Hot Air for Sale: A Quantitative Assessment of Russia's Near-Term Climate Policy Options
AbstractSince January 1st the European Union has launched an EU-internal emissions trading scheme (EU ETS) for emission-intensive installations as the central pillar to comply with the Kyoto Protocol. The EU ETS may be linked at some time to a Kyoto emissions market where greenhouse gas emission allowances of signatory Kyoto countries can be traded. In this paper we investigate the implications of Russian market power for environmental effectiveness and regional compliance costs to the Kyoto Protocol taking into account potential linkages between the Kyoto emissions market and the EU ETS. We find that Russia may have incentives to join the EU ETS as long as the latter remains separated from the Kyoto international emissions market. In this case, Russia can exert monopolistic price discrimination between two separated markets thereby maximizing revenues from hot air sales. The EU will be able to substantially reduce compliance costs when it does not restrain itself to EU-internal emission regulation schemes. However, part of the gains from extra-EU emissions trading will come at the expense of environmental effectiveness as (more) hot air will be drawn in. --
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 06-16.
Date of creation: 2006
Date of revision:
market power; hot air; climate policy;
Other versions of this item:
- Christoph Böhringer & Ulf Moslener & Bodo Sturm, 2007. "Hot air for sale: a quantitative assessment of Russia’s near-term climate policy options," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 38(4), pages 545-572, December.
- Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
- D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-02-17 (All new papers)
- NEP-CIS-2007-02-17 (Confederation of Independent States)
- NEP-ENE-2007-02-17 (Energy Economics)
- NEP-ENV-2007-02-17 (Environmental Economics)
- NEP-TRA-2007-02-17 (Transition Economics)
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.:
- Warwick J. McKibbin & Peter J. Wilcoxen, 2002. "The Role of Economics in Climate Change Policy," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 107-129, Spring.
- Christoph Bohringer & Tim Hoffmann & Andreas Lange & Andreas Loschel & Ulf Moslener, 2005. "Assessing Emission Regulation in Europe: An Interactive Simulation Approach," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 1-22.
- Gernot Klepper & Sonja Peterson, 2005.
"Trading Hot-Air. The Influence of Permit Allocation Rules, Market Power and the US Withdrawal from the Kyoto Protocol,"
Environmental & Resource Economics,
European Association of Environmental and Resource Economists, vol. 32(2), pages 205-228, October.
- Gernot Klepper & Sonja Peterson, 2002. "Trading Hot Air The Influence of Permit Allocation Rules, Market Power and the US Withdrawal from the Kyoto Protocol," Kiel Working Papers 1133, Kiel Institute for the World Economy.
- Klepper, Gernot & Peterson, Sonja, 2005. "Trading hot-air : the influence of permit allocation rules, market power and the US withdrawal from the Kyoto Protocol," Open Access Publications from Kiel Institute for the World Economy 3718, Kiel Institute for the World Economy (IfW).
- Löschel, Andreas & Lange, Andreas & Hoffmann, Tim & Böhringer, Christoph & Moslener, Ulf, 2004. "Assessing Emission Allocation in Europe: An Interactive Simulation Approach," ZEW Discussion Papers 04-40, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- 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.
- Gernot Klepper & Sonja Peterson, 2004. "The EU Emissions Trading Scheme. Allowance Prices, Trade Flows, Competitiveness Effects," Working Papers 2004.49, Fondazione Eni Enrico Mattei.
- Bernard, Alain & Paltsev, Sergey & Reilly, John & Vielle, Marc & Viguier, Laurent, 2003. "Russia's Role in the Kyoto Protocol," IDEI Working Papers 237, Institut d'Économie Industrielle (IDEI), Toulouse.
- Varian, Hal R., 1989. "Price discrimination," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 10, pages 597-654 Elsevier.
- Cathrine Hagem & Steffen Kallbekken & Ottar Mæstad & Hege Westskog, 2006. "Market Power with Interdependent Demand: Sale of Emission Permits and Natural Gas from Russia," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 34(2), pages 211-227, 06.
- Bohringer, Christoph, 2000. "Cooling down hot air: a global CGE analysis of post-Kyoto carbon abatement strategies," Energy Policy, Elsevier, vol. 28(11), pages 779-789, September.
- Christoph Bohringer, 2002. "Climate Politics from Kyoto to Bonn: From Little to Nothing?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 51-71.
- Elias Asproudis & Maria José Gil-Moltó, 2009. "Technological choice under environmentalists’ participation in Emissions Trading Systems," Discussion Papers in Economics 09/9, Department of Economics, University of Leicester.
- 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.
- Christoph Böhringer & Knut Einar Rosendahl, 2008. "Strategic Partitioning of Emissions Allowances. Under the EU Emission Trading Scheme," Discussion Papers 538, Research Department of Statistics Norway.
- Frank Jotzo & Regina Betz, 2009.
"Linking the Australian Emissions Trading Scheme,"
Environmental Economics Research Hub Research Reports
0914, Environmental Economics Research Hub, Crawford School of Public Policy, The Australian National University.
- Tsung-Chen Lee, 2011. "Endogenous market structures in non-cooperative international emissions trading," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 16(6), pages 663-675, August.
- N. Anger & B. Brouns & J. Onigkeit, 2009. "Linking the EU emissions trading scheme: economic implications of allowance allocation and global carbon constraints," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 14(5), pages 379-398, June.
- 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.
- Larson, Donald F. & Ambrosi, Philippe & Dinar, Ariel & Rahman, Shaikh Mahfuzur & Entler, Rebecca, 2008. "Carbon markets, institutions, policies, and research," Policy Research Working Paper Series 4761, The World Bank.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).
If references are entirely missing, you can add them using this form.