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The fundamentals of the future international emissions trading system

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  • Stankeviciute, Loreta
  • Kitous, Alban
  • Criqui, Patrick
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    Abstract

    The study aims to analyze the sectoral marginal abatements cost curves for a number of EU countries as well as to examine the efficiency aspects and the economic impacts for the major sectors of the ETS under different carbon market configurations in 2010 and 2020. To produce a consistent and realistic assessment, we employ sources such as GHG National Inventories, NAPs and POLES world energy model to constitute the sectoral base year and 2010, 2020 emission levels in different countries and regions. We then use the market analysis tool ASPEN, which enables to derive supply and demand from sectoral MACCs produced with the POLES model, and to evaluate the economic impacts on the carbon market participants. The paper shows that, in compliance with the Kyoto targets, the benefits of an enlarged carbon market are significant, since more than 50% of the abatement in the short term have to be achieved in ETS sectors, which may indeed use CDM or JI credits. A second major conclusion is that in 2020 the new flexibility margins provided by the adjustment of investments in new capacities compensate for the increase in pressure towards stronger emission reductions. This reduces the relative importance of the enlarged carbon market.

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    Bibliographic Info

    Article provided by Elsevier in its journal Energy Policy.

    Volume (Year): 36 (2008)
    Issue (Month): 11 (November)
    Pages: 4272-4286

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    Handle: RePEc:eee:enepol:v:36:y:2008:i:11:p:4272-4286

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    Web page: http://www.elsevier.com/locate/enpol

    Related research

    Keywords: Emission trading International carbon market CO2 price;

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    References

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    1. Springer, Urs & Varilek, Matthew, 2004. "Estimating the price of tradable permits for greenhouse gas emissions in 2008-12," Energy Policy, Elsevier, vol. 32(5), pages 611-621, March.
    2. Criqui, Patrick & Mima, Silvana & Viguier, Laurent, 1999. "Marginal abatement costs of CO2 emission reductions, geographical flexibility and concrete ceilings: an assessment using the POLES model," Energy Policy, Elsevier, vol. 27(10), pages 585-601, October.
    3. Patrick Criqui & Nikolaos Kouvaritakis, 2000. "World energy projections to 2030," International Journal of Global Energy Issues, Inderscience Enterprises Ltd, vol. 14(1/2/3/4), pages 116-136.
    4. Patrick Criqui & Laurent Viguier, 2000. "Kyoto and technology at world level: costs of CO 2 reduction under flexibility mechanisms and technical progress," International Journal of Global Energy Issues, Inderscience Enterprises Ltd, vol. 14(1/2/3/4), pages 155-168.
    5. Michaelowa, Axel & Jotzo, Frank, 2005. "Transaction costs, institutional rigidities and the size of the clean development mechanism," Energy Policy, Elsevier, vol. 33(4), pages 511-523, March.
    6. Klepper, Gernot & Peterson, Sonja, 2006. "Emissions trading, CDM, JI, and more : the climate strategy of the EU," Open Access Publications from Kiel Institute for the World Economy 3814, Kiel Institute for the World Economy (IfW).
    7. Anger, Niels, 2006. "Emission trading beyond Europe: linking schemes in a post-Kyoto world," ZEW Discussion Papers 06-58, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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    Cited by:
    1. Christian Flachsland & Steffen Brunner & Ottmar Edenhofer & Felix Creutzig, 2010. "Climate policies for road transport revisited (II): Closing the policy gap with cap-and-trade," Working Papers 2, Department of Climate Change Economics, TU Berlin.
    2. Gren, Ing-Marie Gren & Elofsson, Katarina, 2013. "Value of land use for carbon sequestration: An application to the EU climate policy," Working Paper Series 2012:4, Department Economics, Swedish University of Agricultural Sciences.
    3. Gren, Ing-Marie & Carlsson, Mattias, 2013. "Economic value of carbon sequestration in forests under multiple sources of uncertainty," Journal of Forest Economics, Elsevier, vol. 19(2), pages 174-189.
    4. Brkic, Dejan, 2009. "Serbian gas sector in the spotlight of oil and gas agreement with Russia," Energy Policy, Elsevier, vol. 37(5), pages 1925-1938, May.
    5. Marschinski, Robert & Flachsland, Christian & Jakob, Michael, 2012. "Sectoral linking of carbon markets: A trade-theory analysis," Resource and Energy Economics, Elsevier, vol. 34(4), pages 585-606.
    6. Gren, Ing-Marie & Carlsson, Mattias & Elofsson, Katarina & Munnich, Miriam, 2012. "Stochastic carbon sinks for combating carbon dioxide emissions in the EU," Energy Economics, Elsevier, vol. 34(5), pages 1523-1531.

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