Uncertainty,cost-effectiveness and environmental safety of robust carbon trading: integrated approach

Carbon markets, like other commodity markets, are volatile. They react to stochastic “disequilibrium” spot prices, which may be affected by inadequate policies, speculations and bubbles. The market-based emission trading, therefore, does not necessarily minimize abatement costs and achieve emission reduction goals. We introduce a basic stochastic model integrating emissions reduction, monitoring and trading costs allowing us to analyze the robustness of emission and uncertainty reduction policies under environmental safety constraints asymmetric information and other multiple anthropogenic and natural uncertainties. Explicit treatment of uncertainties provides incentives for reducing them before trading. We illustrate functioning of the robust market with numerical results involving such countries as the US, Australia, Canada, Japan, EU27, Russia, Ukraine. In particular, we analyze if the knowledge about uncertainties may affect portfolios of technological and trade policies or structure of the market and how uncertainty characteristics may affect market prices and change the market structure.     

Trading biomass or GHG emission credits?

Global biomass potentials are considerable but unequally distributed over the world. Countries with Kyoto targets could import biomass to substitute for fossil fuels or invest in bio-energy projects in the country of biomass origin and buy the credits (Clean Development Mechanism (CDM) and Joint Implementation (JI)). This study analyzes which of those options is optimal for transportation fuels and looks for the key variables that influence the result. In two case studies (Mozambique and Brazil), the two trading systems are compared for the amount of credits generated, land-use and associated costs. We found costs of 17–30 euro per ton of carbon for the Brazilian case and economic benefits of 11 to 60 euros per ton of carbon avoided in the Mozambique case. The impact of carbon changes related to direct land-use changes was found to be very significant (both positive and negative) and can currently only be included in emission credit trading, which can largely influence the results. In order to avoid indirect land-use changes (leakage) and consequent GHG emissions, it is crucial that bioenergy crop production is done in balance with improvements of management of agriculture and livestock management. Whatever trading option is economically most attractive depends mainly on the emission baseline in the exporting (emission credit trading) or importing (physical trading) country since both bio- and fossil fuel prices are world market prices in large scale trading systems where transportation costs are low. Physical trading could be preferential since besides the GHG reduction one could also benefit from the energy. It could also generate considerable income sources for exporting countries. This study could contribute to the development of a methodology to deal with bio fuels for transport, in Emission Trading (ET), CDM and the certification of traded bio fuels.     

CO 2 emission trading model with trading prices

In this paper we consider the buying/selling prices of carbon dioxide (CO₂) emission permits in trading models with uncertainty. Permission prices, although usually omitted from standard models, may significantly influence the trading market. We thus undertook to construct a more realistic trade model and to compare it with the standard one. To do this, we introduced several important changes to the standard model, namely, (1) a new optimized quality function; and (2) transactions with price negotiations between regions. We also enhanced the model using methods described in the literature to allow it to deal with reported emissions uncertainty. Additionally, we used an original method of simulating this kind of market based on a specialized evolutionary algorithm (EA).     

Optimal carbon dioxide abatement and technological change: should emission taxes start high in order to spur R&;D?

Many European politicians argue that the EU should set tougher emission targets than what is required by the Kyoto protocol, and moreover, that emission trading with other countries outside EU should be limited so as to keep emission quota prices high. One of the arguments, frequently cited for such a policy, is the need for technological development. However, the literature on climate change and technological innovation does not unambiguously support the need for setting high emission taxes today. In this paper we investigate the relationship between emission taxes and technological change further by modeling innovation activity explicitly. In our model both the amount of R&D and the amount of carbon abatement are decided in a decentralized way by the market as a response to an emission tax. Moreover, we introduce several distinct failures in the market for new innovations, among others, insufficient patent protection and intertemporal knowledge spill-overs. Our findings suggest that governments should under some circumstances set a higher carbon tax today if we have technological change driven by R&D than if we have pure exogenous technological change. Based on numerical simulations these circumstances are (a) positive intertemporal knowledge spillovers and/or (b) weak patent protection.     

Great expectations: can international emissions trading deliver an equitable climate regime?

Climate change equity debates tend to focus on achieving a fair and global ‘allocation’ of emission rights among countries. Allocation proposals typically envision, if implicitly, two purposes for international emissions trading. First, trading is expected to serve as a cost-effective means of promoting compliance with emissions targets. Second, trading is posited as a means to generate financial transfers, typically from industrialized to transitioning and developing countries.This article investigates the common assumption that international emissions trading will effectively serve both of these purposes. We conclude that the two purposes might not be mutually supportive, and that efforts to use international emissions trading as a financial transfer mechanism may potentially undermine cost-effectiveness goals. International emissions trading on a global scale would create new risks in terms of both cost-effectiveness and environmental performance, some of which will be challenging to manage. In particular, uncertainties over market prices and trading eligibility, coupled with the costs of participation, may together be the Achilles heel of some allocation proposals that entail large financial transfers from industrialized to developing countries. Any proposal for an ‘equitable’ allocation of emission allowances, we conclude, must be cognizant of the risks and costs implied by a reliance on international emissions trading. We offer some suggestions to this end.     

Great expectations: can international emissions trading deliver an equitable climate regime?

Abstract

Climate change equity debates tend to focus on achieving a fair and global ‘allocation’ of emission rights among countries. Allocation proposals typically envision, if implicitly, two purposes for international emissions trading. First, trading is expected to serve as a cost-effective means of promoting compliance with emissions targets. Second, trading is posited as a means to generate financial transfers, typically from industrialized to transitioning and developing countries.

This article investigates the common assumption that international emissions trading will effectively serve both of these purposes. We conclude that the two purposes might not be mutually supportive, and that efforts to use international emissions trading as a financial transfer mechanism may potentially undermine cost-effectiveness goals. International emissions trading on a global scale would create new risks in terms of both cost-effectiveness and environmental performance, some of which will be challenging to manage. In particular, uncertainties over market prices and trading eligibility, coupled with the costs of participation, may together be the Achilles heel of some allocation proposals that entail large financial transfers from industrialized to developing countries. Any proposal for an ‘equitable’ allocation of emission allowances, we conclude, must be cognizant of the risks and costs implied by a reliance on international emissions trading. We offer some suggestions to this end.     

我国“十二五”时期建立碳交易市场的政策思考

基于对国际碳市场的调研和定量分析,建议我国碳市场建设之初,应首先选择电力、钢铁等对碳价格敏感的高排放强度行业进入碳市场;尽早开展跨地区交易,便于有效降低总体减排成本;同时碳排放总量上限的设定应与 “十二五”时期的碳强度下降目标挂钩;并在市场建立之初设定碳价格下限等。     

全国碳交易下中国钢铁行业的基准线法研究

自2011年来,中国碳排放权交易机制不断健全完善,其中基准线法被确定为全国碳交易初始配额分配的主要方法。钢铁行业作为仅次于电力行业的第二大碳排放部门,加快对其开展基准线法碳交易的测算、设计和评价,对纵深推进全国碳交易市场建设具有重要意义。文中基于2018年钢铁企业直报的温室气体排放数据和单位产品碳强度这一关键指标,确定了中国钢铁行业开展全国碳交易的基准线方案。结果显示,钢铁行业碳交易基准线应包括炼钢及之前的6个工序,基准值宜采用效率较高的前70%至80%范围内的企业碳强度均值,在配额确定时无需考虑行业区域差异,但针对企业间碳强度差异较大的工序应设立从历史法到基准线法的过渡期。     

中国农业温室气体减排交易的机遇与挑战

 在介绍国际碳市场情况的基础上,总结潜在的农业温室气体减排交易项目类型,探讨中国如何在国际碳市场前景不明朗、自愿碳市场刚刚起步,以及国内实现节能减排目标和实施生态补偿机制的机遇中,克服农业温室气体减排项目所面临的单位减排量小、交易成本高、方法学和独立的第三方认证机构缺乏,以及国内交易平台尚不规范的困难,积极探索利用市场机制控制农业温室气体排放的方法。     

全国碳排放权交易市场下电解铝行业基准线法研究

2011年以来,我国碳排放权交易市场建设不断加快,碳排放权交易机制不断健全完善,其中基准线法被确定为全国碳交易初始配额分配的主要方法。电解铝行业是我国能源消耗和碳排放的重点部门,尽早将该行业纳入碳市场对于行业减排、纵深推进全国碳市场交易以及应对国际碳边境调节机制政策均有重要意义。基于2018年电解铝行业直报的碳排放相关数据,确定了我国电解铝行业开展全国碳交易的基准线方案。结果显示,电解铝行业宜选取8.12~8.15 t CO₂/t铝作为基准线取值,不需设置区域差异调整系数。同时为保证电解铝行业碳交易的顺利开展,还需尽快确定行业配额方案,进一步完善企业排放量的监测、报告和核查以提高核查填报数据质量,以及进一步研究电解铝行业碳排放核算的范围。     

Carbon emission trading and carbon taxes under uncertainties

The idea of market-based carbon emission trading and carbon taxes is gaining in popularity as a global climate change policy instrument. However, these mechanisms might not necessarily have a positive outcome unless their value reflects socioeconomic and environmental impacts and regulations. Moreover, the fact that they have various inherent exogenous and endogenous uncertainties raises serious concerns about their ability to reduce emissions in a cost-effective way. This paper aims to introduce a simple stochastic model that allows the robustness of economic mechanisms for emission reduction under multiple natural and human-related uncertainties to be analyzed. Unlike standard equilibrium state analysis, the model shows that the explicit introduction of uncertainties regarding emissions, abatement costs, and equilibrium states makes it almost impossible for existing market-based trading and carbon taxes to be environmentally safe and cost-effective. Here we propose a computerized multi-agent trading model. This can be viewed as a prototype to simulate an emission trading market that is regulated in a decentralized way. We argue that a market of this type is better equipped to deal with long-term emission reductions, their direct regulation, irreversibility, and “lock-in” equilibria.     

Effectiveness of pilot carbon emissions trading systems in China

China is in the process of establishing a national emissions trading system (ETS). Evaluating the implementation effectiveness of the seven pilot ETSs in China is critical for designing this national system. This study administered a questionnaire survey to assess the behaviour of enterprises covered by the seven ETS pilots from the perspective of: the strictness of compliance measures; rules for monitoring, reporting and verification (MRV); the mitigation pressure felt by enterprises; and actual mitigation and trading activities. The results show that the pilot MRV and compliance rules have not yet been fully implemented. The main factors involved are the lack of compulsory force of the regulations and the lack of policy awareness within the affected enterprises. Most enterprises have a shortage of free allowances and thus believe that the ETSs have increased their production costs. Most enterprises have already established mitigation targets. Some of the covered enterprises are aware of their own internal emission reduction costs and most of these have used this as an important reference in trading. Many enterprises have accounted for carbon prices in their long-term investment. The proportion of enterprises that have participated in trading is fairly high; however, reluctance to sell is quite pervasive in the market, and enterprises are mostly motivated to trade simply in order to achieve compliance. Few enterprises are willing to manage their allowances in a market-oriented manner. Different free allowance allocation methods directly affect the pathways enterprises take to control emissions.

Key policy insights

• In the national ETS, the compulsory force of ETS provisions should be strengthened.

• A reasonable level of free allowance shortage should be ensured to promote emission reduction by enterprises.

• Sufficient information should be provided to guide enterprises in their allowance management to activate the market.

• To promote the implementation of mitigation technologies by enterprises, actual output-based allocation methods should be used.

• The government should use market adjustment mechanisms, such as a price floor and ceiling, to ensure that carbon prices are reasonable and stable, so as to guide long-term low carbon investment.

     

公共建筑运营企业温室气体排放核算方法探讨

本文从完整性的角度提出了中国公共建筑运营企业温室气体排放核算方法,进行了案例分析,并对其在中国未来碳排放交易市场中的应用提出了建议。研究表明,公共建筑运营企业排放核算主要采用活动数据法,核算范围包括化石燃料燃烧排放、逸散型排放、新种植树木的排放抵消、外购电力和热力的排放。案例分析表明,电力和热力引起的排放占88.32%;制冷剂逸散排放、灭火器使用引起的排放、化粪池CH₄的排放、树木吸收的CO₂（即排放量为负值）占比都较小;汽车移动源的排放占11.99%,是否应纳入主要依据核算排放量的用途。对中国未来碳排放交易市场,公共建筑物排放的核算范围,初期仅考虑化石燃料燃烧排放、外购电力和热力的排放是合理的。     

EU ETS对欧洲电力行业的影响及对我国的建议

简要介绍欧盟排放交易体系（EU ETS）的发展情况,调研EU ETS对欧洲电力行业影响的研究现状,认为EU ETS将增加发电企业的生产成本,迅速提高电力市场价格,大幅增加发电企业利润,刺激能源技术投资和创新。同时简要评述EU ETS引发的争议问题,包括当前EU ETS对发电企业和电力市场的实际影响、发电企业巨额利润问题的产生原因等。在此基础上,对比中国和欧盟之间的差异,初步分析建设国内碳交易市场将对我国电力行业产生的影响,最后对我国建设碳交易市场提出建议。     

实现国家自主贡献目标背景下我国碳交易机制研究

以实现国家自主贡献目标为背景,运用电力行业细分的递推动态可计算一般均衡（CGE）模型,模拟我国统一碳市场下不同碳交易机制的实施效果及其经济影响。研究表明,全国统一碳市场有助于我国实现国家自主贡献目标,并且可以缓解碳减排对经济增长造成的负面影响;相比基于碳排放量免费分配初始碳配额的“祖父法则”,基于碳强度基准免费分配初始碳配额的“标杆法则”可以降低碳交易价格、增加碳配额交易量并扩大碳市场规模;采取拍卖方式有偿分配初始碳配额时碳市场中各行业面临更大的减排成本,但有利于增加政府收入;对碳市场未覆盖的行业和居民户征收碳税能有效控制其碳排放、增加政府财政收入、降低碳交易价格并促进我国国家自主贡献目标的实现;全国统一碳市场在抑制火电行业发展的同时将不同程度地促进清洁能源发电部门的发展。     

Russia at GHG Market

In the first Kyoto commitment period Russia could be the major supplier for the greenhouse gases (GHG) emissions market. Potential Russian supply depends on the ability of Russia to keep GHG emissions lower than the Kyoto target. In the literature there is no common understanding of the total trading potential of Russia at the international carbon market. In this paper we focus on CO₂ emission, which constituted nearly 80%of Russian GHG emission. We compare different projections of Russian CO₂emission and analyze the most important factors, which predetermine the CO₂emission growth. In a transition economy these factors are: Gross Domestic Product(GDP) dynamic, changes of GDP structure, innovation activity, transformation of export-import flows and response to the market signals. The input-output macroeconomic model with the two different input-output tables representing old and new production technologies has been applied for the analysis to simulate technological innovations and structural changes in the Russian economy during transition period. The Russian supply at the international GHG market without forest sector may be up to 3 billion metric ton of CO₂ equivalent. Earlier actions to reduce CO₂ emission are critical to insure theRussiansupply at the international carbon market. With regard to the current status of the Russian capital market, the forward trading with OECD countries is only the possibility to raise initial investments to roll no-regret and low-cost GHG reduction. This paper discusses uncertainties of RussianCO₂emission dynamics and analyzes the different incentives to lower the emission pathway.     

Global CO2 emissions trading: Early lessons from the U.S. acid rain program

The U.S. Environmental Protection Agency is implementing a program of SO₂ emission allowance trading as part of the Acid Rain Program authorized by the Clean Air Act Amendments of 1990. Electric utilities may use allowance trading as part of their compliance strategy to meet SO₂ emission reduction requirements, which begin in 1995. In the interest of a free market in emission credits, some utilities began trading in 1992. A strict but essential requirement for continuous-emissions monitoring was developed to support the trading program. This program is being widely watched and will be evaluated as part of an effort to determine if market concepts can be successfully extended to other environmental issues. One such issue is greenhouse gas emissions and their link with global warming and climate change. This paper focuses on the early lessons learned, issues, and challenges involved in going from a domestic electric utility SO₂ emissions trading program to inter-industry, inter-gas and international as well as national emissions trading and offsets programs. Prominent among these issues are CO₂ allowance allocations, equity, emissions monitoring, enforcement, and cost-effectiveness.Paper presented at the90th Annual Meeting of the Association of American Geographers, San Francisco, April 2, 1994, at the Air & Waste Management Association International Specialty Conference onGlobal Climate Change, Tempe, Arizona, April 8, 1994, and at a Cornell University Center for the Environment seminar on global climate change, April 25, 1994. I thank Michael Grubb, Joe Kruger, Elliot Lieberman, Brian McLean, Renee Rico, Richard Schuler and two anonymous referees for helpful comments on previous drafts of this paper. The views and opinions expressed herein are those of the author alone, and do not necessarily represent the policies of the U.S. Environmental Protection Agency.     

Economic,institutional and technological uncertainties of emissions trading—a system dynamics modeling approach

System dynamics models are employed for analyzing the impact of different uncertainties on carbon emission trading–both on national and business levels. Economic, institutional and technological uncertainties significantly influence any country's benefits from emission permit trading. If a country participates in trading on the international market then the possible price range becomes the source of additional uncertainty. In the case of business investment decisions for implementing resource‐saving technology, our system dynamics model shows that the first‐mover investor will get significantly fewer advantages than his followers, which leads to delay in primary investment to the sector.     

不同监管强度下碳排放权交易违约行为的实验研究

2017年底中国全国碳市场启动,全球正式运行的碳排放权交易体系达到21个。伴随碳排放权交易的广泛开展,加之产品市场不确定性的冲击,控排企业的违约行为也日益多样化和复杂化。基于此,根据中国碳市场试点地区的通行交易规则,通过在产品市场中引入随机冲击,分析在具有储蓄机制且存在不确定性需求的碳交易体系中,企业违约行为的方式以及监管强度对企业违约行为的影响。研究结果表明:抽查比例较高的强监管设置下被试不会产生系统动机来排放违约,弱监管设置下明显的报告违约会导致排放总量上升。即使面临不确定性冲击,储蓄机制依然能促进控排企业以一个相对有效的方式跨期分配生产量。因此给出如下建议:违约处罚应该分级,报告违约处罚力度应大于排放违约;为提高实际履约率,各地应提高排放报告抽查比例;完善配额储蓄机制。     

The economic impacts of introducing CCER trading and offset mechanism into the national carbon market of China北大核心CSCD

基于中国风电及光伏国家核证自愿减排量(CCER)现状及发展趋势,针对CCER供给、抵销和价格形成等关键机制问题,运用电力部门细分的递推动态可计算一般均衡(CGE)模型,模拟了在取消电价补贴的背景下全国碳市场引入风电及光伏CCER交易及抵销机制的经济影响。研究发现:引入CCER交易及抵销机制会降低碳配额交易价格,并缓解取消电价补贴对风电和光伏电力的负面影响,但也会削弱全国碳市场的碳减排效果,且随着CCER供给总量增加这些作用更明显;全国碳市场引入CCER交易及抵销机制后,碳排放强度较高的控排行业将选择购买更多的CCER,其中火电行业是主要的CCER需求方;未来我国如果不放开CCER项目备案审批则风电行业将是主要受益方,而未来适度放开CCER项目备案审批则风电和光伏行业都将从中受益。因此,全国碳市场在引入CCER交易及抵销机制的同时需从紧设置初始碳配额发放量,并可考虑适时重启CCER项目备案审批工作以更好地促进风电和光伏电力的发展,但允许的CCER清缴比例上限应结合碳减排目标合理设定,以避免对全国碳市场产生较大冲击。