• Energy Research

Emissions trading is a hot issue. At national as well as supranational levels, proposals for introduction of emissions trading schemes have been made. This paper assesses alternative emissions trading schemes at domestic level: (1) schemes where the total level of emissions is fixed (absolute cap-and-trade), (2) schemes where the allowable level of emissions per firm is related to some firm-specific indicator (relative cap-and-trade), and (3) mixed schemes which combine elements of the above alternatives. We present a quantitative assessment of these alternatives for climate change policy in the Netherlands. It is concluded that while relative cap-and-trade would avoid negative effects on competitiveness, it would not reduce emissions at the lowest costs. Besides, the addition of a trade system to existing relative standards does not result in additional emission reduction; it should be combined with other policy measures, such as energy taxes, in order to realise further reduction. Absolute cap-and-trade leads to efficient emissions reduction, but, implemented at the national level, its overall macroeconomic costs may be significant. The mixed scheme has as drawback that it treats firms unequal, which leads to high administrative costs. We conclude that none of the trading schemes is an advisable instrument for domestic climate policy. © 2003 Elsevier Science Ltd. All rights reserved.

Emissions trading is a hot issue. At national as well as supranational levels, proposals for introduction of emissions trading schemes have been made. This paper assesses alternative emissions trading schemes at domestic level: (1) schemes where the total level of emissions is fixed (absolute cap-and-trade), (2) schemes where the allowable level of emissions per firm is related to some firm-specific indicator (relative cap-and-trade), and (3) mixed schemes which combine elements of the above alternatives. We present a quantitative assessment of these alternatives for climate change policy in the Netherlands. It is concluded that while relative cap-and-trade would avoid negative effects on competitiveness, it would not reduce emissions at the lowest costs. Besides, the addition of a trade system to existing relative standards does not result in additional emission reduction; it should be combined with other policy measures, such as energy taxes, in order to realise further reduction. Absolute cap-and-trade leads to efficient emissions reduction, but, implemented at the national level, its overall macroeconomic costs may be significant. The mixed scheme has as drawback that it treats firms unequal, which leads to high administrative costs. We conclude that none of the trading schemes is an advisable instrument for domestic climate policy. © 2003 Elsevier Science Ltd. All rights reserved.

Abstract Energy policy in the European Union (EU) faces two major\nchallenges. The first challenge is posed by EUs commitment to reduce\ngreenhouse gas emissions to the atmosphere in the context of the\ninternational agreement on climate change. The second challenge is\nto keep ensuring European security of energy supply, while its dependency\non external sources of energy is projected to increase. In this paper,\ntwo long-term alternative climate change policy scenarios for Europe\nare examined. In the first scenario, EU reduces carbon dioxide emissions\nby domestic measures; in the second scenario EU maximizes cooperation\nwith the countries of the former Soviet Union (FSU). Impacts on carbon\nflows between the EU and FSU and on the external energy dependency\nof the EU are assessed with an applied general equilibrium model,\nGTAP-E, whose set of energy commodities is expanded with combustible\nbiomass as a renewable and carbon-neutral energy commodity. The results\nshow that there is a trade-off between economic efficiency, energy\nsecurity and carbon dependency for the EU. The FSU would unambiguously\nprefer cooperation.

Abstract Energy policy in the European Union (EU) faces two major\nchallenges. The first challenge is posed by EUs commitment to reduce\ngreenhouse gas emissions to the atmosphere in the context of the\ninternational agreement on climate change. The second challenge is\nto keep ensuring European security of energy supply, while its dependency\non external sources of energy is projected to increase. In this paper,\ntwo long-term alternative climate change policy scenarios for Europe\nare examined. In the first scenario, EU reduces carbon dioxide emissions\nby domestic measures; in the second scenario EU maximizes cooperation\nwith the countries of the former Soviet Union (FSU). Impacts on carbon\nflows between the EU and FSU and on the external energy dependency\nof the EU are assessed with an applied general equilibrium model,\nGTAP-E, whose set of energy commodities is expanded with combustible\nbiomass as a renewable and carbon-neutral energy commodity. The results\nshow that there is a trade-off between economic efficiency, energy\nsecurity and carbon dependency for the EU. The FSU would unambiguously\nprefer cooperation.

This paper studies the effect of endogenous technical change and international technology spillovers on carbon leakage. It is well known that a unilateral CO2 abatement policy in one region may cause CO2 emissions to increase in non-abating regions because of the relocation of CO2-intensive firms and because of energy market effects. If, however, the CO2 mitigation policy induces energy-saving technological innovation in the home region and this innovation can freely spill-over to energy users abroad, carbon leakage may be offset by induced efficiency gains in foreign firms. In this paper we develop a simple mathematical model of carbon leakage and technological spillovers and perform numerical simulations with an adjusted CGE model to illustrate the potential importance of international technology spillovers. We show that carbon leakage can become negative at moderate levels of technology spillover.

This paper studies the effect of endogenous technical change and international technology spillovers on carbon leakage. It is well known that a unilateral CO2 abatement policy in one region may cause CO2 emissions to increase in non-abating regions because of the relocation of CO2-intensive firms and because of energy market effects. If, however, the CO2 mitigation policy induces energy-saving technological innovation in the home region and this innovation can freely spill-over to energy users abroad, carbon leakage may be offset by induced efficiency gains in foreign firms. In this paper we develop a simple mathematical model of carbon leakage and technological spillovers and perform numerical simulations with an adjusted CGE model to illustrate the potential importance of international technology spillovers. We show that carbon leakage can become negative at moderate levels of technology spillover.

A multi-country, multi-sector computable general equilibrium (CGE) model is employed to evaluate the economy-wide impacts of climate change under the IPCC’s A2 and B1 scenarios and existing irrigation development plans in the Nile basin. The study reveals that climate change adversely affects mainly downstream Egypt and to a lesser extent Sudan, while it results in a limited impact in the upstream countries Ethiopia and the Equatorial Lakes region, where irrigated agriculture is still limited. The economic consequences for Egypt are especially substantial if the river basin countries pursue a unilateral irrigation development strategy. In order to prevent water use conflicts and ease water scarcity conditions, a cooperative water development strategy is needed as well as economic diversification in favor of less water-intensive sectors, combined with investments in water-saving infrastructure and improved irrigation efficiency.