Designing a US Market for CO2

In this paper we focus on one component of the cap-and-trade system: the markets that arise for trading allowances after they have been allocated or auctioned. The efficient functioning of the market is key to the success of cap-and-trade as a system. We review the performance of the EU CO2 market and the US SO2 market and examine how the flexibility afforded by banking and borrowing and the limitations on banking and borrowing have impacted the evolution of price in both markets. While both markets have generally functioned well, certain episodes illustrate the importance of designing the rules to encourage liquidity in the market.Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research

MEAT-GOAT MARKET ANALYSIS: A PILOT STUDY OF THE SOMALI MARKET IN COLUMBUS, OH

This case study focuses on meat goat marketing involving one distinct immigrant group residing in one area of Columbus, Ohio: the Somalis. There are about 20,000-25,000 Somalis living in Columbus, the second largest concentration of Somalian immigrants in the U.S. after Minneapolis-St. Paul, Minnesota. It is estimated that Columbus Somalis consume the meat from about 14,000 goats each year. The objective of this pilot study is to analyze the meat goat marketing and consumption patterns of the Somali immigrant population of Columbus, Ohio. Understanding gained in the Somali meat market will assist in determining the feasibility of establishing a more structured marketing system, including the possible need for a processing plant dedicated to goat meat. The Southern Ohio Meat Goat Task Force is a group of meat-goat producers, marketers, OSU extension professionals, and Ohio Cooperative Development Center staff members that are working with the meat-goat industry to assess and develop goat production, processing, and meat marketing in Ohio. Tours of several retail shops within the Somali community were conducted to further understand the preferences of the Somali population. Interviews were conducted with a slaughter-plant manager in nearby Detroit, Michigan, the current major supplier of fresh goat meat to the Columbus market. During January and March 2003, two focus-group sessions were organized and conducted by task force members with Somali consumers, entrepreneurs, and retail grocery owners. Significant results and discussion presented in detail within this research report include: Somalia's prefer fresh over frozen goat meat, pricing is a key determinant in meat choices for Somali consumers, goat meat and lamb meat are somewhat substitutable in Somali diets, Somalis will substitute halal chicken and beef if lamb and goat meat is not available, lean grass-fed carcass is preferred to a grain-fed goat, Somalis eat goat meat 1-2 times a day year-round, most people feeding families buy a whole carcass, and only a slight preference was indicated between the halal and kosher slaughter practices.Agribusiness,

Designing a U.S. Market for CO2

Abstract and PDF report are also available on the MIT Joint Program on the Science and Policy of Global Change website (http://globalchange.mit.edu/).In this paper we focus on one component of the cap-and-trade system: the markets that arise for trading allowances after they have been allocated or auctioned. The efficient functioning of the market is key to the success of cap-and-trade as a system. We review the performance of the EU CO2 market and the U.S. SO2 market and examine how the flexibility afforded by banking and borrowing, and the limitations on banking and borrowing, have impacted the evolution of price in both markets. While both markets have generally functioned well, certain episodes illustrate the importance of designing the rules to encourage liquidity in the market.The authors gratefully acknowledge the financial support for this work provided by the MIT Joint Program on the Science and Policy of Global Change through a consortium of industrial sponsors and Federal grants. This research was also supported by a grant from the Doris Duke Charitable Foundation

Climate Change Taxes and Energy Efficiency in Japan

Abstract in HTML and technical report in PDF available on the Massachusetts Institute of Technology Joint Program on the Science and Policy of Global Change website (http://mit.edu/globalchange/www/).In 2003 Japan proposed a Climate Change Tax to reduce its CO2 emissions to the level required by the Kyoto Protocol. If implemented, the tax would be levied on fossil fuel use and the revenue distributed to several sectors of the economy to encourage the purchase of energy efficient equipment. Analysis using the MIT Emissions Prediction and Policy Analysis (EPPA) model shows that this policy is unlikely to bring Japan into compliance with its Kyoto target unless the subsidy encourages improvement in energy intensity well beyond Japan’s recent historical experience. Similar demand-management programs in the U.S., where there has been extensive experience, have not been nearly as effective as they would need to be to achieve energy efficiency goals of the proposal. The Climate Change Tax proposal also calls for restricting Japan’s participation in the international emission trading. We consider the economic implications of limits on emissions trading and find that they are substantial. Full utilization of international emission trading by Japan reduces the carbon price, welfare loss, and impact on its energy-intensive exports substantially. The welfare loss with full emissions trading is one-sixth that when Japan meets its target though domestic actions only, but Japan can achieve substantial savings even under cases where, for example, the full amount of the Russian allowance is not available in international markets

Emissions trading to reduce greenhouse gas emissions in the United States : the McCain-Lieberman Proposal

Abstract in HTML and technical report in PDF available on the Massachusetts Institute of Technology Joint Program on the Science and Policy of Global Change website (http://mit.edu/globalchange/www/).The Climate Stewardship Act of 2003 (S. 139) is the most detailed effort to date to design an economy-wide cap-and-trade system for US greenhouse gas emissions reductions. The Act caps sectors at their 2000 emissions in Phase I of the program, running from 2010 to 2015, and then to their 1990 emissions in Phase II starting 2016. There is a strong incentive for banking of allowances, raising the costs in Phase I to achieve savings in Phase II. Use of credits from outside the capped sectors could significantly reduce the cost of the program, even though limited to 15% and 10% of Phase I and II allowances respectively. These credits may come from CO2 sequestration in soils and forests, reductions in emissions from uncapped sectors, allowances acquired from foreign emissions trading systems, and from a special incentive program for automobile manufacturers. The 15% and 10% limits increase the incentive for banking and could prevent full use of cost-effective reductions from the uncapped sectors. Moreover, some of the potential credits might contribute little or no real climate benefit, particularly if care is not taken in defining those from forest and soil CO2 sequestration. Analysis using the MIT Emissions Prediction and Policy Analysis model shows that costs over the two Phases of the program could vary substantially, depending on normal uncertainty in economic and emissions growth, and the details of credit system implementation

Tradable Pollution Permits and the Regulatory Game

This paper analyzes polluters\u27 incentives to move from a traditional command and control (CAC) environmental regulatory regime to a tradable permits (TPP) regime. Existing work in environmental economics does not model how firms contest and bargain over actual regulatory implementation in CAC regimes, and therefore fail to compare TPP regimes with any CAC regime that is actually observed. This paper models CAC environmental regulation as a bargaining game over pollution entitlements. Using a reduced form model of the regulatory contest, it shows that CAC regulatory bargaining likely generates a regulatory status quo under which firms with the highest compliance costs bargain for the smallest pollution reductions, or even no reduction at all. As for a tradable permits regime, it is shown that all firms are better off under such a regime than they would be under an idealized CAC regime that set and enforced a uniform pollution standard, but permit sellers (low compliance cost firms) may actually be better off under a TPP regime with relaxed aggregate pollution levels. Most importantly, because high cost firms (or facilities) are the most weakly regulated in the equilibrium under negotiated or bargained CAC regimes, they may be net losers in a proposed move to a TPP regime. When equilibrium costs under a TPP regime are compared with equilibrium costs under a status quo CAC regime, several otherwise paradoxical aspects of firm attitudes toward TPP type reforms can be explained. In particular, the otherwise paradoxical pattern of allowances awarded under Phase II of the 1990 Clean Air Act\u27s acid rain program, a pattern tending to favor (in Phase II) cleaner, newer generating units, is explained by the fact that under the status quo regime, a kind of bargained CAC, it was the newer cleaner units that were regulated, and which therefore had higher marginal control costs than did the largely unregulated older, plants. As a normative matter, the analysis here implies that the proper baseline for evaluating TPP regimes such as those contained in the Bush Administration\u27s recent Clear Skies initiative is not idealized, but nonexistent CAC regulatory outcomes, but rather the outcomes that have resulted from the bargaining game set up by CAC laws and regulations

Privatization Methods and Productivity Effects in Romanian Industrial Enterprises

Comprehensive panel data on privatization transactions and labor productivity in Romanian industrial corporations are used to describe the post-privatization ownership structure, and to estimate the effect of Romania\u27s diverse privatization policies on firm performance. The econometric results show consistently positive, highly significant effects of private ownership on labor productivity growth, the point estimates imply- ing an increased 1.0 to 1.7 percentage growth for a 10 percent rise in private shareholding. The strongest estimated impacts are associated with sales to outside blockholders; insider transfers and mass privatization are estimated to have significantly smaller—although still positive—effects on firm performance

Toward a Socialism for the Future, in the Wake of the Demise of the Socialism of the Past

http://deepblue.lib.umich.edu/bitstream/2027.42/51230/1/464.pd