Equity and justice in global warming policy

Many countries are implementing or at least considering policies to counter increasingly certain negative impacts from climate change. An increasing amount of research has been devoted to the analysis of the costs of climate change and its mitigation, as well as to the design of policies, such as the international Kyoto Protocol, post-Kyoto negotiations, regional initiatives, and unilateral actions. Although most studies on climate change policies in economics have considered efficiency aspects, there is a growing literature on equity and justice. Climate change policy has important dimensions of distributive justice, both within and across generations, but in this paper we survey only studies on the intragenerational aspect, i.e.., within a generation. We cover several domains including the international, regional, national, sectoral and inter-personal, and examine aspects such as the distribution of burdens from climate change, climate change policy negotiations in general, implementation of climate agreements using tradable emission permits, and the uncertainty of alternatives to emission reductions

The European Union’s potential for strategic emissions trading in a post-Kyoto climate agreement

The literature suggests that Russia and Ukraine may become large sellers of greenhouse gas emissions permits under the Kyoto Protocol and might exploit their market power to maximize trading profits. The EU countries taken together will probably be net buyers of permits. For any given global target for emission, participation by developing countries with low-cost abatement options would benefit the net buyers of permits because the market price for carbon permits would go down. We explore how the EU could benefit from a broader participation through specific bilateral agreements with developing countries in the post-Kyoto period. The bilateral agreement involves a minimum permit sales requirement which is compensated by a financial transfer from EU to the developing country. Such bilateral agreement enables the EU to act strategically in the permit market on behalf of its member states, although firms in each member state are assumed to be price takers in the permit market. In a numerical simulation we show that an appropriately designed bilateral agreement between the EU and China can cut EU’s total compliance cost by one third.nrpages: 31status: publishe

The European Union’s potential for strategic emissions trading in a post-Kyoto climate agreement.

The literature suggests that Russia and Ukraine may become large sellers of greenhouse gas emissions permits under the Kyoto Protocol and might exploit their market power to maximize trading profits. The EU countries taken together will probably be net buyers of permits. For any given global target for emission, participation by developing countries with low-cost abatement options would benefit the net buyers of permits because the market price for carbon permits would go down. We explore how the EU could benefit from a broader participation through specific bilateral agreements with developing countries in the post-Kyoto period. The bilateral agreement involves a minimum permit sales requirement which is compensated by a financial transfer from EU to the developing country. Such bilateral agreement enables the EU to act strategically in the permit market on behalf of its member states, although firms in each member state are assumed to be price takers in the permit market. In a numerical simulation we show that an appropriately designed bilateral agreement between the EU and China can cut EU’s total compliance cost by one third.

The European Union’s potential for strategic emissions trading through permit sale contracts.

Strategic market behavior by permit sellers will harm the European Union (EU) as it is expected to become a large net buyer of permits in a follow-up agreement to the Kyoto Protocol. In this paper, we explore how the EU could benefit from making permit trade agreements with non-EU countries. These trade agreements involve permit sales requirement, complemented by a financial transfer from the EU to the other contract party. Such agreements would enable the EU to act strategically in the permit market on behalf of its member states, although each member state is assumed to behave as a price taker in the permit market. Using a stylized numerical simulation model, we show that an appropriately designed permit trade agreement between the EU and China could significantly cut the EU’s total compliance cost. This result is robust for a wide range of parameterizations of the simulation model.

The price of non-compliance with the Kyoto Protocol: The remarkable case of Norway

Compliance, enforcement, General equilibrium modelling, International institutions, Kyoto Protocol, Punitive consequences,

Hot air for sale: a quantitative assessment of Russia’s near-term climate policy options

Market power, Hot air, Climate policy, D42, Q25,