Sustainability and intergenerational transfers

This paper investigates the intergenerational allocation of a non-renewable resource within an overlapping generations model. Sustainability is defined as a nondecreasing total value of the capital and resource stock. Without forced intergenerational transfers or sufficiently high bequest motives a sustainable allocation is very unlikely to be reached. A tax on the property of the old generation and a tax on resource extraction is investigated. In a numerical example the interaction between the resource extraction decision, the intertemporal consumption decision, and the investment decision are illustrated. It turns out that both types of taxes display shortcomings in creating the incentives for reaching a sustainable allocation.

The EU emissions trading scheme allowance prices, trade flows and competitiveness effects.

The upcoming European Emissions Trading Scheme (ETS) is one of the more controversial climate policy instruments. Predictions about its likely impact and its performance can at present only be made to a certain degree. As long as the National Allocations Plans are not finally settled the overall supply of allowances is not determined. In this paper, we will identify key features and key impacts of the EU ETS by scanning the range of likely allocation plans using the simulation model DART. The analysis of the simulation results highlights a number of interesting details in terms of allowance trade flows between Member States, of allowance prices, and in terms of the role of the accession countries in the ETS. An important finding about the impact of the new ETS with respect to achieving emission reductions more efficiently, i.e. at lower cost, is that savings can only be realized if the cap on emissions is distributed between the ETS sector and the rest of the economy in such a way that the different abatement costs are taken into account. This would imply a relatively small allocation of emissions to the ETS sector. The second important result concerns the role of the accession countries. Even if they do not supply their hot-air in the ETS market, they contribute substantially to the cost savings of the ETS by offering low cost abatement options.Klimaschutz; Emissionsrechte; Preis; Allgemeines Gleichgewicht; Simulation; EU-Staaten;EU emissions trading scheme , permit allocation , Kyoto targets , computable general equilibrium model , DART;

Marginal Abatement Cost Curves in General Equilibrium: The Influence of World Energy Prices

Marginal abatement cost curves (MACCs) are one of the favorite instruments to analyze the impacts of the implementation of the Kyoto Protocol and emissions trading. As shown in this paper one important factor that influences MACCs are energy prices. This leads to the question of how to define MACCs in a general equilibrium context where the overall abatement level world wide influences energy prices and thus national MACCs. We first discuss the mechanisms theoretically and then use the CGE model DART to quantify the effects. The result is, that changes in energy prices resulting from different world wide abatement levels do indeed affect the national MACCs. Also, we compare different possibilities of defining MACCs - of which some turn out to be robust against changes in energy prices while others vary considerably.Climate change, Marginal abatement cost, Energy price, Computable general equilibrium model

The EU Emissions Trading Scheme. Allowance Prices, Trade Flows, Competitiveness Effects

The upcoming European Emissions Trading Scheme (ETS) is one of the more controversial climate policy instruments. Predictions about its likely impact and its performance can at present only be made to a certain degree. As long as the National Allocations Plans are not finally settled the overall supply of allowances is not determined. In this paper we will identify key features and key impacts of the EU ETS by scanning the range of likely allocation plans using the simulation model DART. The analysis of the simulation results highlights a number of interesting details in terms of allowance trade flows between member countries, of allowance prices, and in terms of the role of the accession countries in the ETS.EU Emissions trading scheme, Kyoto targets, Computable general equilibrium model, DART

Marginal abatement cost curves in general equilibrium: The influence of world energy prices.

Marginal abatement cost curves (MACCs) are a favorite instrument to analyze international emissions trading. This paper focusses on the question of how to define MACCs in a general equilibrium context where the global abatement level influences energy prices and in turn national MACCs. We discuss the mechanisms theoretically and then use the CGE model DART for quantitative simulations. The result is, that changes in energy prices resulting from different global abatement levels do indeed affect national MACCs. Also, we compare different possibilities of defining MACCs - of which some are robust against changes in energy prices while others vary considerably.Klimaschutz; Klimaveränderung; Umweltschutzkosten; Erdölpreis; Allgemeines Gleichgewicht; Simulation; Welt;Climate change , marginal abatement cost curves , energy prices , computable general equilibrium model;

Trading hot-air : the influence of permit allocation rules, market power and the US withdrawal from the Kyoto Protocol.

After the conferences in Bonn and Marrakech it is likely that international emissions trading will be realized in the near future. Major influences on the permit market are the institutional detail, the participation structure and the treatment of hot-air. Different scenarios do not only differ in their implications for the demand and supply of permits and thus the permit price, but also in their allocative effects. In this paper we discuss likely institutional designs for permit allocation in the hot-air economies and the use of market power and quantify the resulting effects by using the computable general equilibrium model DART. It turns out that the amount of hot-air supplied will be small if hot-air economies cooperate in their decisions. Under welfare maximization more hot-air is supplied than in the case were governments try to maximize revenues from permit sales.Emissionsrechte; Klimaschutz; Umweltabkommen; Allgemeines Gleichgewicht; Wirtschaftspolitische Wirkungsanalyse;CGE Model , DART , Emission Trading , Hot-Air , Kyoto Protocol , Market Power , Permit Allocation;