Abstract

The objective of this paper is to assess the likely allocation effects of the current climate protection strategy as it is laid out in the National Allocation Plans (NAPs) for the European Emissions Trading Scheme (ETS). The multi-regional, multi-sectoral CGE-model DART is used to simulate the effects of the current policies in the year 2012 when the Kyoto targets need to be met. Different scenarios are simulated in order to highlight the effects of the grandfathering of permits to energy-intensive installations, the use of the project-based mechanisms (CDM and JI), and the restriction imposed by the supplementarity criterion.

Highlights

  • While existing simulation studies are based on hypothetical allowance allocation to the Emissions Trading Scheme (ETS) and ignore the possibility of using Clean Development Mechanism” (CDM) and Joint Implementation” (JI) credits within the ETS and by European governments, the objective of this paper is to examine the implications of the current National Allocation Plans (NAPs) under different assumptions about the use and availability of CDM and JI credits using the DART model (Klepper et al 2003)

  • Simulation Results The simulation results of the different scenarios are derived from running the DART-model over the entire period from 1997 to 2012 when the Kyoto targets will be binding

  • Summary and Conclusions In this paper, we have analyzed the effects of the current National Allocation Plans (NAPs) for the European emissions trading scheme (ETS) by focusing on the allocation effects of meeting the European Kyoto targets in 2012

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Summary

Scenarios that were Run with the DART Model

One of the major components of the European climate strategy aimed at reaching the European Kyoto targets is the European Emissions Trading Scheme (ETS) for CO2. Some NAPs indicate the targets for the ETS sectors until 2012 Given this information it is possible to determine how the different EU member states plan to achieve their Kyoto targets in terms of domestic reductions in and outside the ETS and reductions abroad. While existing simulation studies are based on hypothetical allowance allocation to the ETS and ignore the possibility of using CDM and JI credits within the ETS and by European governments, the objective of this paper is to examine the implications of the current NAPs under different assumptions about the use and availability of CDM and JI credits using the DART model (Klepper et al 2003). The information gathered can be used to design the policy simulations and to interpret the results

Distance to the European Kyoto Targets
The European Climate Strategies
The Role of Hot-Air
The DART Model
Policy Scenarios for the ETS
The Current Climate Strategy of the EU
Making Optimal Use of CDM and JI
Sensitivity Analysis with Respect to Transaction Costs of CDM and JI
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