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We use an econometrically estimated multi-region, multi-sector general equilibrium model of the world economy to examine the effects of the tradable emissions permit system proposed in the 1997 Kyoto protocol, under various assumptions about that extent of international permit trading. We focus, in particular, on the effects of the system on intern...
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... (McKibbin et al., 1998), the assessment of global energy or climate policies cannot neglect the impact of large shifts in commercial energy flows or of a global tradable permits system on current accounts, on investments and eventually on relative prices. In an attempt to capture these crucial interrelations, we adopted the following default specifications 9 : ...
To assess the sustainability of future development pathways requires models to compute long-run Economy?Energy?Environment scenarios. This paper presents the IMACLIM-R framework, aimed at investigating climate, energy and development inter-related issues. The model was built in an attempt to address three methodological challenges: to incoporate knowledge from economics and engineering sciences, to support the dialogue with and between stakeholders, to produce scenarios with a strong consistency, concerning especially the interplay between development patterns, technology and growth. These goals led to the development of a recursive structure articulating a static general equilibrium framework, including innovative features and sector-specific dynamic modules now concerning energy, transportation and industry. This paper provides the general rationale of the model and the description of all its components.
... Sources: The simulation results of other models are taken from Baron and Lanza (2000), which is based on Van den Mensbrugghe (1998a). The original sources for the simulation results are SGM: Sands et al. (1998), MERGE: Manne and Richels (1998), G-Cubed: McKibbin et al. (1998), POLES: Capros (1998), GTEM: Tulpule et al. (1998), WorldScan: Bollen et al. (1998), GREEN: Van den Mensbrugghe (1998b), AIM: Kainuma et al. (1998) Our results of the marginal abatement costs are somewhat below the average of the other models. This is mainly because the United States and Australia keep outside the Protocol in our simulation scenarios, which sharply decreases the demand for the AAUs and hence the equilibrium prices. ...
The Kyoto Protocol came into effect in early 2005, following the formal ratification of the Russian Federation. Starting from 2008, the Russian Federation can sell its reductions in emissions, normally referred to as hot air, in the international trading system. This paper aims to examine the quantitative effects of trading hot air among the Annex-I countries on global environment and economy. It is found that trading hot air leads to a fall in the price of the AAUs (Assigned Amount Units), consequently undermining the incentive to make the domestic abatement. However, trading hot air helps to lower the cost of meeting the Kyoto targets. For each of the Annex-I countries that has abatement obligation, the compliance cost in the scenario where the hot air is traded is around 85% of that in the scenario where the hot air is not traded. The sum of the compliance costs for the Annex-I countries in the scenario with hot air reduces to 80% of that in the scenario without hot air.
... With a potentially significant impact on the exchange rates of currencies(McKibbin et al., 1998). ...
This paper aims at clarifying some conceptual flaws blurring the equity-efficiency debates involved in the setting of objectives of GHGs emissions control beyond 2012. To this end, it carries out numerical experiments that test the viability of agreements grounded on two contrasting target allocation rules: a "Soft Landing" rule prolonging a Kyoto-type agreement; and a "Convergence" rule progressively re-directing Kyoto towards a per capita emissions endowment. The paper demonstrates the sensitivity of the impact to the metric used to assess it and to assumptions regarding the interaction between the cap and trade system and accompanying measures such as domestic policies (characterised as simple fiscal reforms) and international public funding. In a third step it derives some lessons about how to reconcile two political imperatives: (a) an ex-post or "consequentialist" approach to equity, which however cannot fully avoid relying on ex-ante rules, and (b) the necessity of an agreement on such stable ex-ante rules to set up emissions targets and efficient emissions trading. The latter step suggests a coming back to the environment/development "Gordian Knot", which underpins all global environmental affairs since the Stockholm Conference in 1972. We argue that the equity-efficiency dilemma has to be set in a broader sustainable development perspective whereby climate policies are integrated with development priorities of the poorest countries so as to create a leverage effect on development.
... With a potentially significant impact on the exchange rates of currencies(McKibbin et al., 1998). ...
This paper aims at clarifying some conceptual flaws blurring the equity-efficiency debates involved in the setting of objectives of GHGs emissions control beyond 2012. To this end, it carries out numerical experiments that test the viability of agreements grounded on two contrasting target allocation rules: a “Soft Landing” rule prolonging a Kyoto-type agreement; and a “Convergence” rule progressively re-directing Kyoto towards a per capita emissions endowment. The numerical results demonstrate the sensitivity of the impact to the metric used to assess it and to assumptions regarding the interaction between the cap and trade system and accompanying measures such as domestic policies (characterised as simple fiscal reforms) and international public funding. In a further step, the paper derives some lessons about how to reconcile two political imperatives: (a) an ex-post or “consequentialist” approach to equity, which however cannot fully avoid relying on ex-ante rules, and (b) the necessity of an agreement on such stable ex-ante rules to set up emissions targets and efficient emissions trading. Such reconciliation suggests a coming back to the environment/development “Gordian Knot”, which underpins all global environmental affairs since the Stockholm Conference in 1972: the equity-efficiency dilemma has to be set in a broader sustainable development perspective whereby climate policies are integrated with development priorities of the poorest countries so as to create a leverage effect on development.
... 12 8−22, 4−26, and 2−11 billions of 1990 U.S. dollars annually for the European Union, the United States, and Japan, respectively, under a full-trade, full-compliance hypothesis, including transaction costs. 13 Models representing trade and capital flows point out the impact of transfers on the exchange rates of currencies (McKibbin et al. 1998). that should " be increased by 0.25 after the subsequent commitment period [ But because a linkage between UNFCCC and WTO has not been considered so far, an option of Pronk's sort appears the only possible compliance provision. ...
This paper examines prospects for compromise between competing perspectives on four key climate change issues: costs, level of domestic action, nvironmental integrity, and developing world involvement. It focuses on the policy issues stemming from the uncertainty about abatement costs. Based on extensive simulations of a model integration tool, SAP12 (Stochastic Assessment of Climate Policies, 12 models), the analysis considers options for fine-tuning the Kyoto Protocol, such as concrete ceilings or levies on carbon imports; "environmental restoration payments" to be made on excess emissions; and credits for equestration activities in Annex B countries. It demonstrates that the restoration payment (implemented through a safety valve) emerges as a superior means of addressing the cost uncertainty issue. The paper concludes that had this approach been taken at the COP6 climate negotiations, there would have been substantial room for compromise on payments of $35 to $100 per ton of carbon. Examining the Marrakech climate accord, it derives some lessons for attempts at completing Kyoto's unfinished business or at moving on to a new framework.
... As usual, differences in marginal cost of reductions from one model to the others can be explained by: (a) variations in business-as-usual projections of CO 2 emissions (which determine the magnitude of the effort); (b) different assumptions on the availability and cost of carbon-saving technology; (c) more or less detailed treatment of end-use energy and corresponding prices and taxes. SGM 163 76 27 MERGE 274 114 80 G-Cubed 63 167 252 37 13 POLES 82 130-140 240 112 33 GTEM 375 773 751 123 WorldScan 38 78 87 20 GREEN 149 196 77 67 25 AIM 166 214 253 65 43 Average 164 260 277 82 28 a Sources: SGM: Sands et al. [15], MERGE: Manne and Richels [11], G-Cubed: McKibbin et al. [8], POLES: Capros [4], GTEM: Tulpulé et al. [17], WorldScan: Bollen et al. [2], GREEN: Van den Mensbrugghe [13], AIM: Kainuma et al. [7]. ...
... With that goal being 10 years away, one can question the realism of these financial transfers, which would take place only for the sake of climate change. 8 Even more striking may be the additional reductions that would be required in countries with economies in transition to provide the quantities to be traded on the market. Indeed, the 517 million tons traded by countries in transition imply that their emissions would be 34% below what they would be under the no-trading case. ...
... Argentina and Kazakhstan have announced that they would be taking national emission goals in the near future, but major emitters like China, India, Indonesia and Brazil have not yet made such commitments.7 Not all the models quoted in this paper give information on the total quantities traded in different scenarios, which is why we chose to use a single and well-documented reference scenario to estimate the quantities reported here.8 Victor et al.[18] note that Russian earnings from natural gas amounted to US$10 billions in 1997. ...
The purpose of this paper is twofold. First, we raise some issues related to the expected dimension of the carbon market.
This analysis is based on a survey of model results on the implementation of the Kyoto goal with and without reliance on emissions
trading. In particular, we consider both the emissions and the financial implications associated with different trading scenarios.
Transfers related to international GHG trading might be equivalent to a 400% increase in foreign direct investment to countries
with economies in transition. A closer look at the GHG reductions expected from the developing world also suggests that global
models may be overly optimistic in their assessment of the contribution of flexibility mechanisms in meeting the Kyoto emission
goals. OECD countries may need to rely more on domestic policies to reduce their emissions than what has so far been projected
by global models. Second, we use a simple microeconomic model to test the potential contribution of typical power generation
technologies in the context of the Clean Development Mechanism. Projects that are defined as additional in terms of the environment
but already profitable can bring about significant results at a relatively low price of certified emission reductions. To
assume that the contribution of the CDM will come close to what is projected by global models (both for prices and quantities)
is to assume that such projects could be credited under the CDM.
... Arviot kuvaavat tappiota Annex B:n ulkopuolisten maiden päästöjen kasvamisella. On arvioitu, että tämä hiilivuoto (carbon leakage) olisi yhdeksän prosenttia (Shackleton 1998) Annex B-maiden rajoitustavoitteesta. Holtsmark (1998) arvioi, että se olisi 14 prosenttia tästä tavoitteesta, ja korkein arvio lienee 18 prosenttia (Tulpule et al. 1998 ). Korkeammat arviot vastaavat kutakuinkin EU:n vähennystavoitetta, joten globaalista näkökulmasta hiilivuodon ongelma on suuri. ...
... With a potentially significant impact on the exchange rates of currencies(McKibbin et al., 1998). ...
Sommaire du numéro :
http://archive-edutice.ccsd.cnrs.fr/edutice-00000878
Since climate change has become an international concern, most of the developed countries have attempted to adopt energy policies to mitigate global warming and its side effects in the last years. The current energy model, based on fossil fuels and nuclear energy, has been the basis for the functioning and development of modern industrial society. Nevertheless, the threats of this model (environmental problems, exhaustion of fossil sources, possible inflation process and loss of competitiveness, dependency toward energy export countries, etc.) have forced a change in the EU’s traditional energy strategy (which was focused on the security of supply). The present energy model of the European Union, which supports its economic growth and prosperity, is 80% dependent on fossils fuels [1] and it is increasingly dependent on energy imported from Non-EU member countries, creating economic, social, political, and other risks for the Union. From the 1990s, the key objectives of the EU have been security of supply, competitiveness, and environmental protection, making renewable energy sources and energy efficiency the basis for its new energy strategy in the EU. However the lack of a common energy framework seems to have been an obstacle to reach those objectives. Therefore, the European Union has recently adopted new directives and instruments to create a unique energy framework in order to reach the mentioned targets but also to become the world leader in the impulse of renewable energy sources and in the employment of energy efficiency technologies.
In this work the main problems of the conventional energy model (CEM) are explained. The basis, obstacles, and challenges for implementing a more sustainable energy model are also analyzed. Likewise, due to the strategic importance of the European Union leadership in developing and implementing new instruments and policies to mitigate climate change, this work is focused in its energy strategy. Thus, the recent energy directives and other measures adopted by the EU are discussed.
Copyright 2005, Mansi Grover, All rights reserved. Readers may make verbatim copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies.
