Designing A Carbon Tax to Reduce U.S. Greenhouse Gas Emissions.

by Gilbert E. Metcalf

- This article describes a revenue and distributionally neutral approach to reducing U.S. greenhouse gas emissions that uses a carbon tax. The revenue from the carbon tax is used to finance an environmental earned income tax credit designed to be distributionally neutral. The credit is linked to earned income and helps offset the regressivity of the carbon tax. The carbon tax reform proposal is also revenue neutral and avoids conflating carbon policy with debates over the appropriate size of the federal budget.

Metcalf, G.E. (2008). "Designing A Carbon Tax to Reduce U.S. Greenhouse Gas Emissions." NBER Working Paper No. 14375, Oct 2008.

International Emission Permit Markets with Refunding.

by Hans Gersbach and Ralph Winkler

- This paper proposes a blueprint for an international emission permit market such as the EU trading scheme. Each country decides on the amount of permits it wants to offer. A fraction of these permits is grandfathered, the remainder is auctioned. Revenues from the auction are collected in a global fund and reimbursed to member countries in fixed proportions. If the share of grandfathered permits is sufficiently small, this mechanism induces approximately socially optimal emission reductions.

Gersbach, H. and R. Winkler (2008). "International Emission Permit Markets with Refunding." Center of Economic Research at ETH Zurich Working Paper 08/97, Oct 2008.

Garnaut Climate Change Review - Final Report.

by Ross Garnaut

The Garnaut Climate Change Review released its Final Report on 30 September 2008. It follows the release of the Draft and Supplementary Draft Reports in June and September 2008, and provides recommendations on the policy options for Australia to most effectively respond to climate change.

To download the full Draft Report [15.5MB] or to download single chapters follow the link to the Garnaut Climate Change Review Web Site.

Towards an Understanding of Tradeoffs between Regional Wealth, Tightness of a Common Environmental Constraint and the Sharing Rules.

by Raouf Boucekkine, Jacek B. Krawczyk and Thomas Vallee

- Consider a country with two regions that have developed differently so that their current levels of energy efficiency differ. Each region's production involves the emission of pollutants, on which a regulator might impose restrictions. This paper proposes a game theoretic model with a coupled constraints equilibrium as a solution to the regulator's problem of avoiding excessive pollution. The regulator can direct the regions to implement the solution by using a political pressure, or compel them to employ it by using the coupled constraints' Lagrange multipliers as taxation coefficients.

Boucekkine, R., J.B. Krawczyk and T. Vallee (2008). "Towards an Understanding of Tradeoffs between Regional Wealth, Tightness of a Common Environmental Constraint and the Sharing Rules." Core Discussion Paper 2008/55, Oct 2008.

Development of a Policy Framework for CO2 Carbon Capture and Storage in the States.

by L. Stephen Melzer

- This paper presents the background and policy issues surrounding development of a commercial market for captured carbon dioxide (CO2), and seeks to foster among policymakers a deeper understanding of 1) both the generation and carbon capture and storage (CCS) technologies involved, as well as their costs; 2) the technical and regulatory barriers to deployment of those technologies, and 3) the opportunities CCS may offer for increased employment and income.

Melzer, L.S. (2008). "Development of a Policy Framework for CO2 Carbon Capture and Storage in the States." The Pew Center on Global Climate Change, Sept 2008.

The Role of CO2 Enhanced Oil Recovery in Ohio's Economy and Energy Future.

by Jack Kleinhenz

- This report analyzes the Ohio-based industries and employment that might play a role in an Ohio market for exhaust-stream CO2 due to their participation in the development and construction of CO2 pipelines and/or in injection of CO2 into producing oil wells or into underground geologic formations.

Kleinhenz, J. (2008). "The Role of CO2 Enhanced Oil Recovery in Ohio's Economy and Energy Future." The Pew Center on Global Climate Change, Sept 2008.

Technologies as Agents of Change: A Simulation Model of the Evolving Complexity of the Global Energy System.

by Tieju Ma, Arnulf Grubler, Nebojsa Nakicenovic and W. Brian Arthur

- By technological complexity the authors understand a system that is characterized by a large number of constituent components that portray a high degree of interdependence. This paper presents an agent-based simulation model that emulates the evolution of technological complexification in a stylized model of the global energy system.

Tieju Ma, Arnulf Grubler, Nebojsa Nakicenovic and W. Brian Arthur (2008). "Technologies as Agents of Change: A Simulation Model of the Evolving Complexity of the Global Energy System." IIASA Interim Report IR-08-021, Sept 2008.

Adaptation to Climate Change in the European Union: Efficiency vs. Equity Considerations.

by Stine Aakre and Dirk T.G. Rübbelke

- The European Commission recently stated in its Green Paper on adaptation in Europe that there is still a need to develop an overall EU adaptation strategy. Such a strategy should take into consideration both efficiency and equity concerns. In this article the authors propose a framework for EU adaptation policy that addresses both concerns and which enables a transparent decision-making process.

Aakre, S. and D.T.G. Rübbelke (2008). "Adaptation to Climate Change in the European Union: Efficiency vs. Equity Considerations." CEPS Working Documents no 301, Sept 2008.

Industrialized-Country Mitigation Policy and Resource Transfers to Developing Countries: Improving and Expanding Greenhouse Gas Offsets.

by Andrew G. Keeler and Alexander Thompson

- The role of developing country commitments and actions to mitigate greenhouse gas emissions is central to worldwide progress in reducing the risks of anthropogenic climate change. Industrialized-country governments and publics are increasingly concerned that their emissions reduction commitments are unrequited by action in some of the world's largest emitters, especially India and China. Developing countries respond by pointing to the historical responsibility of the global North and stressing their desire to avoid measures that could undermine economic development. This paper offers a proposal for partially resolving this impasse by enhancing existing mechanisms for greenhouse gas offsets, which allow rich countries to finance developing country actions and thereby transfer resources to poorer ones.

Keeler, A.G. and A. Thompson (2008). "Industrialized-Country Mitigation Policy and Resource Transfers to Developing Countries: Improving and Expanding Greenhouse Gas Offsets." Discussion Paper 08-05, Harvard Project on International Climate Agreements, Sept 2008.

Financial Impacts of Climate Change: An Overview of Climate Change-related Actions in the European Commission’s Development Cooperation.

by Arno Behrens

- This paper analyses the variety of different external aid initiatives and financing mechanisms of the European Commission addressing climate change and development objectives, such as those stemming from the 2004 EU Action Plan on Climate Change and Development, from the Global Climate Change Alliance (GCCA) and those under the Thematic Programme for Environment and Sustainable Management of Natural Resources (ENRTP).

Behrens, A. (2008). "Financial Impacts of Climate Change: An Overview of Climate Change-related Actions in the European Commission’s Development Cooperation." CEPS Working Documents no 305, Sept 2008.

Governing Climate Change Post-2012: The Role of Global Cities Case-Study: Los Angeles.

by Heike Schroeder and Harriet Bulkeley

- In May 2007 Los Angeles adopted an Action Plan to Lead the Nation In Fighting Global Warming. The plan includes a CO2 emissions reduction target of 35 percent by 2030 of 1990 levels. The approach Los Angeles is taking is one of simultaneously addressing future energy and water security by investing in decentralised renewable energy and decreasing per-capita water use. Additional areas include waste management, greening of buildings and open space and addressing emissions from the transport sector.

Schroeder, H. and H. Bulkeley (2008). "Governing Climate Change Post-2012: The Role of Global Cities Case-Study: Los Angeles." Tyndall Centre Working Paper 122, Sept 2008.

The Growth of Transport Sector CO2 Emissions and Underlying Factors in Latin America and the Caribbean.

by Govinda R. Timilsina and Ashish Shrestha

- This study examines the factors responsible for the growth of transport sector carbon dioxide emissions in 20 Latin American and Caribbean countries during 1980-2005 by decomposing the emissions growth into components associated with changes in fuel mix, modal shift, and economic growth, as well as changes in emission coefficients and transportation energy intensity.

Timilsina, G.R. and A. Shrestha (2008). The Growth of Transport Sector CO2 Emissions and Underlying Factors in Latin America and the Caribbean World Bank Policy Research Working Paper no. WPS 4734, Sept 2008.

Preventing Climate Change: Second in a Series of Hearings.

by Dallas Burtraw

- These comments highlight three important features in the design of a cap-and-trade policy to regulate greenhouse gas emissions in the United States including the initial distribution of allowance value created under the program, management of costs and the protection of domestic industry from unfair international competition.

Burtraw, D. (2008). "Preventing Climate Change: Second in a Series of Hearings." Resources for the Future, Sept 2008.

Global Trading versus Linking: Architectures for International Emissions Trading.

by Christian Flachsland, Robert Marschinski and Ottmar Edenhofer

- International emissions trading is widely seen as an indispensable policy pillar of climate change mitigation. This article analyzes five different types of trading architectures, classified into two top-down (UNFCCC driven) and three bottom-up (driven by individual countries or regions) approaches. The two types of approaches are characterized by a trade-off between environmental effectiveness and political feasibility, respectively, whereas their relative cost-effectiveness depends on implementation details.

Flachsland, C., R. Marschinski and O. Edenhofer (2008). "Global Trading versus Linking: Architectures for International Emissions Trading." Potsdam Institute for Climate Impact Research, Working Paper, Sept 2008.

Equity and Justice in Global Warming Policy.

by Snorre Kverndokk and Adam Rose

- Climate change policy has important dimensions of distributive justice, both within and across generations. In this paper the authors survey only studies on the intragenerational aspect, i.e., within a generation. They cover several domains including the international, regional, national, sectoral and inter-personal, and examine aspects such as the distribution of burdens from climate change, climate change policy negotiations in general, implementation of climate agreements using tradable emission permits, and the uncertainty of alternatives to emission reductions.

Kverndokk, S. and A. Rose (2008). "Equity and Justice in Global Warming Policy." FEEM Working Papers 80.08, Sept 2008.

Technology Transfer in the Non-traded Sector as a Means to Combat Global Warming.

by Dirk T.G. Rübbelke, Vivekananda Mukherjee and Tilak Sanyal

- The paper considers a situation where two countries -the North and the South- use a non-traded polluting input to produce the goods for final consumption. The North is more efficient in both, production and abatement processes. The study compares the effects of the transfer of abatement technology by the North to the South under autarky with the free trade situation, assuming that the North pre-commits to an international protocol to keep the global pollution under a fixed level. The conditions under which either full or partial technology is transferred in autarky are determined.

Rübbelke, D.T.G., V. Mukherjee and T. Sanyal (2008). "Technology Transfer in the Non-traded Sector as a Means to Combat Global Warming." FEEM Working Papers 78.08, Sept 2008.

Impure Public Technologies and Environmental Policy.

by Dirk T.G. Rübbelke and Anil Markandya

- Analyses of public goods regularly address the case of pure public goods. However, a large number of (international) public goods exhibit characteristics of different degrees of publicness, i.e. they are impure public goods. In this study of transfers helping to overcome the inefficient provision of such goods, the authors therefore apply the Lancastrian characteristics approach. In contrast to the existing literature, they consider the case of a continuum of impure public goods. They employ the example of international conditional transfers targeting to overcome suboptimal low climate protection efforts by influencing the abatement technology choice of countries.

Rübbelke, D.T.G. and A. Markandya (2008). "Impure Public Technologies and Environmental Policy." FEEM Working Papers 76.08, Sept 2008.

International Energy Technology Transfers for Climate Change Mitigation.

by Thomas Brewer

- The goal of the paper is to expand and refine the international technology transfer negotiating and analytic agendas and to reframe the issues. The paper presents concepts, indicators, illustrations and data that identify and measure international transfers of energy technologies that can be used to mitigate climate change. Among the questions on that agenda are how much technology transfer there has been to date, and how much will be needed in the future, especially to assist non-Annex I developing countries in their efforts to mitigate climate change.

Brewer, T. (2008). "International Energy Technology Transfers for Climate Change Mitigation - What, who, how, why, when, where, how much and the Implications for International Institutional Architecture." CESifo Working Paper No. 2408, Sept 2008.

Justice and Climate Change.

by Eric A. Posner and Cass R. Sunstein

- Climate change raises complex issues of science, economics, and politics; it also raises difficult issues of justice. Poor nations are especially vulnerable to rising temperatures, in part because they are poor. Wealthy nations have less at risk, in part because they are wealthy. It is both tempting and plausible to suggest that for either emissions reductions or adaptation, wealthy nations owe special obligations to poor ones. In this paper, the authors address this general question by focusing on a much narrower one: how should permits be allocated in a global cap-and-trade system?

Posner, E.A. and C.R. Sunstein (2008). "Justice and Climate Change." Harvard Project on International Climate Agreements Discussion Paper 08-04, Sept 2008.

Long-Term Risks and Short-Term Regulations: Modeling the Transition from Enhanced Oil Recovery to Geologic Carbon Sequestration.

by Alexander Bandza, Shalini Vajjhala

- In this paper, the authors develop a basic engineering-economic model of four strategies associated with key deployment pathways in the portfolio of enhanced oil recovery (EOR) and geologic carbon sequestration (GS) projects: (a) an indifferent strategy, where EOR is the priority without any consideration for long-term sequestration, (b) an afterthought strategy, where EOR is the primary goal, and a site is later secured for sequestration, (c) a planned strategy, where oil extraction and CO2 injection are co-optimized from the start, and (d) a dedicated strategy, where GS is the sole priority. These strategies are evaluated based on scenarios of oil and CO2 prices; leakage estimates; and transportation, injection, and monitoring costs from the literature and practice.

Bandza, A. and S. Vajjhala (2008). "Long-Term Risks and Short-Term Regulations: Modeling the Transition from Enhanced Oil Recovery to Geologic Carbon Sequestration." RFF Discussion Paper DP 08-29, Sept 2008.

The Economic Impact of Climate Change.

by Richard S.J. Tol

- This paper reviews the literature on the economic impacts of climate change. Only 14 estimates of the total damage cost of climate change have been published. These estimates show that climate change initially improves economic welfare. However, these benefits are sunk. Impacts would be predominantly negative later in the century. Global average impacts would be comparable to the welfare loss of a few percent of income, but substantially higher in poor countries. Current estimates of the damage costs of climate change are incomplete, with positive and negative biases. Most important among the missing impacts are the indirect effects of climate change on economic development, large scale biodiversity loss, low probability-high impact scenarios, the impact of climate change on violent conflict, and the impacts of climate change beyond 2100.

Tol, R.S.J. (2008). "The Economic Impact of Climate Change." ESRI Working Paper 255, Sept 2008.

Intra-Union Flexibility of Non-ETS Emission Reduction Obligations in the European Union.

by Richard S.J. Tol

- The current EU proposal on greenhouse gas emission reduction has 28 targets for 2020: an EU-wide one for carbon dioxide emissions covered by the European Trading System, and one target for non-ETS emission per Member State. Implementation is necessarily more expensive than needed. This paper considers three alternative proposals to reduce costs. In the Irish proposal, Member States can purchase ETS permits to offset excess non-ETS emissions. In the Polish proposal, Member States can sell excess non-ETS emissions in the ETS. In the Swedish proposal, Member States can trade their non-ETS allocations.

Tol, R.S.J. (2008). "Intra-Union Flexibility of Non-ETS Emission Reduction Obligations in the European Union." ESRI Working Paper 256, Sept 2008.

Metrics for Aggregating the Climate Effect of Different Emissions: A Unifying Framework.

Richard S.J. Tol, Terje K. Berntsen, Brian C. O'Neill, Jan S. Fuglestvedt, Keith P. Shine, Yves Balkanski and Laszlo Makra

- Multi-gas approaches to climate change policies require a metric establishing "equivalences" among emissions of various species. Climate scientists and economists have proposed four classes of such metrics and debated their relative merits. This paper presents a unifying framework that clarifies the relationships among them.

Tol, R.S.J., K.T. Berntsen, B.C. O'Neill, J.S. Fuglestvedt, K.P. Shine, Y. Balkanski and L. Makra (2008). "Metrics for Aggregating the Climate Effect of Different Emissions: A Unifying Framework." ESRI Working Paper 257, Sept 2008.

Lessons from Conditionality Provisions for Southnorth Cooperation on Climate Change.

by Maike Sippel and Karsten Neuhoff

- This article examines what may be taken into account, when designing a mechanism of international public finance to support south-north cooperation on domestic climate policies in developing countries. Lessons are derived from existing mechanisms of conditional transfers. Experience with conditionality provisions that the World Bank, the IMF, and bilateral donors apply to development assistance is varied. Conditionality provisions applied during the EU enlargement process are generally evaluated more positively, as the shared objective is increased credibility and participation. Clearly defining global emissions reductions as a shared objective could offer similar opportunities for cooperation.

Sippel, M. and K. Neuhoff (2008). "Lessons from Conditionality Provisions for Southnorth Cooperation on Climate Change." Electricity Policy Research Group, Cambridge University, Working Paper EPRG0825, Sept 2008.

Urban Water Management: Optimal Price and Investment Policy under Climate Variability.

by Neal Hughes, Ahmed Hafi, Tim Goesch and Nathan Brownlowe

- Continual demand growth, increasing supply augmentation costs and potential climate change impacts are driving a long-term trend toward increased urban water scarcity in Australia. Scarcity pricing is an alternative to water restrictions which could potentially avoid many of the costs of water restrictions. This report provides a detailed qualitative discussion of the various benefits and costs of adopting scarcity pricing.

Neal Hughes, Ahmed Hafi, Tim Goesch and Nathan Brownlowe (2008). "Urban Water Management: Optimal Price and Investment Policy under Climate Variability." ABARE Research Report 08.7, Aug 2008.

Climate Change: Opportunities and Challenges in Australian Agriculture.

by Don Gunasekera, Catherine Tulloh, Melanie Ford and Edwina Heyhoe

- In the past the Australian agriculture sector has been able to adjust and adapt successfully to external drivers, such as changes in the natural resource base and climate variability. Continuing improvement in agricultural productivity and international competitiveness in Australian agriculture will be integral as Australia potentially faces more extreme impacts of climate change than its competitors.

Gunasekera, D., C. Tulloh, M. Fors and E. Heyhoe (2008). "Climate Change: Opportunities and Challenges in Australian Agriculture."
ABARE, Jul 2008.

Delayed Participation of Developing Countries to Climate Agreements: Should Action in the EU and US be Postponed?

by Valentina Bosetti, Carlo Carraro and Massimo Tavoni

- This paper analyses the cost implications for climate policy in developed countries if developing countries are unwilling to adopt measures to reduce their own GHG emissions. Delayed participation of NA1 countries has a negative impact on climate policy costs. Economic inefficiencies can be as large as 10-25 TlnUSD. However, this additional cost wanes when developing countries are allowed to trade emission reductions from their baseline emission paths during the 30-year delay period.

Bosetti, V., C. Carraro and M. Tavoni (2008). "Delayed Participation of Developing Countries to Climate Agreements: Should Action in the EU and US be Postponed?" Feem Working Paper 70.08, Sept 2008.

How will Climate Change Shift Agro-ecological Zones and Impact African Agriculture?

by Pradeep Kurukulasuriya and Robert Mendelsohn

- The study develops a new method to measure the impacts of climate change on agriculture called the Agro-Ecological Zone (AEZ) Model. A multinomial logit is estimated to predict the probability of each AEZ in each district. The average percentage of cropland and average crop net revenue are calculated for each AEZ. Then an estimate of the amount of cropland in Africa and where it is located is provided. Using current conditions, the model calculates baseline values of cropland and crop net revenue, and estimates the future impact of climate change using two scenarios.

Kurukulasuriya, P., R. Mendelsohn (2008). "How will Climate Change Shift Agro-ecological Zones and Impact African Agriculture?" World Bank Policy Research Working Paper WPS 4717, Sept 2008.

Sensitivity Analysis in Economic Simulations - A Systematic Approach.

by Claudia Hermeling and Tim Mennel

- This paper formalizes deterministic and stochastic methods used for sensitivity analysis. Moreover, it presents the numerical algorithms to apply the methods, in particular, an improved version of a Gauss-Quadrature algorithm, applicable to one as well as multidimensional sensitivity analysis. The advantages and disadvantages of different methods and algorithms are discussed as well as their applicability.

Hermeling, C. and T. Mennel (2008). "Sensitivity Analysis in Economic Simulations - A Systematic Approach." ZEW Discussion Paper No. 08-068, Sept 2008.

Lessons from Global Environmental Assessments.

by the Netherlands Environmental Assessment Agency

- Analyses in IPCC Climate Change 2007, UNEP Global Environment Outlook 4, OECD Environmental Outlook to 2030 and the IAASTD Agriculture Assessment all show that swift action is needed, worldwide, to achieve the internationally set targets. Land use emerges as a new theme for international policy, as the competition over land is growing. The assessments infer that many of the solutions are already known and that possible measures are theoretically affordable. This report focuses on two areas that warrant global attention: ‘agriculture, food and biodiversity’ and ‘energy, climate and air pollution’.

Kok, M.T.J., J.A., Bakkes, B. Eickhout, A.J.G. Manders, M.M.P. van Oorschot, D.P. van Vuuren, M. van Wees, H.J. Westhoek (2008). "Lessons from Global Environmental Assessments." Netherlands Environmental Assessment Agency, Report no. 500135002, Sept 2008.

A Lindahl Solution to International Emissions Trading.

by Yukihiro Nishimura

- This paper considers international negotiations on the level of global pollution, and examines the Lindahl solution which determines the distribution of the pollution permits with unanimous agreement. The Lindahl solution may result in an unfair allocation, and it does not belong to the core as in other solutions based on emissions trading. The paper provides mechanisms that implement the Lindahl solution as the subgame-perfect equilibrium. It also considers the market with region-specific prices as a device to induce second-best Pareto efficient allocations.

Nishimura, Y. (2008). "A Lindahl Solution to International Emissions Trading." Queen’s Economics Department Working Paper No. 1177, Aug 2008.

Liquidity and Price Discovery in the European CO2 Futures Market: An Intraday Analysis.

by Eva A. Benz and Jördis Klar

- European Union CO2 allowances (EUAs) are traded on several markets with increasing intensity. This paper provides an intraday data analysis of the EUA futures market for the complete first trading period 2005-2007. The ECX and Nord Pool trade platforms are compared with respect to price discovery and liquidity. Overall, results indicate that from 2005 to 2007 liquidity in the European CO2 futures market has markedly increased and according to microstructural criteria the trading process has flowed smoothly.

Benz, E.A., K., Jördis (2008). "Liquidity and Price Discovery in the European CO2 Futures Market: An Intraday Analysis." Available at SSRN, Jul 2008.

Ecological Macroeconomics: Consumption, Investment, and Climate Change.

by Jonathan M. Harris

- A reclassification of macroeconomic aggregates is proposed to distinguish between those categories of goods and services that can expand over time, and those that must be limited to reduce carbon emissions. This reformulation makes it clear that there are many possibilities for environmentally beneficial economic expansion. New forms of Keynesian policy oriented towards ecological sustainability, provision of basic social needs such as education and health care, and distributional equity can provide a basis for a rapid reduction in carbon emissions while promoting investment in human and natural capital.

Harris, J.M. (2008). "Ecological Macroeconomics: Consumption, Investment, and Climate Change." Global Development and Environment Institute, Working Paper No 08-02, Jul 2008.

Policies for Funding a Response to Climate Change.

by Brian Roach

- This paper asserts that a significant increase in public funding for climate change research and development (R&D) is needed in the United States. Different possibilities for generating additional public revenues for R&D funding are considered. The analysis demonstrates that quite modest taxes on carbon emissions or gasoline could fund a significant increase in public R&D funding for clean energy. As an alternative to tax instruments, the paper also considers a program of voluntary retirement contributions to a clean energy fund.

Roach, B. (2008). "Policies for Funding a Response to Climate Change." Global Development and Environment Institute, Working Paper No 08-03, Jul 2008.