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Quotas allocation rules in Romania assessed by a dynamic CGE model

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  • Rodica Loisel

    (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - AgroParisTech)

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    Abstract

    Alternative mechanisms for EU ETS (European Union Emissions Trading Scheme) quotas allocations within the Romanian economy are evaluated using a general equilibrium model within a dynamic intertemporal framework. Several distribution rules are simulated based on: the historical emissions, the least-cost approach and the auctioning scheme with and without a preliminary selection of eligible sectors. (1) The resulting marginal abatement cost in ETS eligible sectors is only 5.75 EUR/t CO2 for reducing pollution by 20.7%. Such a low level is explained by low energy prices and by substitution possibilities with low carbon content resources (nuclear and hydroelectricity). (2) Including all sectors in the trade creates a more flexible market than in the ETS, since more reduction options are available. (3) The ETS has high feasibility for monitoring. All eligible sectors (except refineries and metallurgy) present the lowest abatement cost in the economy. (4) Auctioning introduces a strong carbon price-signal, which reduces emission intensity but creates distortions in terms of trade and worsens the country's energy dependency. (5) Environmental policy has modest macroeconomic results and tends to correct the resources allocation. (6) The strong double dividend obtained under certain circumstances indicates Romania's potential for improving its energy efficiency and carbon intensity.

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    Bibliographic Info

    Paper provided by HAL in its series Working Papers with number halshs-00441487.

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    Date of creation: 2008
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    Handle: RePEc:hal:wpaper:halshs-00441487

    Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00441487
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    Related research

    Keywords: climate policies; EU ETS; National Allocation Plan; quotas allocation; Romania; dynamic GCE modeling.;

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    1. Klepper, Gernot & Peterson, Sonja, 2004. "The EU emissions trading scheme allowance prices, trade flows and competitiveness effects," Open Access Publications from Kiel Institute for the World Economy 3270, Kiel Institute for the World Economy (IfW).
    2. Tjalling C. Koopmans, 1963. "On the Concept of Optimal Economic Growth," Cowles Foundation Discussion Papers 163, Cowles Foundation for Research in Economics, Yale University.
    3. Böhringer, Christoph & Rutherford, Thomas F., 2000. "Decomposing the cost of Kyoto: a global CGE analysis of multilateral policy impacts," ZEW Discussion Papers 00-11, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    4. Burniaux, Jean-Marc & Truong Truong, 2002. "GTAP-E: An Energy-Environmental Version of the GTAP Model," GTAP Technical Papers 923, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    5. Gernot Klepper & Sonja Peterson, 2004. "The EU Emissions Trading Scheme: Allowance Prices, Trade Flows, Competitiveness Effects," Kiel Working Papers 1195, Kiel Institute for the World Economy.
    6. W. J. McKibbin & P. J. Wilcoxen, . "The Theoretical and Empirical Structure of the G-Cubed Model," Discussion Papers 118, Brookings Institution International Economics.
    7. Hiro Lee & Joaquim Oliveira Martins & Dominique van der Mensbrugghe, 1994. "The OECD Green Model: An Updated Overview," OECD Development Centre Working Papers 97, OECD Publishing.
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