Making the most of the G8+5 Climate Change Process: Accelerating Structural Change and Technology Diffusion on a Global Scale. CEPS Task Force Reports, 5 June 2008

Under the chairmanship of Gunnar Still, Senior Vice President and Head of Environment Division at ThyssenKrupp, CEPS organized a Task Force to explore possible initiatives within the context of the G8+5 dialogue on tackling climate change. This report identifies a number of concrete measures that could reduce greenhouse gas (GHG) emissions, while at the same time stimulating structural change and technology development and diffusion. It calls for supporting action-based approaches, which are essential to achieve the necessary reductions in GHG emissions, inform the post-2012 negotiations and address the most urgent issues such as surging energy demand and the need for clean energy technologies in emerging economies. An action-based approach can be regarded as a way of integrating targets and timetables, as they are agreed, with consistent and comparable policies and measures. With a view to a long-term climate strategy, this report attempts to present a portfolio of actions that can be implemented and accelerated on a global scale – especially in the G8+5 countries and the EU, and could become a basis on which developed and developing countries can cooperate

Bridging the Gap Between Energy and Climate Policies in Brazil: Policy Options to Reduce Energy-Related GHG Emissions

Brazil is facing a series of important policy decisions that will determine its energy future over the next several decades, with important implications for the country's economic competitiveness, the well-being of its citizens, and the global climate. The decisions concern the direction of approximately 0.5 trillion U.S. dollars of anticipated investment in energy infrastructure over the next decade -- which can either lock in carbon-intensive infrastructure, or advance Brazil's position as a leader in the low-carbon economy. This report examines Brazil's key energy-related GHG emitting sectors through a climate lens in order to offer recommendations for a more integrated approach that can more effectively reconcile energy and climate needs. It begins with an overview of Brazil's past energy and GHG emissions profiles, current pledges and future trends, and a discussion of the implications for a possible allocation of the remaining global carbon budget. Next, it reviews available scenarios for Brazil's energy-related GHG emissions in order to identify key drivers and results and compare them to a given allocation of the global carbon budget. It then focuses on the top emitting subsectors -- transport, industry, and power generation -- to identify key abatement opportunities. The report concludes with recommendations regarding a portfolio of policies and measures that could achieve both climate and energy objectives

Incentives for energy efficiency in the EU Emissions Trading Scheme

This paper explores the incentives for energy efficiency induced by the European Union Emissions Trading Scheme (EU ETS) for installations in the energy and industry sectors. Our analysis of the National Allocation Plans for 27 EU Member States for phase 2 of the EU ETS (2008-2012) suggests that the price and cost effects for improvements in carbon and energy efficiency in the energy and industry sectors will be stronger than in phase 1 (2005-2007), but only because the European Commission has substantially reduced the number of allowances to be allocated by the Member States. To the extent that companies from these sectors (notably power producers) pass through the extra costs for carbon, higher prices for allowances translate into stronger incentives for demand- side energy efficiency. With the cuts in allocation to energy and industry sectors these will be forced to greater reductions, thus the non-ET sectors like household, tertiary and transport will have to reduce less, which is more in line with the cost-efficient share of emission reductions. The findings also imply that domestic efficiency improvements in the energy and industry sectors may remain limited since companies can make substantial use of credits from the Kyoto Mechanisms. The analysis of the rules for existing installations, new projects and closures suggests that incentives for energy efficiency are higher in phase 2 than in phase 1 because of the increased application of benchmarking to new and existing installations and because a lower share of allowances will be allocated for free. Nevertheless, there is still ample scope to further improve the EU ETS so that the full potential for energy efficiency can be realized. --Climate policy,emission trading,energy efficiency,innovation

Efficiency Gains from "What"-Flexibility in Climate Policy: An Integrated CGE Assessment

We investigate the importance of ?what?-flexibility on top of ?where?- and ?when?-flexibility for alternative emission control schemes that prescribe long-term temperature targets and eventually impose additional constraints on the rate of temperature change. We find that ?what?-flexibility substantially reduces the compliance costs under alternative emission control schemes. When comparing policies that simply involve long-term temperature targets against more stringent strategies that include additional constraints on the rate of temperature increase, it turns out that the latter involve huge additional costs. These costs may be interpreted as additional insurance payments if damages should not only dependent on absolute temperature change but also on the rate of temperature change. --Climate policy,Integrated Assessment,What-flexibility

Pollution responsibility allocation in supply networks: A game-theoretic approach and a case study

This study introduces a cooperative game theory approach aimed at addressing the problem of allocating pollution responsibility across partners collaborating in supply networks. The proposed framework includes three different allocation rules through which companies can share pollution responsibility across complex supply networks. A case study in the context of a supply network for the manufacturing of construction materials is illustrated for demonstrating the real-world applicability of the approach

RECENT DEVELOPMENTS IN EU POLICIES – CHALLENGES FOR PARTIAL EQUILIBRIUM MODELS

This paper gives an overview on current and prospective modelling challenges for agricultural partial equilibrium (PE) models focussing on EU policies. Starting from a certain policy context, the paper highlights the current capabilities and limitations of existing PE models and, if available, develops some ideas on future modelling directions to advance the usefulness of quantitative information provided.Policy impact assessment, agricultural partial equilibrium models, Common Agricultural Policy, Agricultural and Food Policy, Research Methods/ Statistical Methods,

Assessment of U.S. Cap-and-Trade Proposals

The MIT Emissions Prediction and Policy Analysis model is applied to synthetic policies that match key attributes of a set of cap-and-trade proposals being considered by the U.S. Congress in spring 2007. The bills fall into two groups: one specifies emissions reductions of 50% to 80% below 1990 levels by 2050; the other establishes a tightening target for emissions intensity and stipulates a time-path for a "safety valve" limit on the emission price that approximately stabilizes U.S. emissions at the 2008 level. Initial period prices are estimated between $7 and$50 per ton CO2-e with these prices rising by a factor of four by 2050. Welfare costs vary from near zero to less than 0.5% at the start, rising in the most stringent case to near 2% in 2050. If allowances were auctioned these proposals could produce revenue between $100 billion and$500 billion per year depending on the case. Outcomes from U.S. policies depend on mitigation effort abroads, and simulations are provided to illuminate terms-of-trade effects that influence the emissions prices and welfare effects, and even the environmental effectiveness, of U.S. actions. Sensitivity tests also are provided of several of key design features. Finally, the U.S. proposals, and the assumptions about effort elsewhere, are extended to 2100 to allow exploration of the potential role of these bills in the longer-term challenge of reducing climate change risk. Simulations show that the 50% to 80% targets are consistent with global goals of atmospheric stabilization at 450 to 550 ppmv CO2 but only if other nations, including the developing countries, follow suit.

Options for International Financing of Climate Change Mitigation in Developing Countries

This paper provides a model-based analysis of the potential macro-economic impacts of different options for international financing of climate change mitigation in developing countries. The model used is the multi-region and multi-sector climate change version of the WorldScan model. Following the outcome of the UNFCCC conference in Copenhagen, it makes no specific assumptions about the future international climate regime. The analysis shows that the environmental prospects systematically improve in a transition from the Clean Development Mechanism projects towards a global carbon market, while the opposite is foreseen for the economic costs. The more of a carbon market we have when moving from the project-based CDM to sectoral crediting mechanisms and internationally linked cap-and-trade, the more finance the carbon market will channel to developing countries.european union eu annex I non-annex I climate conference in Copenhagen climate change mitigation clean development mechanism emission trading system the US brazil china india own participation of developing countries sectoral crediting mechanisms hayden Veenendaal Zarnic