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Dynamic equity carbon permit allocation scheme to limit global warming to two degrees

Author

Listed:
  • Lining Wang

    (Tsinghua University)

  • Wenying Chen

    (Tsinghua University)

  • Hongjun Zhang

    (Tsinghua University)

  • Ding Ma

    (Tsinghua University)

Abstract

Significant international collaboration is required to limit global temperature increase to below 2 °C above pre-industrial levels. Equity is the foundation of cooperation, and therefore, this study proposed a new dynamic carbon permit allocation scheme based on four principles: equality, historical responsibility, capability, and future development opportunities. Decision makers could have different preferences for allocating carbon permits, therefore, four equity rules or indicators (equality, responsibility, capacity, and sovereignty) were assigned different weights. Based on the global carbon budget of the 2 °C target, emission permits were calculated and relevant economic implications analyzed using the Global Change Assessment Model. Results indicated that developed countries should reduce emissions immediately, while allowances for developing regions could permit an initial increase in emissions until peaking. Applying different weights to the indicators resulted in multifarious regional allowances. Developed regions would benefit from the “preferring sovereignty” scenario and most developing countries would benefit under the “preferring responsibility” and “preferring capacity” scenarios. Compared with the Intended Nationally Determined Contributions submitted to the United Nations Framework Convention on Climate Change, this study found that in the short term, developed countries might insist on sovereignty as the preferred indicator. However, preferring sovereignty would place substantial mitigation pressures on developing countries in the long term. Therefore, in addressing global climate change, a dynamic choice in the weighting distribution for different indicators might be conducive to international agreement. Furthermore, a market-based trading instrument could help all participants both mitigate global climate change by reducing regional and global costs and facilitate mitigation capital flow from developed to less developed regions.

Suggested Citation

  • Lining Wang & Wenying Chen & Hongjun Zhang & Ding Ma, 2017. "Dynamic equity carbon permit allocation scheme to limit global warming to two degrees," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 22(4), pages 609-628, April.
    • Handle: RePEc:spr:masfgc:v:22:y:2017:i:4:d:10.1007_s11027-015-9690-8
    DOI: 10.1007/s11027-015-9690-8
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    5. Fang, Kai & Zhang, Qifeng & Long, Yin & Yoshida, Yoshikuni & Sun, Lu & Zhang, Haoran & Dou, Yi & Li, Shuai, 2019. "How can China achieve its Intended Nationally Determined Contributions by 2030? A multi-criteria allocation of China’s carbon emission allowance," Applied Energy, Elsevier, vol. 241(C), pages 380-389.
    6. Zhang, Lirong & Li, Yakun & Jia, Zhijie, 2018. "Impact of carbon allowance allocation on power industry in China’s carbon trading market: Computable general equilibrium based analysis," Applied Energy, Elsevier, vol. 229(C), pages 814-827.
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