Achieving additional emission reductions under a cap-and-trade scheme

Over the last decade, cap-and-trade emissions schemes have emerged as one of the favoured policy instruments for reducing GHG emissions. An inherent design feature of cap-and-trade schemes is that, once the cap on emissions has been set, no additional reductions beyond this level can be provided by the actions of those individuals, organizations and governments within the covered sectors. Thus, the emissions cap constitutes an emissions floor. This feature has been claimed by some to have undesirable implications, in that it discourages ethically motivated mitigation actions and preempts the possibility that local, state and national governments can take additional mitigation action in the context of weak national or regional targets. These criticisms have become prominent in Australia and the US within the public debate regarding the adoption of an emissions trading scheme (ETS). These criticisms and their potential solutions are reviewed. A set-aside reserve is proposed to automatically retire ETS permits, which would correspond to verified and additional emissions reductions. This minimizes the possibility that ethically motivated mitigation actions are discouraged, allows for additional action by other levels of government, while providing transparency to other market participants on the level of permit retirements.     

Tankering strategies for evading emissions trading in aviation

Which actors in the aviation sector ought to be obliged to participate in emissions trading? The European Commission opted for the aircraft operator in their proposal for a Directive. A major drawback is that non-EU aircraft operators might legally challenge their inclusion in this scheme and, if the challenge was successful, discrimination between EU and non- EU operators would undermine the scheme. An alternative would be to place an obligation on fuel suppliers to prove possession of allowances, thus avoiding discrimination. However, emissions trading can be evaded to some extent by increased refuelling beyond EU boundaries (tankering). Typical city pairs were used to analyse the conditions under which such tankering strategies are economically attractive. The analysis shows that the attractiveness of tankering depends substantially on the relationship between fuel prices and allowance prices. If the price relation as of March 2006 is taken as a basis, tankering would be attractive within a radius of up to 4,000 km especially on southbound and eastward routes. Emissions trading could, under unfavourable conditions, be evaded for up to 20% of the total fuel consumption in aviation with the help of tankering. Although this value is only a theoretical upper limit, more than 10% of fuel consumption could be affected by tankering.     

Achieving a low-carbon society

Climate change is perhaps the central challenge that faces humanity. If the concept of green growth is to be anything more than a mere rebranding of the concept of sustainability, then it must elucidate the relationship between economic activity and pollution and provide a more detailed economic account of it. The articles in this Special Issue focus on ways in which GHG emissions may be reduced while satisfying the increasing demand for energy: from global, technological or economic solutions, to sub-national, financial or regulatory ones. Although the wide disparity in income between the least and most wealthy makes it difficult to reach a consensus on the best way to achieve a low-carbon society, the scale and potential effects of climate change make it imperative that one is reached.     

Commitments through financial options: an alternative for delivering climate change obligations

Governments willing to commit themselves to maintain carbon prices at or above a certain level face the challenge that their commitments need to be credible both for investors in low-carbon technology and for foreign governments. This article argues that governments can make such commitments by issuing long-term put option contracts on the price of CO₂ allowances. This mechanism gives investors the right, but not the obligation, to sell allowances to the government at the strike price. From the investors' point of view, a government is therefore fully committed to a price floor for allowances in the future. This proposed approach alters the incentives that a government faces when considering noncompliance and serves to prevent non-compliance. The proposal fares well when assessed against criteria to determine its suitability in legitimacy, enforcement, proportionality, lack of interference from other contracting States, and transparency. It also allows for fine-tuning through the number and duration of issued options and the strike price. A robust contract structure is proposed to protect against government interference that might threaten the credibility of commitments.     

Sectoral targets for developing countries: combining ‘common but differentiated re-sponsibilities’ with ‘meaningful participation’

Although a global cap-and-trade system is seen by many researchers as the most cost-efficient solution to reduce greenhouse gas (GHG) emissions, the governments of developing countries refuse to enter into such a system in the short term. Many scholars and stakeholders, including the European Commission, have thus proposed various types of commitments for developing countries that appear less stringent, such as sectoral approaches. A macroeconomic assessment of such a sectoral approach is provided for developing countries. Two policy scenarios in particular are assessed, in which developed countries continue with Kyoto-type absolute commitments, while developing countries adopt an emissions trading system limited to electricity generation and linked to developed countries' cap-and-trade systems. In the first scenario, CO₂ allowances are auctioned by the government, which distributes its revenues as a lump sum to households. In a second scenario, the auction revenues are used to reduce taxes on, or to give subsidies to, electricity generation. The quantitative analysis, conducted with a hybrid general equilibrium model, shows that such options provide almost as much emissions reduction as a global cap-and-trade system. Moreover, in the second sectoral scenario, GDP losses in developing countries are much lower than with a global cap-and-trade system, as is also the effect on the electricity price.     

NOx or VOC Limitation in East German Ozone Plumes?

The ozone forming potential of VOCs and NO_x for plumes observed from several cities and a power plant in eastern Germany was investigated. A closed box model with a gas phase photochemical reaction mechanism was employed to simulate several scenarios based upon aircraft observations. In several of the scenarios, the initial concentrations of NO_x, VOCs, and SO₂, were reduced to study the factors limiting the O₃ production. Ozone production was limited by the initial VOC concentrations for all of the simulated plumes. Higher O₃ concentrations were produced with reduced initial NO_x. In one sample with high SO₂ mixing ratios (>100 ppb), SO₂ was also identified as a significant contributor to the production of O₃.     

On the Retrieval of Volcanic Sulfur Dioxide Emissions from GOME Backscatter Measurements

We focus on the retrieval of volcanic sulfur dioxide (SO₂) emissions from an analysis of atmospheric UV backscatter spectra obtained by the Global Ozone Monitoring Experiment (GOME) spectrometer on board the ESA European Remote Sensing Satellite (ERS-2). Here, the last major eruptions of Mt. Etna on Sicily (Italy) in July/August 2001 and October/November 2002 provided an excellent opportunity to study the retrieval of SO₂ columnar amounts from ground-based, LIDAR and satellite measurements. Our study shows that the bulk of emitted SO₂ was confined in the troposphere, mainly between 700 hPa and 400 hPa which is confirmed by trajectory analysis, by LIDAR observations and AVHRR observations. The area of influence of Mt. Etna eruptions ranges from the Western Saharan Desert to Greece and the near east states and even down to the basin of Tschad, Africa. Our analysis revealed that information about the plume height of volcanic eruptions and aerosol parameters is necessary for a reliable quantitative retrieval of SO₂ from space-borne sensor data at periods perturbed by volcanic eruptions.     

我国城乡居民消费差异对CO2的影响分析

采用相关年度数据,利用脉冲响应函数和方差分解技术,详细分析了我国城乡居民消费现状,并探究了我国城乡居民消费差异对CO2排放的影响。结果表明,我国城镇居民的消费结构已由生存型消费向发展享受型转变,但农村居民仍旧停留在以"吃穿用"为主的传统消费阶段,这使得城乡居民消费水平的提高对CO2排放存在巨大差异。据测算,城镇居民消费水平的提高对CO2排放的影响几乎是农村居民消费水平提高对其影响的10倍。鉴于此,我国实现节能减排的目标,不仅需要改变生产方式,更需要转变居民消费理念、调整消费结构、引导居民合理消费,使居民消费行为由高能耗消费向低能耗消费转变。     

Making market rationality: material semiotics and the case of congestion pricing in New York City

What were politicians, planners, and activists able to make of market concepts and market devices as they crafted congestion pricing plans in the context of New York City’s regional governance structure, its transportation infrastructure, and its physical geography? The answer challenges typical assumptions about the use of market mechanisms in restructuring urban space. Market mechanisms and market rationality created a platform for political debate about citywide mobility and its costs. From 2003 to 2014, through five formal plans, advocates and detractors opened up a political space for debating the interests of actors, from drivers, to pedestrians, to the local and global environment to citywide mobility. Market rationality was a provisional assemblage into which actors sought to embed values like sustainability and fairness. These values became more important in each new plan as advocates sought to address the political vulnerabilities of the one that had come before. The changes from plan to plan show challenges, liabilities, and possibilities for using market tools to address ecological and justice issues.     

When does economic development promote mitigation and why?

Is economic development compatible with mitigation? On the one hand, development should promote effective climate policy by enhancing states’ capacities for mitigation. On the other hand, economic growth creates more demand for production, thereby inhibiting emissions reduction. These arguments are often reconciled in the environmental Kuznets curve (EKC) thesis. According to this approach, development initially increases emissions in poor economies, but begins to lower emissions after a country has attained a certain level of development.

The aim of this article is to determine empirically whether the EKC hypothesis seems plausible in light of emissions trends over the birth and implementation of the Kyoto Protocol. Drawing on data from the World Bank World Development Indicators and World Resources Institute Climate Data Explorer, it conducts a large-N investigation of the emissions behaviour of 120 countries from 1990 to 2012. While several quantitative studies have found that economic factors influence emissions activity, this article goes beyond existing research by employing a more sophisticated – multilevel – research design to determine whether economic development: (a) continues to be a significant driver once country-level clustering is accounted for and (b) has different effects on different countries. The results of this article indicate that, even after we account for country-level clustering and hold constant the other main putative drivers of emissions activity, economic development tends to inhibit emissions reduction. They also provide strong evidence that emissions trends resemble the EKC, with development significantly constraining emissions reduction in the South and promoting it in the North.

POLICY RELEVANCE

This article contributes to the understanding of the (changing) role of economic development in shaping emissions activity. It demonstrates the need for a contextualized, country-specific approach for evaluating the effectiveness of economic development in promoting emissions reduction and uncovers new evidence in support of the EKC hypothesis.