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Intertemporal flexibility in a tradeable CO2 quota system

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  • WESTSKOG, HEGE

Abstract

The paper compares the total costs of abating CO2 emissions in two different intertemporal trading systems. In addition, the paper gives an analysis of how abatement costs are distributed among different countries/regions. It is shown that the total cost of implementing a climate treaty is considerably reduced in a system where both banking and borrowing of quotas are allowed compared to a system where quotas only can be banked. The analysis also shows that the total cost of implementing a climate treaty can be reduced in a banking system by compensating the developing country parties for participating in the CO2 emission reductions such that their net costs of making emissions reductions after sale/purchase of quotas equal zero.

Suggested Citation

  • Westskog, Hege, 2000. "Intertemporal flexibility in a tradeable CO2 quota system," Environment and Development Economics, Cambridge University Press, vol. 5(3), pages 203-220, July.
    • Handle: RePEc:cup:endeec:v:5:y:2000:i:03:p:203-220_00
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