The MIT Emissions Prediction and Policy Analysis (EPPA) model is applied to an exploration of the national emissions obligations that would be required to stabilize atmospheric CO2 concentrations at levels now under active discussion. The results indicate that the needed voluntary participation will be difficult to achieve, not least because nations at very different income levels would have to undertake similarly costly emissions restrictions. The need for more attention to the linkage between short-term policy proposals and long-term stabilization goals is highlighted.

In the recent United Nations Framework Convention on Climate Change (UNFCCC) negotiations, sectoral trading was proposed to encourage early action and spur investment in low carbon technologies in developing countries. This mechanism involves including a sector from one or more nations in an international cap-and-trade system. We analyze trade in carbon permits between the Chinese electricity sector and a US economy-wide cap-and-trade program using the MIT Emissions Prediction and Policy Analysis (EPPA) model. In 2030, the US purchases permits valued at $42 billion from China, which represents 46% of its capped emissions. In China, sectoral trading increases the price of electricity and reduces aggregate electricity generation, especially from coal. However, sectoral trading induces only moderate increases in generation from nuclear and renewables. We also observe increases in emission from other sectors. In the US, the availability of cheap emissions permits reduces the cost of climate policy and increases electricity generation.

© 2011 World Scientific Publishing Co.

Global climate change has been on the international environmental agenda for the last decade, but policymakers are still struggling to develop an effective solution to this looming problem. Climate change concerns are based on the idea that greenhouse gases (GHGs), produced primarily from the burning of fossil fuels, accumulate in the earth's atmosphere, trapping heat and causing global temperatures to rise. Although a coordinated global effort to reduce emissions is the preferred starting point, initial efforts to devise an equitable and cost-effective international regime to lower GHG emissions have yielded only mixed results. The most ambitious international regime to be developed thus far, the Kyoto Protocol, suffered a severe setback when the United States announced its withdrawal in 2001. Ironically, U.S. intransigence enabled the European Union (EU) to rally support for the Protocol, and the agreement appears likely to obtain the signatures necessary to enter into force. Russian ratification of the Protocol, anticipated for 2003, will be key to its success. The paradox is that Russia's participation and the United States's absence moves the agreement from one requiring costly emissions reductions for most to one that can be accomplished with little real effort for some countries-though others will still have to enact costly domestic measures-and with very little overall environmental benefit. As the Kyoto Protocol nears the requirements for entry into force, there is a pressing need for a look backward at how we arrived at our current predicament, and a look forward to whether the current agreement can evolve into a truly global regime that brings about real reductions from all major emitters.

© 2003 Georgetown journal of International Affairs

The potential for greenhouse gas (GHG) restrictions in some nations to drive emission increases in other nations, or leakage, is a contentious issue in climate change negotiations. We evaluate the potential for border carbon adjustments (BCAs) to address leakage concerns using an economy-wide model. For 2025, we find that BCAs reduce leakage by up to two-thirds, but result in only modest reductions in global emissions and significantly reduce welfare. In contrast, BCA-equivalent leakage reductions can be achieved by very small emission charges or efficiency improvements in nations targeted by BCAs, which have negligible welfare effects. We conclude that BCAs are a costly method to reduce leakage but such policies may be effective coercion strategies. We also investigate the impact of BCAs on sectoral output and evaluate the leakage contributions of trade and changes in the price of crude oil.