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CO2 Emissions Control Agreements: Incentives for Regional Participation


  • Stephen C. Peck
  • Thomas J. Teisberg


This paper explores the incentives for participation in international CO2 control agreements using tradable emission permits. We employ a welfare analysis in a two-region model to explore these incentives. The two regions are Annex-I (A-I) and Non-Annex I (Non-A-I). A key insight underlying the analysis is that emission permit allocations must not depart too far from optimal emissions paths, to avoid creating future incentives to drop out of the agreement. We find a range of permit allocations that improves the welfare of both the Annex-I and the Non-Annex I, and compare them with allocations based on regional population or GDP. In addition, we examine the implications of the Kyoto agreement in the context of this welfare analysis. We find that the Kyoto agreement transfers wealth from A-I to the Non-A-I, while failing to realize tile efficiency gains to be hoped for from an agreement to control CO2 emissions.

Suggested Citation

  • Stephen C. Peck & Thomas J. Teisberg, 1999. "CO2 Emissions Control Agreements: Incentives for Regional Participation," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 367-390.
  • Handle: RePEc:aen:journl:1999si-a14

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    Cited by:

    1. Carolyn Fischer & Richard D. Morgenstern, 2006. "Carbon Abatement Costs: Why the Wide Range of Estimates?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 73-86.
    2. Kopp, Raymond, 2004. "Near-Term Greenhouse Gas Emissions Targets," Discussion Papers dp-04-41, Resources For the Future.
    3. Khanna, Neha, 2001. "Analyzing the economic cost of the Kyoto protocol," Ecological Economics, Elsevier, vol. 38(1), pages 59-69, July.
    4. Ingmar Schumacher, 2014. "The Aggregation Dilemma," Working Papers 2014-224, Department of Research, Ipag Business School.
    5. He, Shawei & Marc Kilgour, D. & Hipel, Keith W., 2017. "A general hierarchical graph model for conflict resolution with application to greenhouse gas emission disputes between USA and China," European Journal of Operational Research, Elsevier, vol. 257(3), pages 919-932.
    6. Pizer, William A. & Kopp, Raymond, 2005. "Calculating the Costs of Environmental Regulation," Handbook of Environmental Economics,in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 3, chapter 25, pages 1307-1351 Elsevier.
    7. Ingmar Schumacher, 2014. "The Aggregation Dilemma in Climate Change Policy Evaluation," Working Papers 2014-428, Department of Research, Ipag Business School.
    8. Loschel, Andreas, 2002. "Technological change in economic models of environmental policy: a survey," Ecological Economics, Elsevier, vol. 43(2-3), pages 105-126, December.
    9. Ciscar, Juan Carlos & Soria, Antonio, 2002. "Prospective analysis of beyond Kyoto climate policy: a sequential game framework," Energy Policy, Elsevier, vol. 30(15), pages 1327-1335, December.
    10. Dowlatabadi, Hadi & Oravetz, Matthew A., 2006. "US long-term energy intensity: Backcast and projection," Energy Policy, Elsevier, vol. 34(17), pages 3245-3256, November.
    11. Yang, Zili & Sirianni, Philip, 2010. "Balancing contemporary fairness and historical justice: A 'quasi-equitable' proposal for GHG mitigations," Energy Economics, Elsevier, vol. 32(5), pages 1121-1130, September.
    12. repec:eee:ecomod:v:204:y:2007:i:3:p:301-314 is not listed on IDEAS

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    JEL classification:

    • F0 - International Economics - - General


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