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Sectoral Targets for Developing Countries: Combining "Common but Differentiated Responsibilities" with "Meaningful participation"

  • Meriem Hamdi-Cherif

    (CIRED, Chaire Paris-Tech «Modélisation Prospective au service du Développement Durable»)

  • Céline Guivarch

    (CIRED, Ecole des Ponts Paris-Tech)

  • Philippe Quirion

    (CIRED, CNRS and LMD-IPSL)

Although a global cap-and-trade system is seen by many researchers as the most cost-efficient solution to reduce greenhouse gas emissions, developing countries governments refuse to enter into such a system in the short term. Hence, many scholars and stakeholders, including the European Commission, have proposed various types of commitments for developing countries that appear less stringent, such as sectoral approaches. In this paper, we assess such a sectoral approach for developing countries. More precisely, we simulate two policy scenarios in which developed countries continue with Kyoto-type absolute commitments, whereas developing countries adopt an emission trading system limited to electricity generation and linked to developed countries' cap-and-trade system. In a first scenario, CO2 allowances are auctioned by the government, which distributes the auctions receipts lump-sum to households. In a second scenario, the auction receipts are used to reduce taxes on, or to give subsidies to, electricity generation. Our quantitative analysis, led with a hybrid general equilibrium model, shows that such options provide almost as much emission reductions as a global cap-and-trade system. Moreover, in the second sectoral scenario, GDP losses in developing countries are much lower than with a global cap-and-trade system and so is the impact on the electricity price.

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Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2010.37.

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Date of creation: Apr 2010
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Handle: RePEc:fem:femwpa:2010.37
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  1. Sandrine Mathy & Céline Guivarch, 2010. "Climate policies in a second-best world- a case study on India," Post-Print halshs-00724498, HAL.
  2. C�Line Guivarch & Renaud Crassous & Olivier Sassi & St�Phane Hallegatte, 2011. "The costs of climate policies in a second-best world with labour market imperfections," Climate Policy, Taylor & Francis Journals, vol. 11(1), pages 768-788, January.
  3. Hourcade, Jean-Charles, 1993. "Modelling long-run scenarios : Methodology lessons from a prospective study on a low CO2 intensive country," Energy Policy, Elsevier, vol. 21(3), pages 309-326, March.
  4. Philibert, Cedric, 2000. "How could emissions trading benefit developing countries," Energy Policy, Elsevier, vol. 28(13), pages 947-956, November.
  5. Jean Charles Hourcade & Olivier Sassi & Renaud Crassous & Vincent Gitz & Henri Waisman & Céline Guivarch, 2010. "IMACLIM-R: a modelling framework to simulate sustainable development pathways," Post-Print hal-00566290, HAL.
  6. Philippe Quirion, 2009. "Historic versus output-based allocation of GHG tradable allowances: a comparison," Climate Policy, Taylor & Francis Journals, vol. 9(6), pages 575-592, November.
  7. Jorgenson, Dale W, 1981. " Energy Prices and Productivity Growth," Scandinavian Journal of Economics, Wiley Blackwell, vol. 83(2), pages 165-79.
  8. Berndt, Ernst R & Wood, David O, 1975. "Technology, Prices, and the Derived Demand for Energy," The Review of Economics and Statistics, MIT Press, vol. 57(3), pages 259-68, August.
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