July 26, 2009

Sharing Global CO2 Emission Reductions Among One Billion High Emitters

by Shoibal Chakravartya, Ananth Chikkaturb, Heleen de Coninckc, Stephen Pacalaa, Robert Socolowa and Massimo Tavoni

- We present a framework for allocating a global carbon reduction target among nations, in which the concept of "common but differentiated responsibilities" refers to the emissions of individuals instead of nations. We use the income distribution of a country to estimate how its fossil fuel CO2 emissions are distributed among its citizens, from which we build up a global CO2 distribution. We then propose a simple rule to derive a universal cap on global individual emissions and find corresponding limits on national aggregate emissions from this cap.

Chakravartya, S., A. Chikkaturb, H. de Coninckc, S. Pacalaa, R. Socolowa and M. Tavoni (2009). "Sharing Global CO2 Emission Reductions Among One Billion High Emitters." PNAS 2009 106:11884-11888, Jul 2009.

Progress with Implementing Energy Efficiency Policies in the G8

by the International Energy Agency

- This report evaluates the progress of the G8 countries in implementing energy efficiency policy, including the 25 G8/IEA recommendations. Information in this report is current up to 31 March 2009. Conclusions are based on country completion of a detailed questionnaire measuring energy efficiency policy implementation and subsequent IEA review and analysis. In November 2009, the Secretariat intends to conduct an evaluation of the progress reporting process.

IEA (2009). "Progress with Implementing Energy Efficiency Policies in the G8." International Energy Agency, Jul 2009.

Global Welfare Implications of Carbon Border Taxes

by Daniel Gros

- This paper presents a simple, basic model to compute the welfare consequences of the introduction of a tariff on the CO2 content of imported goods in a country that already imposes a domestic carbon tax. The main finding is that the introduction of a carbon import tariff increases global welfare (and not just the welfare of the importing country) if there is no (or insufficient) pricing of carbon abroad. A higher domestic price of carbon justifies a higher import tariff. Moreover, a higher relative intensity of carbon abroad increases the desirability of high import tariff imposed by the home country because a border tax shifts production to the importing country, which in this case leads to lower environmental costs.

Gros, D. (2009). "Global Welfare Implications of Carbon Border Taxes." CEPS Working Documents, July 2009.

Economywide Impacts of Climate Change on Agriculture in Sub-Saharan Africa

by Alvaro Calzadilla, Tingju Zhu, Katrin Rehdanz, Richard S.J. Tol, and Claudia Ringler

- Two possible adaptation options to climate change for Sub-Saharan Africa are analyzed under the SRES B2 scenario. The first scenario doubles the irrigated area in Sub-Saharan Africa by 2050, compared to the baseline, but keeps total crop area constant. The second scenario increases both rainfed and irrigated crop yields by 25 percent for all Sub-Saharan African countries. The two adaptation scenarios are analyzed with IMPACT, a partial equilibrium agricultural sector model combined with a water simulation module, and with GTAP-W, a general equilibrium model including water resources.

Calzadilla, A., T. Zhu, K. Rehdanz, R.S.J. Tol and C. Ringler (2009). "Economywide Impacts of Climate Change on Agriculture in Sub-Saharan Africa." Discussion Paper No. 873, July 2009.

Balancing the Carbon Market: Overview of Carbon Price Estimates

by T. Bole

- One of the main conclusions of this study is that little modeling work has been done on very ambitious greenhouse gas reduction targets, which is of most relevance for climate policy. The few studies that do address the implications of achieving low stabilization levels (around 450 Parts per million by volume, ppmv, CO2-equivalent) on average estimate a carbon price of 52 $/tCO2, while those analyzing the costs of stabilization around 550 ppmv CO2-equivalent come to an average figure of 48 $/tCO2. The high standard deviation around the average estimate testifies to the large model and parameter uncertainties inherent to the modelling process and calls for cautious interpretation of modelling results, both when comparing the outcomes of different models and in their individual use.

Bole, T. (2009). "Balancing the Carbon Market: Overview of Carbon Price Estimates." Netherlands Environmental Assessment Agency (PBL), Report no. 500102029, July 2009.

CO2 Emission Reduction in Transport - Confronting Medium-Term and Long-Term Options for Achieving Climate Targets in the Netherlands

by A. Hoen, K. Geurs, H. de Wilde, C. Hanschke and M. Uyterlinde

- To meet long-term climate targets, developed countries should reduce greenhouse gas emission with 65 to 95% compared to 2000 levels. If the transport sector should match these reductions three crucial conditions need to be fulfilled: (1) substantial changes in travel behaviour, travel demand and public acceptance, (2) availability of zero-carbon or low-carbon fuels, (3) availability of advanced vehicle technology. The measures that are currently available for the period until 2020 do not have sufficient potential to meet the long-term climate targets. To meet the goals, there is a need for parallel investments in 'new' technologies (electricity, hydrogen) which, in the future, could be decarbonised to a large extent.

Hoen, A., K. Geurs, H. de Wilde, C. Hanschke and M. Uyterlinde (2009). "CO2 Emission Reduction in Transport - Confronting Medium-Term and Long-Term Options for Achieving Climate Targets in the Netherlands" Netherlands Environmental Assessment Agency (PBL), PBL publication number 500076009, July 2009.

Can Biofuels be Sustainable by 2020?

by P. Bindraban, E. Bulte, S. Conijn, B. Eickhout, M. Hoogwijk and M. Londo

- This study looks into the expected near future developments in the production of biofuels to assess the availability of sustainable biofuels for the Netherlands in 2020 and the implications for sustainability components as outlined and accepted by society at large, including the Netherlands government, in the Cramer criteria.

Bindraban, P., E. Bulte, S. Conijn, B. Eickhout, M. Hoogwijk and M. Londo (2009). "Can Biofuels be Sustainable by 2020?" Report No 500102024, June 2009.

Differentation in the CDM: Options and Impacts

by SJA Bakker, HD van Asselt, J. Gupta, C. Haug and MAR Saidi

- Policymakers and scientists have raised concerns with respect to the functioning of the Clean Development Mechanism. This includes lack of sustainable development benefits, few projects in Least Developed Countries and the transport sector, a high administrative burden, high windfall profits for some project developers, and questions related to whether the projects actually reduce emissions. Several forms of differentiation between countries or project types have been proposed for the CDM, to address these concerns. This report first provides an overview of these differentiation options. We then analyse their implications for the governance and decision-making processes of the CDM, and provide a quantitative assessment of the impacts on the carbon market, using bottom-up marginal abatement cost curves.

by SJA Bakker, HD van Asselt, J. Gupta, C. Haug and MAR Saidi (2009). "Differentation in the CDM: Options and Impacts." Netherlands Environmental Assessment Agency PBL, 500102023 June 2009.

Dynamic Core-Theoretic Cooperation in a Two-Dimensional International Environmental Model

by Marc Germain, Henry Tulkens and Alphonse Magnus

- This article deals with cooperation issues in international pollution problems in a two dimensional dynamic framework implied by the accumulation of the pollutant and of the capital goods. Assuming that countries do reevaluate at each period the advantages to cooperate or not given the current stocks of pollutant and capital, and under the assumption that damage cost functions are linear, we de¯ne at each period of time a transfer scheme between countries, which makes cooperation better for each of them than non-cooperation. This transfer scheme is also strategically stable in the sense that it discourages partial coalitions.

Germain, M., H. Tulkens and A. Magnus (2009). "Dynamic Core-Theoretic Cooperation in a Two-Dimensional International Environmental Model." Université catolique de Louvain, ECON-IRES, WP 2009 015, Mar 2009.

July 5, 2009

The Incentives to Participate in and the Stability of International Climate Coalitions: A Game-Theoretic Approach Using the WITCH Model

by Valentina Bosetti, Carlo Carraro, Enrica De Cian, Romain Duval, Emanuele Massetti and Massimo Tavoni

- This paper uses WITCH, an integrated assessment model with a game-theoretic structure, to explore the prospects for, and the stability of broad coalitions to achieve ambitious climate change mitigation action. Only coalitions including all large emitting regions are found to be technically able to meet a concentration stabilisation target below 550 ppm CO2eq by 2100. Once the free-riding incentives of non-participants are taken into account, only a "grand coalition" including virtually all regions can be successful. This grand coalition is profitable as a whole. However, neither the grand coalition nor smaller but still environmentally significant coalitions appear to be stable.

Bosetti, V., C. Carraro, E. De Cian, R. Duval, E. Massetti and M. Tavoni (2009). "The Incentives to Participate in and the Stability of International Climate Coalitions: A Game-Theoretic Approach Using the WITCH Model." OECD Economics Department Working Papers No. 702, June 2009.

Climate Change Mitigation Strategies in Fast-Growing Countries: The Benefits of Early Action

by Valentina Bosetti, Carlo Carraro and Massimo Tavoni

- This paper builds on the assumption that OECD countries are (or will soon be) taking actions to reduce their greenhouse gas emissions. These actions, however, will not be sufficient to control global warming, unless developing countries also get involved in the cooperative effort to reduce GHG emissions. This paper investigates the best short-term strategies that emerging economies can adopt in reacting to OECD countries’ mitigation effort, given the common long-term goal to prevent excessive warming without hampering economic growth.

Bosetti, V., C. Carraro and M. Tavoni (2009). "Climate Change Mitigation Strategies in Fast-Growing Countries: The Benefits of Early Action." Fondazione Eni Enrico Matteri Working Paper 53.2009, June 2009.

The Logic of Collective Action and Australia’s Climate Policy

by John.C.V.Pezzey, Salim Mazouz and Frank Jotzo

- We analyse the efficiency of the target and of the provisions to prevent carbon leakage in the Australian Government's Carbon Pollution Reduction Scheme (CPRS), as proposed in March 2009, and the nature and likely cause of changes to these features during 2008. The target range of 5-15% national emission cuts during 2000-2020 is weak, and on balance likely to increase the cost of mitigation in Australia in the long run. The free allocation of output-linked, tradable permits to Emissions-Intensive, Trade-Exposed (EITE) sectors was much higher than proposed earlier, and than shown to be needed to prevent carbon leakage.

Pezzey, J.C.V, S. Mazouz and F. Jotzo (2009). "The logic of collective action and Australia’s Climate Policy." EERH Research Report No.24, May 2009.

An Experimental Analysis of Auctioning Emissions Allowances under a Loose Cap

by William Shobe, Karen L. Palmer, Erica Myers, Charles Holt, Jacob Goeree, Dallas Burtraw

- This study is motivated by the observation that all of the major implementations of cap-and-trade regulations for the control of air pollution have started with a generous allocation of allowances relative to recent emissions history, a situation we refer to as a "loose cap." Typically more stringent reductions are achieved in subsequent years of a program. We use an experimental setting to investigate the effects of a loose cap environment on a variety of auction types.

Shobe, W., K.L. Palmer, E. Myers, C. Holt, J. Goeree, D. Burtraw (2009). "An Experimental Analysis of Auctioning Emissions Allowances under a Loose Cap." RFF Discussion Paper 09-25, June 2009.

On a Boundedly Rational Pareto-Optimal Trade in Emission Reduction

by Kryazhimskiy A

- We consider the emission reduction process involving several countries, in which the countries negotiate, in steps, frequently enough, on small, local emission reductions and implement their decisions right away. In every step, the countries either find a mutually acceptable local emission reduction vector and use it as a local emission reduction plan, or terminate the emission reduction process. We prove that the process necessarily terminates in some step and the final total emission reduction vector lies in a small neighborhood of a certain Pareto maximum point in the underlying emission reduction game.

Kryazhimskiy, A. (2009). On a Boundedly Rational Pareto-Optimal Trade in Emission Reduction."" IASA Interim Report IR-09-017, June 2009.