One problem in international climate policy is the refusal of large developing countries to accept emission reduction targets. Brazil, China and India together account for about 20% of today’s CO2 emissions. We analyse the case in which there is no international agreement on emission reduction targets, but countries do have domestic targets, and trade permits across borders. We contrast two scenarios. In one scenario, Brazil, China and India adopt their business as usual emissions as their target. In this scenario, there are substantial exports of emission permits from developing to developed countries, and substantial economic gains for all. In the second scenario, Brazil, China and India reduce their emissions target so that they have no net economic gain from permit trade. Here, developing countries do not accept responsibility for climate change (as they bear no net costs), but they do contribute to emission reduction policy by refusing to make money out of it. Adopting such break-even targets can be done at minor cost to developed and developing countries (roughly $2 bln/year each in extra costs and foregone benefits), while developing countries are still slightly better off than in the case without international emissions trade. This result is robust to variations in scenarios and parameters. It contrasts with Stewart and Wiener (2003) who propose granting “hot air” to developing countries to seduce them to accept targets. In 2020, China and India could reduce their emissions by some 10% from the baseline without net economic costs.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
file. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by Research unit Sustainability and Global Change, Hamburg University in its series Working Papers with number
FNU-68.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.: