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A developing Asia emission trading scheme (Asia ETS)

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  • Massetti, Emanuele
  • Tavoni, Massimo

Abstract

This paper provides a model assessment of the role of developing Asia in the context of climate change policies. We diagnose the potential response of Asian economies to the imposition of various climate policies, showing that if we were to equally price carbon across the world roughly half of the abatement would occur in developing Asia. We show that such autarkic measures would be consistent with the policy targets put forward by the Major Economies Forum but would not necessarily be equitable. We thus propose a fragmented cap-and-trade scheme with a specific regional market for developing Asia, the Asian Emission Trading Scheme (Asia ETS). We assess the role of the Asia ETS on the macro-economy and international transfers vis-à- vis the standard case of global trading. Our results indicate that creating two large trading markets would result in small global efficiency losses, while at the same time generating more reasonable regional incentives and transfers.

Suggested Citation

  • Massetti, Emanuele & Tavoni, Massimo, 2012. "A developing Asia emission trading scheme (Asia ETS)," Energy Economics, Elsevier, vol. 34(S3), pages 436-443.
    • Handle: RePEc:eee:eneeco:v:34:y:2012:i:s3:p:s436-s443
    DOI: 10.1016/j.eneco.2012.02.005
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    References listed on IDEAS

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    Cited by:

    1. Cemal Atici, 2022. "Reconciling the flexibility mechanisms of climate policies towards the inclusiveness of developing countries: commitments and prospects," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(7), pages 9048-9067, July.
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    3. Jie Wu & Ying Fan & Yan Xia, 2017. "How Can China Achieve Its Nationally Determined Contribution Targets Combining Emissions Trading Scheme and Renewable Energy Policies?," Energies, MDPI, vol. 10(8), pages 1-20, August.
    4. Li, Mengyu & Weng, Yuyan & Duan, Maosheng, 2019. "Emissions, energy and economic impacts of linking China’s national ETS with the EU ETS," Applied Energy, Elsevier, vol. 235(C), pages 1235-1244.
    5. Calvin, Katherine & Clarke, Leon & Krey, Volker & Blanford, Geoffrey & Jiang, Kejun & Kainuma, Mikiko & Kriegler, Elmar & Luderer, Gunnar & Shukla, P.R., 2012. "The role of Asia in mitigating climate change: Results from the Asia modeling exercise," Energy Economics, Elsevier, vol. 34(S3), pages 251-260.
    6. Bosello, Francesco & Marangoni, Giacomo & Orecchia, Carlo & Raitzer, David A. & Tavoni, Massimo, 2016. "The Cost of Climate Stabilization in Southeast Asia, a Joint Assessment with Dynamic Optimization and CGE Models," MITP: Mitigation, Innovation and Transformation Pathways 251810, Fondazione Eni Enrico Mattei (FEEM).
    7. Melnikov, Nikolai B. & O’Neill, Brian C. & Dalton, Michael G. & van Ruijven, Bas J., 2017. "Downscaling heterogeneous household outcomes in dynamic CGE models for energy-economic analysis," Energy Economics, Elsevier, vol. 65(C), pages 87-97.
    8. Francesco Bosello & Carlo Orecchia & David A. Raitzer, 2016. "Decarbonization Pathways in Southeast Asia: New Results for Indonesia, Malaysia, Philippines, Thailand and Viet Nam," Working Papers 2016.75, Fondazione Eni Enrico Mattei.
    9. Jiang, Jingjing & Xie, Dejun & Ye, Bin & Shen, Bo & Chen, Zhanming, 2016. "Research on China’s cap-and-trade carbon emission trading scheme: Overview and outlook," Applied Energy, Elsevier, vol. 178(C), pages 902-917.
    10. Li, Mengyu & Duan, Maosheng, 2021. "Exploring linkage opportunities for China's emissions trading system under the Paris targets——EU-China and Japan-Korea-China cases," Energy Economics, Elsevier, vol. 102(C).
    11. Ruamsuke, Kawin & Dhakal, Shobhakar & Marpaung, Charles O.P., 2015. "Energy and economic impacts of the global climate change policy on Southeast Asian countries: A general equilibrium analysis," Energy, Elsevier, vol. 81(C), pages 446-461.
    12. Fan, Ying & Wu, Jie & Xia, Yan & Liu, Jing-Yu, 2016. "How will a nationwide carbon market affect regional economies and efficiency of CO2 emission reduction in China?," China Economic Review, Elsevier, vol. 38(C), pages 151-166.
    13. Li, Guangyao & Yang, Jin & Chen, Dingjiang & Hu, Shanying, 2017. "Impacts of the coming emission trading scheme on China’s coal-to-materials industry in 2020," Applied Energy, Elsevier, vol. 195(C), pages 837-849.
    14. Lau, K.Y. & Tan, C.W. & Yatim, A.H.M., 2015. "Photovoltaic systems for Malaysian islands: Effects of interest rates, diesel prices and load sizes," Energy, Elsevier, vol. 83(C), pages 204-216.
    15. Lau, K.Y. & Muhamad, N.A. & Arief, Y.Z. & Tan, C.W. & Yatim, A.H.M., 2016. "Grid-connected photovoltaic systems for Malaysian residential sector: Effects of component costs, feed-in tariffs, and carbon taxes," Energy, Elsevier, vol. 102(C), pages 65-82.
    16. Maria Christina Gudrun Hart & Michael Hans Breitner, 2022. "Fostering Energy Resilience in the Rural Thai Power System—A Case Study in Nakhon Phanom," Energies, MDPI, vol. 15(19), pages 1-20, October.
    17. Gavard, Claire & Winchester, Niven & Paltsev, Sergey, 2016. "Limited trading of emissions permits as a climate cooperation mechanism? US–China and EU–China examples," Energy Economics, Elsevier, vol. 58(C), pages 95-104.
    18. Wang, Yizhong & Hang, Ye & Wang, Qunwei, 2022. "Joint or separate? An economic-environmental comparison of energy-consuming and carbon emissions permits trading in China," Energy Economics, Elsevier, vol. 109(C).

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    More about this item

    Keywords

    Climate change; Developing Asia; Mitigation scenarios; Emission trading; EU-ETS; Equity;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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