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A developing Asia emission trading scheme (Asia ETS)

  • Massetti, Emanuele
  • Tavoni, Massimo

This paper provides a model assessment of the role of developing Asia in the context of climate change policies. We diagnose the potential response of Asian economies to the imposition of various climate policies, showing that if we were to equally price carbon across the world roughly half of the abatement would occur in developing Asia. We show that such autarkic measures would be consistent with the policy targets put forward by the Major Economies Forum but would not necessarily be equitable. We thus propose a fragmented cap-and-trade scheme with a specific regional market for developing Asia, the Asian Emission Trading Scheme (Asia ETS). We assess the role of the Asia ETS on the macro-economy and international transfers vis-à- vis the standard case of global trading. Our results indicate that creating two large trading markets would result in small global efficiency losses, while at the same time generating more reasonable regional incentives and transfers.

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File URL: http://www.sciencedirect.com/science/article/pii/S0140988312000321
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Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 34 (2012)
Issue (Month): S3 ()
Pages: S436-S443

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Handle: RePEc:eee:eneeco:v:34:y:2012:i:s3:p:s436-s443
DOI: 10.1016/j.eneco.2012.02.005
Contact details of provider: Web page: http://www.elsevier.com/locate/eneco

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  1. Valentina Bosetti & Carlo Carraro & Enrica De Cian & Romain Duval & Emanuele Massetti & Massimo Tavoni, 2009. "The Incentives to Participate in and the Stability of International Climate Coalitions: A Game-Theoretic Approach Using the WITCH Model," OECD Economics Department Working Papers 702, OECD Publishing.
  2. Judson Jaffe & Robert N. Stavins, 2008. "Linkage of Tradable Permit Systems in International Climate Policy Architecture," NBER Working Papers 14432, National Bureau of Economic Research, Inc.
  3. Jotzo, Frank & Betz, Regina, 2009. "Linking the Australian Emissions Trading Scheme," Research Reports 94814, Australian National University, Environmental Economics Research Hub.
  4. Emanuele Massetti, 2011. "Carbon tax scenarios for China and India: exploring politically feasible mitigation goals," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 11(3), pages 209-227, September.
  5. Carraro, Carlo & Massetti, Emanuele, 2012. "Energy and Climate Change in China," CEPR Discussion Papers 8895, C.E.P.R. Discussion Papers.
  6. Massimo Tavoni & Shoibal Chakravarty & Robert Socolow, 2012. "Safe vs. Fair: A Formidable Trade-off in Tackling Climate Change," Sustainability, MDPI, Open Access Journal, vol. 4(2), pages 210, February.
  7. Valentina Bosetti & Carlo Carraro & Enrica De Cian & Romain Duval & Emanuele Massetti & Massimo Tavoni, 2009. "The Incentives to Participate in, and the Stability of, International Climate Coalitions: A Game-theoretic Analysis Using the Witch Model," Working Papers 2009.64, Fondazione Eni Enrico Mattei.
  8. Hansson, Julia & Berndes, Gran & Johnsson, Filip & Kjrstad, Jan, 2009. "Co-firing biomass with coal for electricity generation--An assessment of the potential in EU27," Energy Policy, Elsevier, vol. 37(4), pages 1444-1455, April.
  9. Barrett, Scott, 1997. "The strategy of trade sanctions in international environmental agreements," Resource and Energy Economics, Elsevier, vol. 19(4), pages 345-361, November.
  10. Henk Folmer & Pierre Mouche & Shannon Ragland, 1993. "Interconnected games and international environmental problems," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 3(4), pages 313-335, August.
  11. Calvin, Katherine & Clarke, Leon & Krey, Volker & Blanford, Geoffrey & Jiang, Kejun & Kainuma, Mikiko & Kriegler, Elmar & Luderer, Gunnar & Shukla, P.R., 2012. "The role of Asia in mitigating climate change: Results from the Asia modeling exercise," Energy Economics, Elsevier, vol. 34(S3), pages S251-S260.
  12. Michael Mehling & Erik Haites, 2009. "Mechanisms for linking emissions trading schemes," Climate Policy, Taylor & Francis Journals, vol. 9(2), pages 169-184, January.
  13. Valentina Bosetti & Carlo Carraro & Marzio Galeotti & Emanuele Massetti & Massimo Tavoni, 2006. "WITCH. A World Induced Technical Change Hybrid Model," Working Papers 2006_46, Department of Economics, University of Venice "Ca' Foscari".
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