National Greenhouse Gas Inventories: Understanding Uncertainties versus Potential for Improving Reliability

We investigated the Austrian national greenhouse gas emission inventory to review the reliability and usability of such inventories. The overall uncertainty of the inventory (95% confidence interval) is just over 10% of total emissions, with nitrous oxide (N₂O) from soils clearly providing the largest impact. Trend uncertainty – the difference between 2 years – is only about five percentage points, as important sources like soil N₂O are not expected to show different behavior between the years and thus exhibit a high covariance. The result is very typical for industrialized countries – subjective decisions by individuals during uncertainty assessment are responsible for most of the discrepancies among countries. Thus, uncertainty assessment cannot help to evaluate whether emission targets have been met. Instead, a more rigid emission accounting system that allows little individual flexibility is proposed to provide harmonized evaluation uninfluenced by the respective targets. Such an accounting system may increase uncertainty in terms of greenhouse gas fluxes to the atmosphere. More importantly, however, it will decrease uncertainty in intercountry comparisons and thus allow for fair burden sharing. Setting of post-Kyoto emission targets will require the independent evaluation of achievements. This can partly be achieved by the validation of emission inventories and thorough uncertainty assessment.     

The Impact of Uncertainty on Banking Behavior: Evidence from the US Sulfur Dioxide Emissions Allowance Trading Program

In this paper, we study empirically whether uncertainty has an influence on trade in the US sulfur dioxide allowances market. In particular, we investigate the role of uncertainty on banking behavior. To do this, we introduce a tractable, structural model of trading permits under uncertainty. The model establishes a relation between banking behavior and risk preferences, especially prudence in the Kimball (1990) sense. We then test this model using data on allowances, for utilities submitted to the US Environmental Protection Agency’s Acid Rain Program, carried over from one year to the next. Evidence is found of imprudence, namely, utilities bank permits in order to favor higher profits. Another finding is that larger utilities do not adopt behavior significantly different from that of smaller ones. This paper was presented at the “International Workshop on Uncertainty in Greenhouse Gas Inventories: Verification, Compliance & Trading” in Warsaw, Poland, September 2004, under the title “Portfolio Management of Emissions Permits and Prudence Behavior.”     

Emission Models and Inventories for Local Greenhouse Gas Emissions Assessment: Experience in the East Midlands Region of the Uk

This paper considers how regional greenhouse gas emissioninventories can be determined. It presents a greenhousegas emissions inventory, by source, for the East Midlandsthat has been compiled as part of a regional study intoclimate change impacts in the United Kingdom. This hasused available local data, and national emissions datawith appropriate scaling factors. Total greenhouse gasemissions for the region are estimated to be 59 milliontonnes of carbon dioxide equivalent (CO₂ equivalent)for 1997. Of these emissions, approximately 86% werecarbon dioxide emissions, 7% methane emissions, and 5%were nitrous oxide, with emissions of hydrofluorocarbons(HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride(SF₆) contributing less than 2% of total emissions.