A Stochastic Dynamic Game of Carbon Emissions Trading

This paper proposes a computable stochastic equilibrium model to represent the possible competition between Russia and China on the international market of carbon emissions permits. The model includes a representation of the uncertainty concerning the date of entry of developing countries (e.g., China) on this market in the form of an event tree. Assuming that this date of entry is an uncontrolled event, we model the competition as a dynamic game played on an event tree and we look for a solution called S-adapted equilibrium. We compare the solution obtained from realistic data describing the demand curves for permits and the marginal abatement cost curves in different countries, under different market and information structures: (i) Russia's monopoly, (ii) Russia–China competition in a deterministic framework, (iii) Russia–China competition in a stochastic framework. The results show the possible impact of this competition on the pricing of emissions permits and on the effectiveness of Kyoto and post-Kyoto agreements, without a US participation.     

The Strategic Impact of Adaptation in a Transboundary Pollution Dynamic Game

This work studies the strategic impact of a region’s investment in adaptation measures on the equilibrium outcomes of a transboundary pollution dynamic game played in finite horizon. We incorporate adaptation as a region-specific capital stock that decreases local damages and study the feedback (subgame perfect) equilibrium of the non-cooperative game between two regions. In order to discern the impact of adaptation, we compare the equilibrium solutions of three scenarios, which differ in the regions’ ability to invest in adaptation measures. The results show that investing in adaptation gives regions an incentive to increase their emissions, which causes an inverse strategic response in the other region. The anticipation of a rise in pollution makes the other region respond by cutting its emissions and investing more in adaptation. The equilibrium trajectories of the stocks of pollution and adaptation capital follow the highest path over time when both regions adapt. When there is an asymmetry between regions in their adaptation capabilities, the region that does not (or cannot) adapt becomes worse off due to lower emissions and higher damages, while the adapting region finishes the game better off than the no-adaptation case.     

Understanding the Price Dynamics in the Jiangsu SO2 Emissions Trading Program in China: A Multiple Periods Analysis

Because emissions permits can be considered to be a pseudo-commodity, the permit price in the emissions trading markets has already attracted great interest from the economic literature. This research took the Jiangsu sulfur dioxide (SO₂) emissions trading program in China as a case study to examine the price dynamics over the next 10 years (2011–2020) based on Jiangsu’s new SO₂ emissions trading policy design. An adaptive agent-based simulation model was developed to estimate the price dynamics as well as the impact of energy price, policy design, and new environmental regulation on the permit price. The results showed that the equilibrium price of the Jiangsu SO₂ emissions trading market is approximately 4.20 CNY/kg, and the permit price will fluctuate around this price if the other conditions are not changed. If the coal price increases during 2011–2016, the permit price will decline to 2.79 CNY/kg by 2020 under China’s current coal–electricity price mechanism. In addition, the banking mechanism will smooth the price fluctuations and the average permit price will be generally higher when banking is not allowed. Finally, the stricter environmental regulation will reduce the market supply of permits and will raise the permit price. According to China’s potential new SO₂ discharge standard, the permit price will jump to 11 CNY/kg. The quantification of the permit price dynamics can help power plants to make decisions on emissions trading.     

Assessing the Impact of Carbon Tax Differentiation in the European Union

To what extent do the welfare costs associated with the implementation of the Burden Sharing Agreement in the European Union depend on sectoral allocation of emissions rights? What are the prospects for strategic climate policy to favor domestic production? This paper attempts to answer those questions using a CGE model featuring a detailed representation of the European economies. First, numerical simulations show that equalizing marginal abatement costs across domestic sectors greatly reduces the burden of the emissions constraint but also that other allocations may be preferable for some countries because of pre-existing tax distortions. Second, we show that the effect of a single country's attempt to undertake a strategic policy to limit impacts on its domestic energy-intensive industries has mixed effects. Exempting energy-intensive industries from the reduction program is a costly solution to maintain the international competitiveness of these industries; a tax-cum-subsidy approach is shown to be better than exemption policy to sustain exports. The welfare impact either policy – exemption or subsidy – on other European countries is likely to be small because of general equilibrium effects.     

环境统计与排污许可衔接的工业源排放核算研究

环境统计面临依据排污许可数据估算工业污染排放总量的挑战.以某市4个行业6类污染物的排放数据为案例,讨论了在非重点源污染排放量估算问题上衔接排污许可和环境统计的可行性和存在的问题.研究结果表明:排污许可重点管理单位与环境统计重点调查单位存在显著差异,不能采用比率估算方法估算工业非重点源排污量;排污许可简化和登记管理单位排...     

Insights for climate policy in Europe

In this paper, the following key issues are addressed: the so-called “South” – the Group of 77 and China – and how to engage their interest and commitment; the purported savings if the flexible mechanisms are availed of, and the macro-economic impacts of meeting the Kyoto objectives; the associated issues of narrowing the extent and scope for such trading by setting a limit on how much can be traded, and “hot air” – the surplus quota above their own projected needs which Russia and most of the old Soviet Union have to offer; operational issues, including units to be traded, monitoring and enforcement, allocation of permits, competitiveness and risk management; in the case of emissions trading, the initial allocation of permits. This revised version was published online in July 2006 with corrections to the Cover Date.     

Carbon Emissions Trading and Equity in International Agreements

This paper explores the distributional consequences of alternative emissions trading schemes. It is argued that the distributional impact stems from the difference between two social welfare functions: the function which is implicitly maximised in a competitive market equilibrium and the function which is implicitly adopted when a given equity principle is chosen. An integrated assessment model is used to illustrate these findings, by simulating the introduction of various emissions trading schemes for the Kyoto protocol on the reduction of greenhouse emissions. It is shown that (1) changes produced on an equity index by the imposition of emission constraints (by country) may not be significantly higher than those obtained by the subsequent introduction of a market mechanism, and that (2) the various market regimes which could be adopted have quite different distributional implications. This revised version was published online in July 2006 with corrections to the Cover Date.     

Emission-based static traffic assignment models

Tailpipe emissions in the road transportation system are a major source of air pollution and greenhouse gases. One of the possible approaches is to influence drivers’ routing decisions such that the emissions and fuel consumption is minimized. In order to evaluate such condition, we develop environmental traffic assignment (E-TA) models based on user equilibrium (UE) and system optimal (SO) behavioral principles. Extending the traditional travel time-based UE and SO principles to E-TA is not straightforward because, unlike travel time, the rate of emissions increases with the increase in vehicle speed beyond a certain point. The results of various TA models show a network-wide traffic control strategy in which vehicles are routed according to SO-based E-TA, can reduce system-wide emissions. However, a system in which drivers make routing decisions to minimize their own emissions (E-UE system) results in a paradoxical situation of increased individual as well as system-wide emissions.     

Coupling Climate Damages and GHG Abatement Costs in a Linear Programming Framework

The paper discusses the coupling of non-linear non-convex damage costs due to climate change with a cost-efficiency analysis based on a technical-economic linear programming model like MARKAL and studies the implications for the computation of cooperative and non-cooperative solutions. Our empirical analysis of climate damages based on different world emissions levels and paths prove (a) that the dependency of damages on the trajectory of emissions may be neglected, so that the only relevant variables are the cumulative emissions in each country, and (b) that a linear relationship links regional damages and cumulative global emissions. Based on these results, cooperative and non-cooperative equilibria can be much more easily calculated by solving local optimization problems in a case where international trade effects of GHG policies are neglected: given the linearity of damage functions, each country chooses its non-cooperative strategy by considering only the part of its own damage cost due to its own emissions; in the cooperative case, each country takes into account its contribution to the damages done to all countries. Of course, any cost-benefit conclusion that will be produced by this approach is fully dependent on the damage functions. Also, this approach may be extended to the case where trade effects are modeled.     

Kyoto commitments: macro and micro insights on trading and the Clean Development Mechanism

The purpose of this paper is twofold. First, we raise some issues related to the expected dimension of the carbon market. This analysis is based on a survey of model results on the implementation of the Kyoto goal with and without reliance on emissions trading. In particular, we consider both the emissions and the financial implications associated with different trading scenarios. Transfers related to international GHG trading might be equivalent to a 400% increase in foreign direct investment to countries with economies in transition. A closer look at the GHG reductions expected from the developing world also suggests that global models may be overly optimistic in their assessment of the contribution of flexibility mechanisms in meeting the Kyoto emission goals. OECD countries may need to rely more on domestic policies to reduce their emissions than what has so far been projected by global models. Second, we use a simple microeconomic model to test the potential contribution of typical power generation technologies in the context of the Clean Development Mechanism. Projects that are defined as additional in terms of the environment but already profitable can bring about significant results at a relatively low price of certified emission reductions. To assume that the contribution of the CDM will come close to what is projected by global models (both for prices and quantities) is to assume that such projects could be credited under the CDM. This revised version was published online in July 2006 with corrections to the Cover Date.     

Assessing the impact of environmental regulation on pollution abatement and collaborative emissions reduction: Micro-evidence from Chinese industrial enterprises

Given the rapid industrialization and urbanization of China, environmental problems have gradually become major constraints that hinder its sustainable economic development. Moreover, China's pollution abatement and reduction of greenhouse gas emissions have been severely affected by pressures coming from domestic environmental appeals and international environmental diplomacy. By using integrated data from the Chinese Industrial Enterprise and the Chinese Enterprise Environmental Survey and Reporting databases, this study constructs comprehensive indicators of pollutant discharge intensity and carbon emissions index at the enterprise level and uses the panel fixed effect model, Kaya identity, and mediation effect model to assess the effects of environmental regulations on pollution abatement and collaborative emissions reduction from the micro-perspective. Results show that these regulations can abate the pollution emissions of Chinese industrial enterprises and verify the effectiveness of environmental policies. These regulations can also efficiently reduce the carbon dioxide emissions of enterprises through pollution abatement. In other words, environmental regulations facilitate a collaborative emissions reduction of pollutant and greenhouse gas emissions from enterprises. Such collaborative emissions reduction effect is also influenced by the energy structure and consumption of enterprises. This paper presents empirical evidence and policy basis for further improving China's environmental regulation policy system and achieving coordinated progress in China's economic development and environmental governance.     

Transboundary Pollution and Absorptive Capacity

The impact of the investment in absorptive capacity on transboundary pollution is studied by considering two countries, each of them regulating a firm. Firms can invest in inventive research and in absorptive research to lower their pollution intensity. The absorptive research enables a firm to capture part of the inventive research made by the other one. We show that by means of adequate emission taxes, original and absorptive research and development (R&D) subsidies, regulators can reach the non-cooperative social optimum. Interestingly, we show that the investment in absorptive research enables non-cooperating regulators to better internalize transboundary pollution. The higher is the learning parameter of absorption, the greater is the proportion of transboundary pollution internalized. Therefore, it is recommended for the international community to make the patent laws more flexible and enabling learning from the research made by others more interesting. Moreover, the investment in absorptive R&D may lead to multiple equilibria necessitating non-cooperating countries to coordinate on an equilibrium, which constitutes an incentive for them to cooperate.     

Global Emission Ceiling Versus International Cap and Trade: What is the Most Efficient System to Solve the Climate Change Issue?

We model the climate change issue as a pollution control game with the purpose of comparing two possible departures from the business as usual (BAU) where countries noncooperatively choose their emission levels. In the first scenario, players have to agree on a global emission cap (GEC) that is enforced by a uniform taxation scheme. They still behave strategically when choosing emission levels but are now subject to the coupled constraint imposed by the cap. The second scenario consists of the implementation of an international cap and trade (ICT) system. In this case, players decide on their emission quotas, and emission trading is allowed. A three heterogenous player quadratic game serves as a basis for the analysis. When the cap is binding, among all the coupled constraints Nash equilibria, we select a particular normalized equilibrium by solving a variational inequality. Comparing the normalized equilibrium with the Nash equilibria of the BAU and the ICT, we first show that if the cap is appropriately chosen, then the GEC system improves all players’ payoffs, relative to the BAU. The GEC system may thus be unanimously approved whereas the ICT is not, because moving from the BAU to the ICT is costly for one player. Second, for some values of the cap, all players get a higher payoff under the GEC than under the ICT. Therefore, the GEC outperforms the ICT both in terms of feasibility and efficiency.     

Dynamical Allocation Method of Emission Rights of Pollutants by Viability Constraints Under Tychastic Uncertainty

This study proposes a method of dynamic decentralization by constraints and its associated software. It can be used to allocate pollutant emissions rights among the different polluters such that they achieve both given global and local emission thresholds not to be transgressed. Knowing the maximum growth rates of polluting emissions of each polluter in the worst case, this method provides the rule of a dynamic allocation of pollutant emissions rights as well as the required initial emissions of each polluters assuring that, whatever the growth rates of the emissions below the maximum growth rates, the resulting emissions will be, both globally and locally, under their thresholds. These guaranteed initial emissions supply each polluter with a measure of risk insurance. This problem, formulated as a “tychastic” regulated system with viability constraints, is solved with mathematical and algorithmic tools of viability theory and numerical results obtained by a dedicated software are presented.     

Assessment of New Vehicles Emissions Certification Standards in the Metropolitan Area of Mexico City

Light duty gasoline vehicles account for most of CO hydrocarbons and NOx emissions at the Metropolitan Area of Mexico City (MAMC). In order to ameliorate air pollution from the beginning of 2001, Tier 1 emission standards became mandatory for all new model year sold in the country. Car manufacturers in Mexico do not guarantee the performance of their exhaust emissions systems for a given mileage. The purpose of this study was to assess whether the Tier 1 vehicles will stand the certification values for at least 162000 km with the regular fuel available at the MAMC. Mileage accumulation and deterioration show that certified carbon monoxide emissions will stand for the useful life of the vehicles but in the case of non-methane hydrocarbons will be shorter by 40%, and nitrogen oxides emissions above the standard will be reached at one third of the accumulated kilometers. The effect of gasoline sulfur content, on the current in use Tier 1 vehicles of the MAMC and the impact on the emissions inventory in year 2010 showed that 31000 extra tons of NOx could be added to the inventory caused by the failure of the vehicles to control this pollutant at the useful life of vehicles.     

河南省资源环境基尼系数分析

选取2013年河南省资源和环境污染指标进行资源环境基尼系数和绿色贡献系数分析。结果表明,2013年河南省资源消耗、SO2、NOX、烟(粉)尘、COD和NH3-N排放量的资源环境基尼系数分别为0.17,0.32,0.19,0.37,0.28和0.25。指出,烟(粉)尘排放的资源环境基尼系数已接近0.4的国际警戒线;河南省应对烟(粉)尘排放分配加以控制和调整;郑州、南阳和许昌的经济贡献率均大于其资源消耗和污染物排放占全省的比例,对全省的公平性分配贡献较大。     

Emissions of Particulate and Gaseous Pollutants within the Keelung Harbor Region of Taiwan

The Keelung port, which is located on the northern tip of Taiwan, right next to the Taipei metropolitan area, is an important international harbor. However, any air pollutants generated from the Keelung port region, immediately travel to the neighboring Keelung city, and greatly impact the residents' daily life and the quality of their environment. This study has investigated and quantified pollution emissions, from the Keelung port region, between 1997 and 2002. Emissions from major air pollution sources were estimated. The estimated results indicated that total TSP (total suspended particles) emissions had significantly increased, from 5221 ton/yr in 1997 to 262 687 ton/yr in 2002, due to the greatly increased volume of sand imported into Keelung Harbor. Quantities of other emissions, such as SO₂, NO₂, CO and HC remained stable and were 440, 207, 78 and 25 ton/yr, respectively, on average, with variations within 7% over the previous six-year period. By examining the emissions from pollution sources, it was found that TSP emissions mainly originated from re-suspension of dust, due to both vehicle movement and the sand unloading process; this accounted for over 99% of the total TSP emissions produced in the port region. About 80% of the total SO₂ emissions originated from the main ships' engines within the Keelung port region, due to the use of fuel with a high sulfur content. In addition, loading/unloading machines within the port region were the major sources of NO₂, CO and HC pollution emissions, which comprised 54, 58 and 66% of the total emissions of these pollutants, respectively. TSP emissions from Keelung port were much higher than from the neighboring Keelung city; hence, alleviating TSP emissions should be the first priority for air pollution reduction within both the port of Keelung and Keelung city.     

连云港蔷薇河非点源污染的调查分析

调查分析蔷薇河非点源废水排放情况,结合相关统计资料,核算出蔷薇河非点源废水污染物的排放量。结论表明,农田回归水污染是蔷薇河水体非点源污染的主要因素。     

Open-source methods for estimating health risks of fine particulate matter from coal-fired power plants: A demonstration from Karachi,Pakistan

Environmental impact assessments (EIAs) effectiveness and accessibility by the public is determined by local environmental enforcement and regulation. Massive energy infrastructure projects like China's Belt and Road initiative (BRI) could accentuate social and economic costs, as regulation is deferred to host countries with varying levels of domestic enforcement. To fill major gaps in the public evaluation of EIA practices and results, our objective here is to present an open-source approach for evaluating localized air pollution health impacts for BRI-financed coal-fired power plants. This analysis focuses on one specific problem, additional attributable mortality from stroke, ischemic heart disease, and chronic obstructive pulmonary disease for adults ages 25–84 from fine particulate matter (PM_2.5), known to be major risk factor for premature deaths globally. As a concrete example, we examine the case of the Port Qasim power plant located near Karachi, Sindh Province, Pakistan. We present results for two main scenarios: a base case, assuming fully operational pollution control technologies, in particular electrostatic precipitators (ESP); and an alternative case without ESPs. All material and methods for replicating this analysis for the case study and for other projects are available in our institutional open repository. Our approach can be applied immediately to virtually any source location in the world, due to the public and global availability of input data.SynopsisWe present an open-source approach for evaluating localized health impacts due to fine particulate matter emitted from coal-fired power plants.     

Assessing the effects of noise abatement measures on health risks: A case study in Istanbul

In recent decades, noise pollution caused by industrialization and increased motorization has become a major concern around the world because of its adverse effects on human well-being. Therefore, transportation agencies have been implementing noise abatement measures in order to reduce road traffic noise. However, limited attention is given to noise in environmental assessment of road transportation systems. This paper presents a framework for a health impact assessment model for road transportation noise emissions. The model allows noise impacts to be addressed with the health effects of air pollutant and greenhouse gas emissions from road transportation. The health damages assessed in the model include annoyance, sleep disturbance, and cardiovascular disease in terms of acute myocardial infarction. The model was applied in a case study in Istanbul in order to evaluate the change in health risks from the implementation of noise abatement strategies. The noise abatement strategies evaluated include altering pavement surfaces in order to absorb noise and introducing speed limits. It was shown that significant improvements in health risks can be achieved using open graded pavement surfaces and introducing speed limits on highways.