Advancing the climate regime through linking domestic emission trading systems?

More and more countries are incorporating the instrument of emissions trading into their national climate policies. This emerging mosaic of emissions trading schemes (ETS) raises the question of whether they should be linked with each other. From an economic point of view, linking of domestic schemes is supposed to increase the economic efficiency of carbon markets. In addition, linking is also expected by some to yield substantial political benefits in terms of the evolution of the UNFCCC/Kyoto regime. However, these optimistic prospects are based on a best-case scenario where all major countries establish environmentally effective emissions trading systems and then link them with each other. Real-life politics might develop rather differently. This paper therefore examines to what extent the current status of emissions trading in industrialised countries provides a basis for reinforcing and moving forward the international climate regime through linking domestic ETS. After comparing emerging emissions trading schemes from an institutional perspective, it emerges that not only emissions trading is at a very early stage in most countries, in addition the emerging systems are probably going to be designed very differently from the EU ETS. While for some design features such as the coverage design differences do not matter, there are some areas where the plans in many non-EU countries look crucially different from the EU system. The outlook for a linked international ETS is therefore currently still very uncertain. Given this state of affairs, the EU should pro-actively engage with the non-EU countries to try to harmonise their developing national emissions trading schemes with the EU ETS, widely disseminate the lessons it has learned from the EU ETS, strongly make the case for environmental integrity and at the same time make clear that systems that want to link to the EU ETS will need to meet certain quality criteria.

Linking the EU emissions trading scheme: economic implications of allowance allocation and global carbon constraints

We investigate the role of domestic allowance allocation and global emissions constraints for the carbon-market impacts of linking the EU Emissions Trading Scheme (ETS) internationally. Employing a quantitative simulation model of the global carbon market, we find that the economic benefits from connecting the European ETS to emerging non-EU schemes strongly depend on the regional allowance allocation of the linking participants: In a world of moderate carbon constraints, an economically efficient regional allowance allocation induces a much stronger fall in total compliance costs than a sub-optimal (i.e. too high) domestic allocation of emissions permits. However, a more efficient (i.e. stricter) allocation shifts abatement efforts and compliance costs to energy-intensive industries which are covered by the domestic ETS. We further find that committing to ambitious global emissions reduction targets (compatible with stabilizing CO₂ concentrations at 450 ppm) induces much stronger regional abatement efforts and substantially higher compliance costs for the abating regions. In such an ambitious climate policy regime, an efficient domestic allocation of allowances is even more important from an economic perspective: Here, linking emissions trading schemes diminishes the associated compliance costs on the largest scale.

Fairness aspects of linking the European emissions trading scheme under a long-term stabilization scenario for CO2 concentration

Climate equity is a crucial but difficult element in negotiations on a post-2012 climate regime. With respect to the trading of greenhouse gas emissions the equity aspect is considered in the Kyoto Protocol which demands that emissions trading should be supplemental to domestic abatement efforts. The question arises whether a linking of the European Union Emissions Trading Scheme (EU ETS) to non-EU emission trading schemes or the Clean Development Mechanism (CDM) could have an impact on principles of climate justice and thus potentially affect ongoing negotiations. In this study, we present the results of a three step analysis: In a first step, it estimates mid-term greenhouse gas emission entitlements for Annex B and Non-Annex B countries for the year 2020 which keep within reach a stabilization of the CO₂ concentration at 450 ppmv in the long-term. In the second step, the resulting emission entitlements are used as an input to an economic partial-equilibrium model in order to assess the shift of abatement efforts under different scenarios of linking the EU ETS. In a third step, we analyze the outcome of the economic model with respect to the future trend of European per capita emissions under the current EU ETS relative to different scenarios of linking the EU ETS. The model results indicate that European per capita emissions have to be reduced to a considerably smaller extent if a linking of the EU ETS is accompanied by an optimal design of the National Allocation Plans and if low-cost CO₂ permits became available via the CDM to a large extent.

欧盟航空碳税对中国的影响及应对建议

尽管始终备受争议的航空碳税计划终于在欧盟内外的双重压力之下面临流产,但是建立全球碳排放交易体系终究是大势所趋,中国在这一问题上应该有前瞻性.由于欧盟航空碳税同环保高度相关,本文通过资料调研及数据收集,对欧盟此举的主要原因和对中国的影响进行了分析,并从保护航空业竞争力、介入全球碳排放交易体系设计和我国环保工作实际出发提出了应对建议.     

Global economic implications of alternative climate policy strategies

This paper investigates the world economic implications of climate change policy strategies, and particularly evaluates the impacts of an implementation of clean development mechanisms (CDM), joint implementation (JI) and emissions trading with a world integrated assessment model. Of special interest in this context are welfare spill over and competitiveness effects resulting from diverse climate policy strategies. This study elaborates and compares multi-gas policy strategies and explores the impacts of sink inclusion. We furthermore examine the economic impacts on all world regions of the USA’s non-cooperative, free rider position resulting from its recent isolated climate policy strategy decision.It turns out that CDM and JI show evidence of improvement in the economic development in host countries and increase the share of new applied technologies. The decomposition of welfare effects demonstrates that the competitiveness effect (including the spill over effects from trade) have the greatest importance because of the intense trade relations between countries. Climatic effects will have a significant impact within the next 50 years, will cause considerable welfare losses to world regions and will intensify if nations highly responsible for pollution like the USA do not reduce their emissions.     

Top-down approaches for sharing GHG emission reductions: uncertainties and sensitivities in the 27 European Union Member States

To reduce GHG emissions, the 27 European Union Member States committed themselves in 2007 to reduce emissions from 1990 levels by 20% by 2020. In January 2008, the EU Commission gave the first country-specific proposals to reduce emissions in sectors outside the EU emission trading system (non-ETS). In this study, we looked at several ways of sharing emission reductions in the non-ETS sector. We considered population and economic growth as significant drivers of the development of emissions. In particular, we analyzed development in GHG intensity of economies. Reduction requirements vary greatly among countries depending on the principle of effort sharing. The results of our calculations can be perceived as examples of how effort sharing between the EU Member States could look like when certain assumptions are made. Generally they illustrate the sensitivity of the results to data used, assumptions made, and method applied. The main strength of simple top-down approaches is transparency. A major weakness is a very limited ability to consider national circumstances. Political negotiations are ultimately crucial; an analysis like this provides material for negotiations and makes a contribution to solving the effort-sharing problem. As future development is partly unpredictable, implementation of some kind of subsequent adjustment could be considered during the process.     

Oil price scenarios and climate policy: welfare effects of including transportation in the EU emissions trading system

The stringency of policies needed to meet a climate target is influenced by uncertain oil prices because price changes cause emission changes, making the robustness of climate policy instruments important. As a result of its dependence on oil, emissions from the transport sector are particularly sensitive to oil price changes. We use a computable general equilibrium model to study the effects of including the transport sector in the EU??s emissions trading scheme under three future oil price scenarios. Our results show that there are potentially significant welfare gains from including transportation in the emissions trading scheme because the system as a whole helps absorb required changes in climate policy to meet the overall EU cap on emissions. There is, however, a cost in terms of somewhat greater permit price uncertainty.     

欧盟可交易白色证书机制的发展及启示

在全球能源危机及气候变暖的背景下,近几年,可交易白色证书机制在欧盟发展迅速。可交易白色证书机制可以分为两部分:节能义务和白色证书交易体系,是指设定节能目标分配给责任主体,并通过市场交易,促进节能工作的有效开展。文章主要介绍可交易白色证书机制的基本原理、组成结构、运行机制和基本规则等,在比较分析意大利、英国、法国等欧盟国家的实践经验基础上,提出可供中国借鉴学习的经验。     

Linking Russia with the European and global greenhouse gas emissions trading markets: three paths for greening the Russian assigned amount under the Kyoto Protocol

This article examines possibilities for linkage between the European Union Emissions Trading System (EU ETS) and Russia, with a view to enhancing cooperation on a broader scale than the project-based approaches that have been tested thus far. Three paths for possible EU-Russia linkage are presented by which the Russian Assigned Amount under the Kyoto Protocol can be greened in order to stimulate emissions trading: 1. Joint implementation—reductions earned via individual projects in Russia; 2. Greened allowances or green investment schemes; and 3. Linked cap-and-trade systems, in which a Russian domestic emissions trading system would link with the European Union Emissions Trading System. The authors conclude that the third option, emissions trading through linked domestic emissions trading systems, offers the best opportunities at the lowest transaction costs. The authors discuss useful innovative instruments like call options and slip level arrangements on government-to-government and business-to-business levels.

Linking the emissions trading schemes of Europe and China - Combining climate and energy policy instruments

Both Europe and China have announced targets for greenhouse gas emissions reduction and renewable energy development. To achieve their emissions targets, Europe has introduced emissions trading scheme (ETS) since 2005 and China has planned to establish a national ETS in 2015. We assess the impact of a joint Europe-China ETS when both climate and energy policy instruments are simulated in a multiregional general equilibrium model. Our results show that a joint ETS markedly increases total carbon emissions from fossil fuels even though global mitigation costs are reduced. Moreover, a joint ETS helps China achieve its renewable energy target, but for Europe, it works opposite. While the renewable energy target does not help Europe achieve additional abatement, the renewable energy target in China reduces mitigation costs and emissions, and increases renewable energy consumption and sales of carbon allowances. Financial transfer through a joint ETS remains marginal compared to China’s demand for renewable energy subsidies. We conclude that as long as an absolute emissions cap is missing in China, a joint ETS is not attractive for mitigation and China’s renewable energy target can reduce emissions.     

Foresty offsets in emissions trading systems: a link between systems?

An important aspect in the linking of different emissions trading schemes is the degree to which these systems allow (or ban) external offset project categories. The EU Emission Trading Scheme (EU ETS) currently allows the use of credits from energy and industry projects developed under the Kyoto Protocol’s Joint Implementation (JI) and Clean Development Mechanism (CDM) but excludes the use of carbon credits from forestry projects for compliance in the EU ETS. Forestry credits generated by the CDM have a limited lifetime and expire at the end of a project’s crediting period, or earlier if the carbon stock for which the credits have been issued ceases to exist. According to the recently adopted amendment of the EU ETS Directive forestry credits will remain to be excluded until 2020. The present article reviews how the New South Wales Greenhouse Gas Abatement Scheme (Australia), the Regional Greenhouse Gas Initiative (US) and the voluntary scheme of the Chicago Climate Exchange integrate forestry offsets into the respective system and how they deal with the risk of losing stored and credited biomass. By comparing the results of different scenarios this article shows how differences in the treatment of forestry offsets could impact the efforts to link various emission trading systems in future.

欧盟温室气体排放交易实践对我国的借鉴

基于欧盟温室气体排放交易体系的建立与特点,概述了欧盟温室气体排放交易第一阶段的市场运行效果,分析了该阶段取得的经验与教训,主要包括管制范围、历史数据获取与分配方法等方面,在此基础上提出我国应加紧制定温室气体排放交易法律法规、建立国际化碳交易所,并以电力行业为试点探索建立我国碳排放贸易体系。     

欧盟航空排放交易系统及其对中国利益相关方的影响

在应对气候变化问题上,欧委会坚持将民航纳入排放交易系统。欧盟已经通过指令立法程序,自2012年1月1日起正式将在欧盟境内起降的所有欧盟和非欧盟航班排放纳入欧盟温室气体排放交易系统（EUETS）,试图通过“上限—交易”的模式来限制航空的温室气体排放。本文解读了欧盟这一法律和政策,并分析了欧盟将国际民航纳入EUETS后,中国的航空公司、乘客及航空减排政策和行业发展将受到的潜在影响。     

Financial adaptation to disaster risk in the European Union

Increasing losses from weather related extreme events coupled with limited coping capacity suggest a need for strong adaptation commitments, of which public sector responses to adjustments to actual and expected climate stimuli are key. The European Commission has started to address this need in the emerging European Union (EU) climate adaptation strategy; yet, a specific rationale for adaptation interventions has not clearly been identified, and the economic case for adaptation to extremes remains vague. Basing the diagnosis on economic welfare theory and an empirical analysis of the current EU and member states’ roles in managing disaster risk, we discuss how and where the public sector may intervene for managing climate variability and change. We restrict our analysis to financial disaster management, a domain of adaptation intervention, which is of key concern for the EU adaptation strategy. We analyse three areas of public sector interventions, supporting national insurance systems, providing compensation to the affected post event as well as intergovernmental loss sharing through the EU solidarity fund, according to the three government functions of allocation, distribution, and stabilization suggested by welfare theory, and suggest room for improvement.     

美欧中印“国家自主贡献”目标的力度和公平性评估

基于气候公平的不同原则,采用动态的衡量指标,建立了公平分配未来碳排放空间的综合性框架,计算了基数、平等、能力、责任和混合方案下2010~2100年全球累积碳排放配额的地区分布,并评估了美欧中印“国家自主贡献（Intended Nationally Determined Contribution,INDC）”目标的力度,提出了各国减排目标力度应当增加的程度.结果表明：美欧中印总体的INDC力度离实现2℃目标仍有差距,不同方案下的排放差距为8.0~9.6Gt CO₂,超出2030年2℃目标下全球排放的比例为20%~24%.在各自最为有利的方案下,中印能满足实现2℃目标的公平分配方案的低限要求.而在所有方案下美欧距离实现2℃目标的公平分配要求均有差距,需要进一步提高力度.公平指标的动态和静态衡量方法,以及历史责任计量起始年的选取,对公平分配的结果影响很大.     

Major challenges of integrating agriculture into climate change mitigation policy frameworks

Taking the European Union (EU) as a case study, we simulate the application of non-uniform national mitigation targets to achieve a sectoral reduction in agricultural non-carbon dioxide (CO₂) greenhouse gas (GHG) emissions. Scenario results show substantial impacts on EU agricultural production, in particular, the livestock sector. Significant increases in imports and decreases in exports result in rather moderate domestic consumption impacts but induce production increases in non-EU countries that are associated with considerable emission leakage effects. The results underline four major challenges for the general integration of agriculture into national and global climate change mitigation policy frameworks and strategies, as they strengthen requests for (1) a targeted but flexible implementation of mitigation obligations at national and global level and (2) the need for a wider consideration of technological mitigation options. The results also indicate that a globally effective reduction in agricultural emissions requires (3) multilateral commitments for agriculture to limit emission leakage and may have to (4) consider options that tackle the reduction in GHG emissions from the consumption side.     

Integrated assessment of promising measures to decrease nitrogen losses from agriculture in EU-27

Following the recognition of the detrimental effects of nitrogen (N) losses from agriculture in the European Union (EU) on human health and environment, series of environmental policy measures have been implemented from the early 1990s onwards. However, these measures have only been partially successful. Clearly, there is lack of integration of available measures and there is lack of enforcement and hierarchy; which measures should be implemented first? We identified and assessed three ‘most promising measures’ to decrease N losses from agriculture, i.e., (i) balanced fertilization, (ii) low-protein animal feeding, and (iii) ammonia (NH₃) emissions abatement measures. Environmental-economic assessments were made using scenario analyses and the modeling tools MITERRA-EUROPE and CAPRI.In the baseline scenario (business as usual), N use efficiency (NUE) in crop production increases from 44% in 2000 to 48% in 2020, while total N losses decrease by 10%. Implementation of promising measures increases NUE further to 51–55%, and decreases NH₃ emissions (by up to 23%), nitrous oxide (N₂O) emissions (by up to 10%) and N leaching losses (by up to 35%). Differences in responsiveness to promising measures varied between and within Member States. Strict implementation of balanced fertilization in nitrate vulnerable zones, as defined in the Nitrates Directive, decreases total farmers’ income in EU-27 by 1.7 billion euros per year. Implementation of all three measures decreases farmers income by 10.8 and total welfare by 17 billion euros per year, without valuing the environmental benefits.The study presented here is one of the first EU-wide integrated assessments of the effects of policy measures on all major N losses from agriculture and their economic costs. Our results show that the most promising measures are effective in enhancing NUE and decreasing NH₃ and N₂O emissions to the atmosphere and N leaching to groundwater and surface waters, but that income effects are significant. The order of implementation of the measures is important; NH₃ emissions abatement measures must be implemented together with balanced N fertilization.     

欧盟甲烷减排战略对我国碳中和的启示

欧盟于2020年10月出台了《欧盟甲烷减排战略》,以支撑其中长期温室气体减排目标。该战略共提出了五个领域的24个行动方案。欧盟将油气行业作为重点,设置了两个强制性的政策来完善能源部门的温室气体监测、报告和核查制度,并禁止天然气放空和燃烧。农业领域以加强全生命周期甲烷排放核算、减排技术等方面研究,编制最佳减排实践和技术清单为主要措施。在废弃物管理领域,欧盟将主要修订废弃物管理方面的立法和废水处理标准并加强监管。全球层面,欧盟提出希望联合包括中国在内的主要油气进口国家,推动建立全球性的监测、报告和核查标准,分享其甲烷超级排放源探测的卫星数据等措施。我国提出2060碳中和愿景后,下一阶段温室气体减排将会从能源相关二氧化碳减排为主扩展到全部温室气体减排。建议我国和欧盟在甲烷减排方面开展广泛合作,借鉴欧盟的经验,尽快制定我国甲烷减排近期、中期、远期目标和行动计划,推广甲烷减排技术,加强科学研究和技术研发,探索在国家碳市场交易体系中纳入甲烷等非二氧化碳气体的时机和方案,鼓励大型能源企业加入国际甲烷减排倡议以提高能力,逐步完善我国甲烷减排相关政策和制度环境,打造我国在低碳领域的经济和技术竞争力。     

Ensuring the environmental effectiveness of linked emissions trading schemes over time

Linking emissions trading schemes allows the combined emissions cap to be achieved at lower cost. Linking is usually environmentally neutral, but some design features can lead to higher aggregate emissions if schemes are linked. Technical solutions to limit the potential emissions increases due to design differences implemented when schemes are linked are not sufficient to ensure the environmental effectiveness of the linked schemes over time. Technological, economic, administrative and other changes that can lead to higher aggregate emissions are inevitable. The administrators of the linked schemes must ensure the stringency of the emissions cap relative to the “business as usual” emissions of affected sources, the accuracy of the emissions reported by affected sources, the integrity of the allowance registry, effective compliance enforcement, and the environmental integrity of the credits issued for emission reduction projects over time. This will require a process for agreeing on revisions to the regulations of the linked schemes, a mechanism to provide assurance of the environmental effectiveness of each of the linked schemes, and a procedure for terminating the linking agreement.

Co-benefits of post-2012 global climate mitigation policies

This paper provides an analysis of co-benefits for traditional air pollutants made possible through global climate policies using the Greenhouse Gas and Air Pollution Interactions and Synergies (GAINS) model in the time horizon up to 2050. The impact analysis is based on projections of energy consumption provided by the Prospective Outlook for the Long term Energy System (POLES) model for a scenario without any global greenhouse gas mitigation efforts, and for a 2°C climate policy scenario which assumes internationally coordinated action to mitigate climate change. Outcomes of the analysis are reported globally and for key world regions: the European Union (EU), China, India and the United States. The assessment takes into account current air pollution control legislation in each country. Expenditures on air pollution control under the global climate mitigation regime are reduced in 2050 by 250 billion € when compared to the case without climate measures. Around one third of financial co-benefits estimated world-wide in this study by 2050 occur in China, while an annual cost saving of 35 billion (Euros) € is estimated for the EU if the current air pollution legislation and climate policies are adopted in parallel. Health impacts of air pollution are quantified in terms of loss of life expectancy related to the exposure from anthropogenic emissions of fine particles, as well as in terms of premature mortality due to ground-level ozone. For example in China, current ambient concentrations of particulate matter are responsible for about 40 months-losses in the average life expectancy. In 2050, the climate strategies reduce this indicator by 50 %. Decrease of ozone concentrations estimated for the climate scenario might save nearly 20,000 cases of premature death per year. Similarly significant are reductions of impacts on ecosystems due to acidification and eutrophication.