Discussion Papers no. 654

Sectoral and regional expansion of emissions trading

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We consider an international emissions trading scheme with partial sectoral and regional coverage. Sectoral and regional expansion of the trading scheme is beneficial in aggregate, but not necessarily for individual countries. We simulate international CO2 emission quota markets using marginal abatement cost functions and the Copenhagen 2020 climate policy targets for selected countries that strategically allocate emissions in a bid to manipulate the quota price. Quota exporters and importers generally have conflicting interests about admitting more countries to the trading coalition, and our results indicate that some countries may lose substantially when the coalition expands in terms of new countries. For a given coalition, expanding sectoral coverage makes most countries better off, but some countries (notably the USA and Russia) may lose out due to loss of strategic advantages. In general, exporters tend to have stronger strategic power than importers.

Om publikasjonen

Tittel

Sectoral and regional expansion of emissions trading

Ansvarlige

Christoph Böhringer, Bouwe Dijkstra, Knut Einar Rosendahl

Serie og -nummer

Discussion Papers no. 654

Utgiver

Statistics Norway

Emne

Discussion Papers

ISSN

1892-753X

Antall sider

34

Målform

Engelsk

Om Discussion Papers

Discussion papers comprise research papers intended for international journals and books. A preprint of a Discussion Paper may be longer and more elaborate than a standard journal article as it may include intermediate calculations, background material etc.

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