of policy instruments to use to implement greenhouse gas (GHG) mitigation and sequestration. Second is the decision on whether the state should pursue its target for net GHG reduction on its own or in cooperation with other states. We summarize the results of applying a formal model for analyzing the implications of Authors' Note: The authors are, respectively, Research Professor, School of Policy, Planning, and Development (SPPD), University of Southern California (USC), Los Angeles, CA; Post-doctoral Research Associate, SPPD, (USC); Consultant to the Center for Climate Strategies (CCS); President and CEO of CCS. We would like to acknowledge the funding support of Faurecia, Inc., Roy A. Hunt Foundation, Kendeda Fund, Norman Founda-tion, the Rockefeller Brothers Fund, the Sandler Family Foundation, and the Michigan Department of Environ-mental Quality. Legions of stakeholders and analysts contributed to the process and research described in this paper. We wish to offer special thanks to CCS team members:. Of course, any remaining errors and omissions are solely those of the authors. Moreover, the views expressed in this article represent those of the authors and not necessarily any of the institutions with which they are affiliated nor the institutions that funded the research.
... For example, Grubb evaluates the economic implications of achieving the Kyoto Protocol targets, the results show that the cost-saving effect is obvious if the global emissions trading market could be quickly and effectively implemented [11]. Rose et al. study the cost-saving effects of the inter-regional emissions trading markets in the United States, and found that the overall cost-savings increases with increasing geographic scope [12]. Massetti and Tavoni propose a fragmented cap-and-trade scheme with a specific regional market in mind for developing Asia, and argue that creating two large trading markets would result in small efficiency losses, while generating more reasonable regional incentives and transfers [13]. ...
Chinese government has committed to reduce its carbon intensity by 40–45% over the period 2005–2020 at the 2009 Copenhagen Summit. To achieve the target in a cost-effective way, China is signaling strong intentions to establish emissions trading scheme, and presently seven pilots have been established. This paper focuses on the cost-saving effects of carbon emissions trading in China for the 2020 target. First, an interprovincial emissions trading model is constructed. Then, three kinds of policy scenarios, including no carbon emissions trading among provinces (NETS), the carbon emissions trading only covering the pilots (PETS), and the unified carbon emissions trading market (CETS), have been designed. The results show that China needs to reduce its emissions by 819 MtCO2 for achieving the 42.5% reduction in carbon intensity over the period 2005–2020. The PETS and the CETS, which may result in a carbon price of 99 yuan/tCO2 and 53 yuan/tCO2, could reduce the total abatement costs by 4.50% and 23.67%, respectively. This paper also finds that the carbon emissions trading could yield different impacts on different provinces, and the cost-saving effects of the eastern and western provinces are more pronounced than the central provinces. Necessary sensitivity analysis is also provided at the end of the research. These findings may be useful for promoting the development of carbon emissions trading in China.
... This could be particularly problematic for developed countries of distinct ''regional'' character, like Australia, Canada, and the U.S., partly because their provincial (or state) governments under the federal system are vested with significant political authority, and partly because energy-intensive industries are not spread evenly throughout these countries. Therefore, deterioration in the international competitiveness of energy-intensive sectors, while potentially economically disruptive in any country, could impose regionally uneven impacts on these countries (Rose and Zhang, 2004;Rose et al., 2006;Garnaut, 2008;Rivers, 2010). ...
This paper provides a review of the literature on competitiveness and leakage concerns associated with differentiated climate abatement commitments among countries. The literature reviewed is not exhausted, but it is sufficient to provide a balanced view of both academics and policy circles. Section 2 discusses how to identify the sectors at a risk of carbon leakage. Section 3 examines ex ante estimates of potential carbon leakage rates, and explains why they differ from ex post results of environmental tax reforms and greenhouse gas emissions trading schemes that have been implemented in the European Union. Section 4 discusses broad policy options to address competitiveness and leakage concerns, and compares which anti-leakage policy, border adjustments or output-based allocation, is more effective to limiting carbon leakages or mitigating production loss in the sectors affected. Given that border carbon adjustment measures are incorporated in the U.S. proposed congressional climate bills to level the carbon playing field and could have potential conflicts with World Trade Organization (WTO) provisions and practical difficulties associated with their implementation, Section 5 discuses in great detail the WTO consistency, the effectiveness and methodological challenges of border carbon adjustment measures. The paper ends with some concluding remarks.
... The model can be solved either as a system of simultaneous equations (equilibrium) or as a nonlinear program (optimization). It has been applied to the analysis of C&T associated with the international compliance to the Kyoto Protocol, EUTS, RGGI, ten U.S. Environmental Protection Agency (EPA) regions covering all states of the United States, Pacific Rim states and countries (see Rose et al. 1998;Zhang 2000;Rose and Zhang 2004;Rose, Peterson, and Zhang 2006;Rose and Wei 2008). This C&T model has also been applied at the state level and in conjunction with the policy-making process to examine coverage of all GHG emissions statewide (see, e.g., Minnesota Climate Change Advisory Group [MCCAG], 2008; Florida Governor's Action Team on Energy and Climate Change [FGAT], 2008). ...
Like 30 other states in the U.S., Michigan recently began addressing the problem of climate change through comprehensive mitigation action planning. The Michigan climate initiative involved combining a stepwise, fact-based, stakeholder decision process and technical analyses to formulate a consensus-based climate action plan. This paper reports on the results of work conducted by policy analysts and facilitators of the policy-making process in response to state government and stakeholder decisions on three key aspects. First is the choice of policy actions used to establish a comprehensive portfolio of actions and economy-wide greenhouse gas (GHG) goals and targets. Second is the design of policy instruments to use to implement these specific GHG mitigation actions. Third is the decision on whether the state should pursue its target for net GHG reduction through sector based policies and measures, a regional cap and trade program, or both combined. We summarize the results of applying a formal model for analyzing the implications of alternative environmental policies and instruments. The model was applied to data on the financial costs/savings and applicability of a spectrum of GHG reduction options developed by a consensus of stakeholders from all segments of the Michigan population. We conclude that a combination of sector-based measures and market incentive-based policies could attain a low cost, high co-benefit solution if Michigan joined with other Midwestern States in developing the cap and trade aspect of its climate action plan.
... The WCI has roots in a 2003 agreement among the governors of California, Oregon, and Washington, known as the West Coast Governors' Global Warming Initiative. 72 This initiative grew out of the Western Governors' Association, which has a history of bringing governors together to deal with issues of regional concerns, such as transportation, water, and energy. 73 RGGI grew out of the Ozone Transport Commission (OTC) created by the 1990 Clean Air Act amendments, which convened representatives from each of the states that ultimately participated in RGGI to address interstate transport of ozone pollution. ...
States have often been theorized to act as competitors in crafting their environmental policies, engaging in either a “race to the bottom” or a “race to the top.” In the recent development of climate law, however, it is state collaboration and cooperation rather than state competition that have emerged most strongly. This article first discusses how the theories of competitive state behavior would have predicted states to behave in the absence of federal action and describes the contrasting extent to which states have engaged in collaborative initiatives. The article then analyzes why states have been motivated to collaborate in climate law.
... Based on this result, during the last two decades regulators have extended the use of tradable permits. For instance, at the …rm level the European Union implemented a wide carbon trading scheme since 2005 (Ellerman and Buchner, 2007), while in the US greenhouse gas emissions have been regulated locally through the regional carbon dioxide trading scheme since 2001 (Rose et al., 2006). Both studies converge to the fact that overall e¢ ciency of the system has improved after the introduction of tradable permits. ...
The asymptotic distributions of cointegration tests are approximated using the Gamma distribution. The tests considered are for the I(1), the conditional I(1), as well as the I(2) model. Formulae for the parameters of the Gamma distributions are derived from response surfaces. The resulting approximation is flexible, easy to implement and more accurate than the standard tables previously published.
The emissions trading policy is considered a key measure for China to achieve its “double carbon” goal. In this study, two types of Tapio carbon decoupling models are constructed, panel data for 30 provinces and cities in China from 2004 to 2017 are selected, and the difference-in-differences (DID) model is used to evaluate the role of carbon trading policies in carbon decoupling. The study shows that carbon emissions trading policies can significantly promote carbon decoupling in China and that the formulation and implementation of such environmental regulations promote carbon decoupling with the help of two intermediary variables: gray technology innovation and clean technology innovation. Based on the findings, it is concluded that China should actively build a unified national carbon trading market, ensure the synergistic coupling of emission reduction targets and economic growth targets, and effectively play the role of the carbon trading market in inducing and promoting low-carbon technology innovation to help decouple carbon.
China will establish a national emission trading scheme (ETS) in 2017, and the excessive development of coal-to-materials may hinder China′s emission reduction goals, specifically to reduce carbon emissions intensity by 40–45% from 2005 to 2020. In this study, the status of China′s coal-to-materials projects is presented, based on which we forecasted the high, middle and low CO2 emission scenarios for the coal-to-materials industry in 2020, which were determined to be approximately 580, 290, and 180 Mt CO2, respectively. The high scenario is approximately equivalent to the total emission from Canada, the world's 11th-largest emitter in 2014. The main purpose of this study is to research the impacts of ETS on the coal-to-materials industry in 2020. Oil-to-materials is an ineluctable and powerful competitor to the coal-to-materials industry, complicating this matter. Therefore, the Cournot model was applied to quantitatively analyze the competition between these two monopolistic entities and determine the influence of oil, coal and carbon prices on CO2 emissions from coal-to-materials. The visual simulation of the results shows that ETS can improve the competitiveness of oil-to-materials, resulting in a decline in production of coal-to-materials. However, the effect of the carbon cost with historical price range of Chinese ETS pilots on mitigating CO2 emissions from the coal-to-materials industry is limited. High oil prices and low coal prices can increase the emissions from coal-to-materials significantly. Our study also provides a tool to analyze the feasibility of ETSs for a set emission reduction goal. Additionally, the necessary sensitivity analysis was also provided.
As the country with the greatest energy consumption and CO2 emissions globally, China has commenced preparations for a nationwide carbon market, to be established during the period 2016–2020. Given the spatial heterogeneity of economic development across different regions, that nationwide market will have differing impacts on China’s regional economies. The present paper uses a multi-regional CGE model to examine the effects of a nationwide carbon market on regional economies and CO2 reduction efficiency under different emissions reduction targets. The results indicate that such a market can effectively reduce costs across the whole society, improving welfare and allocation efficiency of production factors and so reducing regional economic disparities and promoting coordinated regional development. These measures can help China to achieve more ambitious reduction targets with the same abatement costs, and large-scale inter-regional transfer of funds during emissions trading can be invested in CO2 mitigation technologies in economically backward regions, promoting CO2 reduction efficiency and industrial upgrading.
Energy conservation is a long-term strategic policy in China to support its economic and social development. This strategy is important for saving resources, protecting the environment, and ensuring a secure supply of energy. However, energy conservation often involves large amounts of investment and may also have dampening impacts on some local and regional economies. Moreover, energy conservation has many features of a public good. Therefore, government policy will have to play a strong role to foster local efforts and interregional cooperation on this issue. This paper analyzes a promising policy instrument - an interregional energy conservation-quota trading system. An operational model is developed to simulate the workings of this policy instrument for a variety of quota allocations among regions. The results indicate that a tradable quota system can help China achieve its conservation target in a costeffective way and in accordance with its regional development strategy.
The model we use for the C&T analysis has been previously developed and successfully applied to simulate the workings of interregional (and international) C&T systems. It is based on established economic principles (equilibrium and optimization). The model can be solved either as a system of simultaneous equations or as a non-linear programming model. It has been applied to the analysis of C&T associated with the Kyoto Protocol, emissions trading within the European Union, the Regional
In the wake of Hurricane Katrina, attention has focused on a pair of threats to low-lying coastal areas. Scientists have begun a debate over the possible impact of global climate change on hurricane intensity. Some scientists take the position that recent increases in hurricane intensity in the North Atlantic are due, at least in part, to increases in sea surface temperatures caused by human-induced global climate change. Others believe that those increases are largely due to natural fluctuations in weather patterns such as the Atlantic Multidecadal Oscillation. There is little debate over a second threat to coastal areas. The broad consensus of scientific opinion supports the conclusion that global climate change poses a significant risk of accelerated melting of polar ice sheets and glaciers, which in turn increases the risk of coastal flooding. This article surveys the scientific literature on the links between global climate change and the risks of increased hurricane intensity and coastal flooding. It concludes that the scientific evidence of such links is compelling and that environmental and energy policymakers should respond by taking steps to abate the activities - primarily the emission of greenhouse gases - that are known to contribute to global climate change. The article describes a series of policy initiatives that the federal government could take but has not yet taken to contribute to global efforts to abate climate change. It also describes longstanding national environmental and energy policies that exacerbate, rather than alleviate the adverse effects of global climate change on coastal areas. Recent economic studies demonstrate that a comparison of the costs and benefits of tackling global climate change and failing to do so strongly supports taking immediate steps to address climate change, rather than further deferring such a response. Finally, the article assesses the possible impact of Katrina on the public policy debate over global climate change, and in particular, it focuses on the effects of Katrina on public opinion in the U.S. on government policies relating to global climate change.
The absence of US national action on global climate change policy has prompted initiatives by the US Congress, cities, states, and regions toward what is likely to become a long-term, collaborative effort to harmonize national energy and climate policies. This upward evolution in the face of a reluctant administration is historically consistent with the development of national legislation on other environmental and social issues in the US. At the heart of this movement is the need to resolve conflicts between high-intensity use of low-cost fossil energy supplies, and the dominating impact of carbon dioxide emissions on global climate change. US states are among the largest carbon dioxide emitters in the world and play a critical role in supplying and transforming energy, as well as consuming it, for economic advantage. State governments are also likely to have to shoulder some of the cost of potentially extensive climate damages and bear the brunt of the cost of implementing future federal mandates. As a result, many are taking proactive stances on the development of climate mitigation policy to prepare for, accelerate, and/or guide national policy. As US states show leadership on addressing greenhouse gas emissions, they also play an important role in forging policies and measures that reduce economic conflict between energy and climate goals. A number have launched or completed greenhouse gas mitigation plans and other major policies in the past few years that address these conflicts through: (1) finding ways to reduce mitigation costs, including the use of incentive-based policy instruments; (2) promoting an open and democratic policy process that includes major stakeholders; (3) promoting equity across socioeconomic groups, regions, and generations; and (4) promoting interregional cooperation. The results are promising and suggest that the state arena for climate and energy policy is evolving quickly and constructively toward alternatives that reduce conflict. Regional efforts are also unfolding, along with greater congressional attention to the lessons learned and commitments made by sub-federal actions. In the next few years many national energy and climate conflicts are likely to be tested and addressed by states. Among these, Pennsylvania is likely to be an important player due to its high profile of energy production and potential for leadership.
Executive Summary New Mobility is a relatively new term used to represent an exciting and imminent reality. Our individual and societal transportation needs are complex and rapidly-evolving, while being shaped, constrained, transformed, and defined by a host of global pressures and trends. Within this context, New Mobility offers a fresh understanding of how we can meet transportation needs for both people and goods through an integrated network of products, services, and information technology. As the concept of New Mobility begins to take root, certain human-induced trends are putting unprecedented pressures on our global society. “Megatrends” such as climate change, increasing social disparity, shifting demographics, urbanization, and congestion are affecting the rate and degree to which populations, regions, and economies can grow and prosper. This project builds on the work of previous groups, including the Canadian think-tank Moving the Economyi and a group of three University of Michigan graduate students who, in 2005, produced a report for Ford Motor Company entitled New Mobility: Future Opportunities for Ford as a Mobility Integrator. Our team consists of eight MS students at the School of Natural Resources and Environment at the University of Michigan. Through a combination of primary and secondary research, we surveyed the current and future potential for New Mobility products, services, and technologies in five global cities, vis-à-vis the growing urgency of addressing the aforementioned megatrends. Our results from each city combined a conventional Market Attractiveness Analysis with a progressive New Mobility Market Analysis. We then overlaid these results with Ford’s specific strengths, core competencies, and leadership potential in each of the five cities. In so doing, we have created a novel new approach to business project evaluation. Our results indicate that Bangalore, India is the most attractive New Mobility market, due not only to the overall market size, but also to the transportation infrastructure gap which is rapidly emerging as Megatrend pressures intensify. However, our Discussion & Analysis section identifies a number of other key factors for Ford to consider when selecting how, when, and why to assume a leadership role in the New Mobility Market. Master of Science School of Natural Resources & Environment University of Michigan http://deepblue.lib.umich.edu/bitstream/2027.42/48792/1/FMFinal_121306.pdf
Recognizing and addressing community concerns can benefit emissions trading programs and help foster greater environmental justice.
We present an analysis of the economic impacts of marketable permits for greenhouse gas reduction across industries and income groups in the United States. A computable general equilibrium model is used to simulate permit markets under various assumptions about permit allocations, industry coverage, revenue recycling, sequestration, and the inclusion of multiple greenhouse gases. Our results indicate that a permit price of as much as $128 per ton carbon would be needed to comply with the full U.S. Kyoto commitment, and that this would lead to a slightly more than I percent reduction in GDP in the year 2010. Expansion of trading to include carbon sequestration and methane mitigation can significantly lower these impacts. However, all policy alternatives simulated are somewhat regressive in terms of income distribution, though to significantly different degrees depending on the policy design.
In this paper, we consider a three-stage game in the context of a competing exporters model to compare and contrast the effects of discriminatory and uniform (Most Favored Nation, MFN) tariffs on countries' choice over environmental standards for varying degrees of pollution spillovers. Because of the presence of punishment effects and stronger own and cross-tariff effects, we find that discrimination yields higher standards than MFN (and free trade) independently of the extent of pollution spillovers. When pollution is local and incentives to free ride on other countries' abatement efforts are weak, we show, however, that welfare is larger under MFN than under discrimination. In a dynamic setting, we consider the impact of symmetric and asymmetric treatments on the sustainability of an international environmental agreement (IEA) and obtain that multilateral cooperation is easier to sustain under discrimination than under MFN (or free trade).
This article analyzes how transaction-related, functions wil change as joint implementation evolves. We postulate how these functions might be provided at various stages and offer an estimate of the relative magnitude of their cost and benefits. We conclude that transaction costs could serve as a significant impetus for the movement from joint implementation to marketable permits.
This paper presents a generalized dynamic model of greenhouse gas emissions trading under constraints on the volume of transactions. An empirical version of the model is used to evaluate potentially cost-saving flexibility mechanisms (joint implementation and clean development mechanism) and potentially cost-adding restrictions (supplementarity) of the Kyoto Protocol. The results indicate the greatest gains would stem from extending permit trading spatially among industrialized nations, although sizable gains would also emanate from the inclusion of developing countries. Gains from intertemporal trading (banking and borrowing) are meager. Restrictions on the volume of permit purchases have by far the most costly effect when developing countries are incorporated into trading. Sensitivity tests with respect to differential discount rates across countries and technological change indicate the results are robust.
Taking account of sinks credits as agreed in Bonn and Marrakech, this paper illustrates how market power could be exerted in the absence of the US ratification under Annex 1 trading and explores the potential implications of non-competitive supply behavior for the international market of tradable permits, compliance costs for the remaining Annex 1 countries to meet their revised Kyoto targets, and the environmental effectiveness. Our results show that the US withdrawal from the Kyoto Protocol has great impact on the economic costs and environmental effectiveness of the Protocol since it would lead to no real emission reduction in all remaining Annex 1 regions. Depending on how market power is exerted by the dominant permit suppliers, the former Soviet Union and the Eastern European countries, the overall compliance costs of all remaining Annex 1 regions differ significantly. Moreover, curtailing permit supply by market power increases substantially the overall environmental effectiveness by cutting the amount of hot air being emitted into the atmosphere by more than half, although to much less extent than in the case of the US compliance.
This article examines whether a greenhouse gas emissions trading scheme has the potential to bring parties into conflict with the WTO provisions in dealing with the initial allocation of permits, non-compliance with emissions targets, emissions trading system enlargement, and trade measures against non-members of an emissions trading club, and relates the discussion to joint implementation with developing countries. To our knowledge, this is the first article to analyze potential conflicts between an international emissions trading scheme and the world trade system.
The inclusion of emissions trading in the Kyoto Protocol reflects an important decision to address climate-change issues through flexible market mechanisms. The author addresses a number of policy issues that must be considered in designing and implementing an international greenhouse gas (GHG) emissions-trading scheme. These include: how much of a Party’s assigned amount of GHG emissions can be traded internationally; emissions-trading models; competitiveness concerns in the allocation of emissions permits; banking and borrowing; liability for noncompliance; how to enlarge the emissions-trading system; and bubbles. Although the focus is exclusively on emissions trading, its relationship with the clean development mechanism, joint implementation, and bubbles are discussed wherever necessary. By providing some new insights, the author aims to contribute to the design and operationalization of an international emissions-trading scheme.
ne of the major obstacles to reaching a comprehensive agreement on global warming is the setting of greenhouse gas emission reduction targets for individual countries. Long-standing tensions between industrialized and developing countries have raised the issue of equity in burden-sharing. Moreover, individual industrialized nations have pleaded special circumstances and have sought differentiation in their obligations. This paper analyzes alternative rules for distributing tradable carbon dioxide emissions permits. A non-linear programming model, which distinguishes between allocation-based and outcome-based rules, is used to analyze the relative welfare outcomes. The model is applied to the world body of nations and yields several important policy implications. Copyright Kluwer Academic Publishers 1998
En la UE se ha estimado que los costes de la congesti�n representan el 2% de su PIB y que el coste de la poluci�n del aire y ruido supera el 0,6% del PIB, siendo alrededor del 90% de los mismos ocasionados por el transporte terrestre. Ante este hecho y el continuo aumento de la demanda del transporte privado frente al p�blico para los desplazamientos, muchos abogan por una conjunci�n de medidas tanto restrictivas como alternativas al uso del coche. Dentro de las primeras se encuentra el establecimiento de un peaje o una tarifa por el uso de las carreteras, medida que aunque desde el punto de vista de la Teor�a Econ�mica es la manera m�s eficiente para corregir el fallo de mercado que supone la congesti�n, desde la visi�n de pol�ticos y del p�blico no goza de gran aceptaci�n. En este trabajo se pretende hacer una simulaci�n de los efectos que tendr�a sobre el bienestar social de la implantaci�n de una medida de este tipo en la Bah�a de C�diz. In the European Union it has been estimated that the congestion cost are the 2% of the gross domestic product and the cost of pollution and noise is over 0,6%, olso it is known that the 90% of this cost are caused by overland transport. For this reason and for the always increasing demand of private transport, there are professionals who thinks that the solution have to be restrictive measures added to alternatives to the car. road pricing is a restrictive measures that for the economic theory is the most efficient way to solve congestion cost but for politicians and user of transport is not always accepted. In this study we are going to simulate road pricing for commuters in the Bah�a of C�diz and then it will be estimated welfare effects.