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Emission projections 2008-2012 versus national allocation plans II

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  • Karsten Neuhoff
  • Federico Ferrario
  • Michael Grubb
  • Etienne Gabel
  • Kim Keats

Abstract

We compare the national allocation plans (NAPs), proposed and submitted by EU Member States as of October 2006, with our estimations for CO 2 emissions by the installations covered by these NAPs. The collective allocations proposed under phase II NAPs exceed the historic trend of emissions extrapolated forward. Using our projections we find, depending on uncertainty in fuel prices, economic growth rates, performance of the non-power sector and CDM/JI availability, a 15% chance of a 'dead market' with emissions below cap even at zero prices. With an expected inflow of committed CDM/JI credits of 100 MtCO 2 /year, allowance supply will exceed demand in 50% of cases without any carbon price, and in 80% of our €20/tCO 2 scenarios. Banking of allowances towards post-2012 conditions could create additional demand, but this is difficult to anticipate and conditional on policy evolution. The proposed phase II NAPs would result in low prices and only small volumes of CDM/JI would enter the EU ETS. CDM/JI would almost exclusively be public-sector funded, placing the cost of Kyoto compliance entirely upon governments.

Suggested Citation

  • Karsten Neuhoff & Federico Ferrario & Michael Grubb & Etienne Gabel & Kim Keats, 2006. "Emission projections 2008-2012 versus national allocation plans II," Climate Policy, Taylor & Francis Journals, vol. 6(4), pages 395-410, July.
    • Handle: RePEc:taf:tcpoxx:v:6:y:2006:i:4:p:395-410
    DOI: 10.1080/14693062.2006.9685609
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    References listed on IDEAS

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    1. Roland Ismer & Karsten Neuhoff, 2006. "Commitments through Financial Options: A Way to Facilitate Compliance with Climate Change Obligations," Working Papers EPRG 0625, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
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    Cited by:

    1. Trotter, Ian Michael & da Cunha, Dênis Antônio & Féres, José Gustavo, 2015. "The relationships between CDM project characteristics and CER market prices," Ecological Economics, Elsevier, vol. 119(C), pages 158-167.
    2. Böhringer, Christoph & Rosendahl, Knut Einar, 2009. "Strategic partitioning of emission allowances under the EU Emission Trading Scheme," Resource and Energy Economics, Elsevier, vol. 31(3), pages 182-197, August.
    3. Thomas Spencer & Dora Fazekas & Simone Cooper & Tim Laing, 2012. "East-West Regional Dimensions in European Climate Policy," WIFO Studies, WIFO, number 44535, February.

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