Modelling emissions trading and abatement costs in FAIR 1.1 - Case study: the Kyoto Protocol under the Bonn-Marrakesh Agreement
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Open Access
Type
Report
Language
nl
Date
2002-09-30
Research Projects
Organizational Units
Journal Issue
Title
Modelling emissions trading and abatement costs in
FAIR 1.1 - Case study: the Kyoto Protocol under the Bonn-Marrakesh
Agreement
Translated Title
Modelering van emissiehandel en mitigatiekosten in
FAIR 1.1 - Case Studie: Het Kyoto Protocol onder het Bonn-Marrakesh
Akkkoord
Published in
Abstract
Dit rapport beschrijft het kostenmodel van het FAIR
model (Framework to Assess International Regimes for differentiation of
commitments). Het kostenmodel is gebruikt voor eerdere analyses van de
evaluatie van de milieueffectiviteiten kosten van het Kyoto Protocol na het
Bonn-Marrakesh akkoord. Het kostenmodel bevat marginale kosten curves, die
gebruikt kunnen worden voor de berekening van de marginale en totale kosten,
het verkennen van de voordelen van emissiehandel in een internationale
emissiemarkt. De berekeningen maken gebruik van geaggregeerde vraag en
aanbod curves, welke zijn afgeleid van deze kosten curves. Om de methode te
illustreren presenteren we de case studie van het Bonn-Marrakesh Akkoord
voor de periode 2008-2012. De case studie bevestigt de conclusies van onze
eerdere studies: het terugtrekken van de VS heeft verreweg de grootste
invloed op de verminderde milieueffectiviteit van het Kyoto Protocol, de
afname van de prijs op de internationale emissiemarkt en het verminderen van
de totale emissiereductie-kosten van het Protocol. De Marrakesh
Overeenkomst brengt de emissies van alle broeikasgassen van de Annex I
landen in 2010 zonder de VS een 4 procent onder het niveau van het
basisjaar; dit is niet hetzelfde vergeleken met het 1990-niveau. Zonder de
VS echter zal de vraag naar emissierechten sterk dalen en daardoor de prijs
op de internationale emissiemarkt (minder dan US$10/tC). Hot air wordt een
zeer dominant probleem, met name in lagere groeiscenario's, en kan zelfs de
ontwikkeling van de emissiemarkt ondermijnen omdat de prijs naar nul dreigt
te gaan. Het banken van hot air van cruciaal belang is voor het versterken
van zowel de milieueffectiviteit van het Protocol als de ontwikkeling van
een internationale emissiemarkt. Een strategie gericht op het beperken en
banken van het aanbod is ook in het voordeel van de belangrijkste aanbieder,
dat is de Annex I FSU regio.
This report describes the cost model of the FAIR 1.1 model (Framework to Assess International Regimes for differentiation of future commitments). The cost model has been used in our earlier analysis of the evaluation of the environmental effectiveness and economic efficiency of the Kyoto Protocol after the Bonn-Marrakesh Agreement. The cost model includes Marginal Abatement cost (MAC) curves, which can be used to determine marginal and total abatement costs, to examine the gains of emissions trading in a competitive trading market. The default calculations in the cost model make use of the properties of the permit demand and supply curves, derived from MAC curves, in order to compute the market equilibrium permit price, abatement costs and emissions trading for the various regions. In order to illustrate the methodology we present the case study of the Bonn-Marrakesh Agreement in the first commitment period, i.e. 2008-2012. The case study confirms the main conclusions of our earlier policy report: the US withdrawal has by far the greatest impact in reducing the environmental effectiveness, lowering the price of traded emission permits and reducing Annex I abatement costs. Overall, Annex I CO2-equivalent emissions without the US will come out at about 4 per cent below base-year level, but if sinks are seen as efforts additional to emission reductions to capture the overall decreasing effect on CO2 built-up, this will increase to over 4 per cent. Without US participation, the emission permit price is estimated to be in a range up to US$10/tC. Hot air becomes increasingly dominant and may threaten the viability of the Kyoto Mechanisms, especially in lower baseline scenarios. Therefore, banking of hot air is of absolute importance to improve the environmental effectiveness of the Protocol at moderately higher costs, while enhancing the development of a viable emission trading market. A strategy of curtailing and banking permit supply is also in the interest of the dominant seller, Russia and the Ukraine.
This report describes the cost model of the FAIR 1.1 model (Framework to Assess International Regimes for differentiation of future commitments). The cost model has been used in our earlier analysis of the evaluation of the environmental effectiveness and economic efficiency of the Kyoto Protocol after the Bonn-Marrakesh Agreement. The cost model includes Marginal Abatement cost (MAC) curves, which can be used to determine marginal and total abatement costs, to examine the gains of emissions trading in a competitive trading market. The default calculations in the cost model make use of the properties of the permit demand and supply curves, derived from MAC curves, in order to compute the market equilibrium permit price, abatement costs and emissions trading for the various regions. In order to illustrate the methodology we present the case study of the Bonn-Marrakesh Agreement in the first commitment period, i.e. 2008-2012. The case study confirms the main conclusions of our earlier policy report: the US withdrawal has by far the greatest impact in reducing the environmental effectiveness, lowering the price of traded emission permits and reducing Annex I abatement costs. Overall, Annex I CO2-equivalent emissions without the US will come out at about 4 per cent below base-year level, but if sinks are seen as efforts additional to emission reductions to capture the overall decreasing effect on CO2 built-up, this will increase to over 4 per cent. Without US participation, the emission permit price is estimated to be in a range up to US$10/tC. Hot air becomes increasingly dominant and may threaten the viability of the Kyoto Mechanisms, especially in lower baseline scenarios. Therefore, banking of hot air is of absolute importance to improve the environmental effectiveness of the Protocol at moderately higher costs, while enhancing the development of a viable emission trading market. A strategy of curtailing and banking permit supply is also in the interest of the dominant seller, Russia and the Ukraine.
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