IDEAS home Printed from https://ideas.repec.org/a/kap/enreec/v33y2006i2p169-198.html

International Emissions Trading and Induced Carbon-Saving Technological Change: Effects of Restricting the Trade in Carbon Rights

Author

Listed:
  • Patrick Matschoss
  • Heinz Welsch

Abstract

This paper examines the implications of restricting the tradability of carbon rights in the presence of induced technological change. Unlike earlier approaches aimed at exploring the tradability-technology linkage, we focus on climate-relevant “carbon-saving” technological change. This is achieved by incorporating endogenous investment in carbon productivity into the RICE-99 integrated assessment model of Nordhaus and Boyer (2000). Simulation analysis of various emission reduction scenarios with several restrictions on emissions trading reveals a pronounced dichotomy of effects across regions: Restrictions to trading raise the investments in carbon productivity in permit demanding regions while reducing them in permit supplying regions. In terms of per capita consumption, permit demanding regions lose and permit supplying regions gain from restrictions. In scenarios that involve “hot air,” restrictions to trade lower overall emissions, which results in reduced climate damage for most regions. Reduced damage, in turn, reduces the incentive to invest in carbon productivity. Copyright Springer 2006

Suggested Citation

  • Patrick Matschoss & Heinz Welsch, 2006. "International Emissions Trading and Induced Carbon-Saving Technological Change: Effects of Restricting the Trade in Carbon Rights," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 33(2), pages 169-198, February.
    • Handle: RePEc:kap:enreec:v:33:y:2006:i:2:p:169-198
    DOI: 10.1007/s10640-005-3105-3
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s10640-005-3105-3
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10640-005-3105-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Stavins, Robert & Jaffe, Adam & Newell, Richard, 2000. "Technological Change and the Environment," Working Paper Series rwp00-002, Harvard University, John F. Kennedy School of Government.
    2. Christoph Bohringer & Heinz Welsch, 2006. "Burden sharing in a greenhouse: egalitarianism and sovereignty reconciled," Applied Economics, Taylor & Francis Journals, vol. 38(9), pages 981-996.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Liangpeng Wu & Qingyuan Zhu, 2024. "Whether China’s carbon emission trading scheme has triggered technical change in emission reduction? An integrated approach," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(3), pages 7633-7655, March.
    2. Liu, Lin & Liu, Liqun & Liu, Kai & Jiménez-Zarco, Ana Isabel, 2025. "Climate policy and corporate green transformation: Empirical evidence from carbon emission trading," Research in International Business and Finance, Elsevier, vol. 74(C).
    3. Larson, Donald F. & Dinar, Ariel & Blankespoor, Brian, 2012. "Aligning climate change mitigation and agricultural policies in Eastern Europe and Central Asia," Policy Research Working Paper Series 6080, The World Bank.
    4. Satoru Kasahara & Sergey Paltsev & John Reilly & Henry Jacoby & A. Ellerman, 2007. "Climate Change Taxes and Energy Efficiency in Japan," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(2), pages 377-410, June.
    5. Chu-Lun Hsieh & Wen-Hsien Tsai, 2023. "Towards Carbon Neutrality and Circular Economy in the Glass Industry by Using the Production Decision Model," Energies, MDPI, vol. 16(22), pages 1-18, November.
    6. Larson, Donald F. & Dinar, Ariel & Frisbie, J. Aapris, 2011. "Agriculture and the clean development mechanism," Policy Research Working Paper Series 5621, The World Bank.
    7. Alfred Endres, 2008. "Ein Unmöglichkeitstheorem für die Klimapolitik?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 9(3), pages 350-382, August.
    8. Mandaroux, Rahel & Schindelhauer, Kai & Basse Mama, Houdou, 2023. "How to reinforce the effectiveness of the EU emissions trading system in stimulating low-carbon technological change? Taking stock and future directions," Energy Policy, Elsevier, vol. 181(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vallentin, Daniel, 2007. "Inducing the international diffusion of carbon capture and storage technologies in the power sector," Wuppertal Papers 162, Wuppertal Institute for Climate, Environment and Energy.
    2. Jonathan B. Wiener, 2010. "Structuring an energy technology revolution , by Charles Weiss and William B. Bonvillian. Cambridge, MA: MIT Press, 2009, 318 pp., $24, hardcover," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 29(3), pages 649-653.
    3. Valeria Costantini & Francesco Crespi, 2013. "Public policies for a sustainable energy sector: regulation, diversity and fostering of innovation," Journal of Evolutionary Economics, Springer, vol. 23(2), pages 401-429, April.
    4. Stavins, Robert, 2004. "Environmental Economics," RFF Working Paper Series dp-04-54, Resources for the Future.
    5. Wu, Yinyin & Wang, Ping & Liu, Xin & Chen, Jiandong & Song, Malin, 2020. "Analysis of regional carbon allocation and carbon trading based on net primary productivity in China," China Economic Review, Elsevier, vol. 60(C).
    6. Everett, Tim & Ishwaran, Mallika & Ansaloni, Gian Paolo & Rubin, Alex, 2010. "Economic growth and the environment," MPRA Paper 23585, University Library of Munich, Germany.
    7. Bramoulle, Yann & Olson, Lars J., 2005. "Allocation of pollution abatement under learning by doing," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1935-1960, September.
    8. Abdul-Manan, Amir F.N. & Baharuddin, Azizan & Chang, Lee Wei, 2014. "A detailed survey of the palm and biodiesel industry landscape in Malaysia," Energy, Elsevier, vol. 76(C), pages 931-941.
    9. Yueqi Sun & Junlong Ti & Fang Yang & Hsing Hung Chen, 2025. "Blessing or Curse? The Impact of the Penetration of Industrial Robots on Green Sustainable Transformation in Chinese High-Energy-Consuming Industries," Energies, MDPI, vol. 18(3), pages 1-21, February.
    10. Costantini, Valeria & Crespi, Francesco, 2008. "Environmental regulation and the export dynamics of energy technologies," Ecological Economics, Elsevier, vol. 66(2-3), pages 447-460, June.
    11. Phuong Nguyen & Pier-Paolo Saviotti & Michel Trommetter & Bernard Bourgeois, 2005. "Variety and the evolution of refinery processing," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 14(3), pages 469-500, June.
    12. Blackman, Allen, 2005. "Adoption of Clean Leather-Tanning Technologies in Mexico," Discussion Papers 10881, Resources for the Future.
    13. Cantono, Simona, 2012. "Unveiling diffusion dynamics: an autocatalytic percolation model of environmental innovation diffusion and the optimal dynamic path of adoption subsidies," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201222, University of Turin.
    14. Zhou, P. & Wang, M., 2016. "Carbon dioxide emissions allocation: A review," Ecological Economics, Elsevier, vol. 125(C), pages 47-59.
    15. Roman Lokhov & Heinz Welsch, 2008. "Emissions trading between Russia and the European Union: a CGE analysis of potentials and impacts," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 9(1), pages 1-23, March.
    16. Zhang, Haomin & Chen, Aizhen & Duan, Jiazheng & Ye, Haibo, 2025. "The impact of corporate environmental responsibility on corporate performance of Chinese firms," International Review of Financial Analysis, Elsevier, vol. 104(PB).
    17. Heal, Geoffrey & Tarui, Nori, 2008. "Technology Diffusion, Abatement Cost, and Transboundary Pollution," Climate Change Modelling and Policy Working Papers 46653, Fondazione Eni Enrico Mattei (FEEM).
    18. Karanfil, Fatih & Yeddir-Tamsamani, Yasser, 2010. "Is technological change biased toward energy? A multi-sectoral analysis for the French economy," Energy Policy, Elsevier, vol. 38(4), pages 1842-1850, April.
    19. Bleischwitz, Raimund, 2002. "Cognitive and institutional perspectives of eco effiency: A new research landscape towards factor four (or more)," Wuppertal Papers 123, Wuppertal Institute for Climate, Environment and Energy.
    20. David Popp, 2003. "ENTICE: Endogenous Technological Change in the DICE Model of Global Warming," NBER Working Papers 9762, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:enreec:v:33:y:2006:i:2:p:169-198. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.