IDEAS home Printed from https://ideas.repec.org/p/zbw/ifwkie/4237.html
   My bibliography  Save this paper

US participation, permit allocation, and hot air supply

Author

Listed:
  • Klepper, Gernot
  • Peterson, Sonja

Abstract

After Bonn and Marrakech it is likely that emission trading will be realized in the near future. Major influences on the permit market are the institutional details, the participation structure and the treatment of hot air. Different scenarios do not only differ in their implications for the demand and supply of permits and thus the permit price, but also in their allocative effects. Most repercussions can be expected to stem from the effects on the world markets for fossil fuel and especially the oil market. For example the withdrawal of the USA from the Kyoto Protocol and the allocation mechanism for the hot air in Russia, Ukraine and Eastern Europe influence the level of energy demand and gross and net energy prices which in turn change the production structure of energy intensive goods and influence welfare depending on whether a country is an energy net exporter or importer. In this paper we discuss different institutional designs for hot air trading combined with the US withdrawal and quantify the effects by using a computable general equilibrium model. Besides detailed results for the analyzed scenarios, two major findings are relevant for future studies on emission trading: First, marginal abatement cost curves are not as stable as presumed up to now. Second, we find that indeed the allocative repercussions of a scenario are to a large degree determined by its effects on world energy demand and world energy prices. Both findings imply that partial equilibrium models of permit trading that are based on marginal abatement curves ignore the important interaction between the permit market and the world energy markets.

Suggested Citation

  • Klepper, Gernot & Peterson, Sonja, 2002. "US participation, permit allocation, and hot air supply," Open Access Publications from Kiel Institute for the World Economy 4237, Kiel Institute for the World Economy (IfW Kiel).
  • Handle: RePEc:zbw:ifwkie:4237
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/4237/1/Klepper_Peterson_final.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Rutherford, Thomas F, 1999. "Applied General Equilibrium Modeling with MPSGE as a GAMS Subsystem: An Overview of the Modeling Framework and Syntax," Computational Economics, Springer;Society for Computational Economics, vol. 14(1-2), pages 1-46, October.
    2. Böhringer, Christoph, 2001. "Climate politics from Kyoto to Bonn: from little to nothing?!?," ZEW Discussion Papers 01-49, ZEW - Leibniz Centre for European Economic Research.
    3. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
    4. Andreas Löschel & Zhong Zhang, 2002. "The economic and environmental implications of the US repudiation of the kyoto protocol and the subsequent deals in Bonn and Marrakech," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 138(4), pages 711-746, December.
    5. Paul M. Bernstein & W. David Montgomery & Thomas F. Rutherford & Gui-Fang Yang, 1999. "Effects of Restrictions on International Permit Trading: The MS-MRT Model," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 221-256.
    6. Böhringer, Christoph & Löschel, Andreas, 2001. "Market power in international emissions trading : the impact of U.S. withdrawal from the Kyoto Protocol," ZEW Discussion Papers 01-58, ZEW - Leibniz Centre for European Economic Research.
    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. Klepper, Gernot & Peterson, Sonja & Springer, Katrin, 2003. "DART97: a description of the multi-regional, multi-sectoral trade model for the analysis of climate policies," Kiel Working Papers 1149, Kiel Institute for the World Economy (IfW Kiel).
    2. Deke, Oliver & Peterson, Sonja, 2003. "Integrated climate modelling at the Kiel Institute for World Economics: The DART Model and its applications," Open Access Publications from Kiel Institute for the World Economy 4236, Kiel Institute for the World Economy (IfW Kiel).

    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. Gernot Klepper & Sonja Peterson, 2005. "Trading Hot-Air. The Influence of Permit Allocation Rules, Market Power and the US Withdrawal from the Kyoto Protocol," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 32(2), pages 205-228, October.
    2. Klepper, Gernot & Peterson, Sonja, 2006. "Marginal abatement cost curves in general equilibrium: The influence of world energy prices," Resource and Energy Economics, Elsevier, vol. 28(1), pages 1-23, January.
    3. Bernard, A. & Haurie, A. & Vielle, M. & Viguier, L., 2008. "A two-level dynamic game of carbon emission trading between Russia, China, and Annex B countries," Journal of Economic Dynamics and Control, Elsevier, vol. 32(6), pages 1830-1856, June.
    4. Weitzel, Matthias & Hübler, Michael & Peterson, Sonja, 2012. "Fair, optimal or detrimental? Environmental vs. strategic use of border carbon adjustment," Energy Economics, Elsevier, vol. 34(S2), pages 198-207.
    5. Warwick J. McKibbin, 2006. "Global Energy and Environmental Impacts of an Expanding China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 14(4), pages 38-56, August.
    6. Andreas Löschel & Zhong Zhang, 2002. "The economic and environmental implications of the US repudiation of the kyoto protocol and the subsequent deals in Bonn and Marrakech," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 138(4), pages 711-746, December.
    7. Khalil Helioui, 2006. "Coordination internationale des politiques climatiques : quelle efficacité ?," Working Papers hal-00866433, HAL.
    8. Vincent Steenberghe, 2005. "Carbon dioxide abatement costs and permit price: exploring the impact of banking and the role of future commitments," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 7(2), pages 75-107, June.
    9. Khalil Helioui, 2006. "Coordination internationale des politiques climatiques : quelle efficacité ?," CIRED Working Papers hal-00866433, HAL.
    10. Springer, Urs, 2003. "The market for tradable GHG permits under the Kyoto Protocol: a survey of model studies," Energy Economics, Elsevier, vol. 25(5), pages 527-551, September.
    11. Kemfert, Claudia & Zhang, ZhongXiang, 2003. "Linking developing country's cooperation on climate control with industrialized country's R&D and technology transfer," MPRA Paper 41473, University Library of Munich, Germany.
    12. Warwick McKibbin & Adele Morris & Peter Wilcoxen, 2008. "Expecting The Unexpected: Macroeconomic Volatility And Climate Policy," CAMA Working Papers 2008-35, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    13. Justin Caron, Sebastian Rausch, and Niven Winchester, 2015. "Leakage from sub-national climate policy: The case of Californias capandtrade program," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    14. VAN STEENBERGHE, Vincent, 2003. "CO2 abatement costs and permits price : Exploring the impact of banking and the role of future commitments," LIDAM Discussion Papers CORE 2003098, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    15. repec:ilo:ilowps:366690 is not listed on IDEAS
    16. Vieira, Flávio & MacDonald, Ronald & Damasceno, Aderbal, 2012. "The role of institutions in cross-section income and panel data growth models: A deeper investigation on the weakness and proliferation of instruments," Journal of Comparative Economics, Elsevier, vol. 40(1), pages 127-140.
    17. Eicher, Theo S. & Schreiber, Till, 2010. "Structural policies and growth: Time series evidence from a natural experiment," Journal of Development Economics, Elsevier, vol. 91(1), pages 169-179, January.
    18. Sylvie Démurger & Jeffrey D. Sachs & Wing Thye Woo & Shuming Bao & Gene Chang & Andrew Mellinger, 2002. "Geography, Economic Policy, and Regional Development in China," Asian Economic Papers, MIT Press, vol. 1(1), pages 146-197.
    19. Alexandre Janiak & Paulo Santos Monteiro, 2011. "Inflation and Welfare in Long‐Run Equilibrium with Firm Dynamics," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43(5), pages 795-834, August.
    20. Nilanjan Banik & John Gilbert, 2010. "Regional Integration and Trade Costs in South Asia," Chapters, in: Douglas H. Brooks & Susan F. Stone (ed.), Trade Facilitation and Regional Cooperation in Asia, chapter 4, Edward Elgar Publishing.
    21. Haidar, Jamal Ibrahim, 2012. "The impact of business regulatory reforms on economic growth," Journal of the Japanese and International Economies, Elsevier, vol. 26(3), pages 285-307.

    More about this item

    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:zbw:ifwkie:4237. 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: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/iwkiede.html .

    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.