The impacts of emissions trading on world economies: contemplation of baseline emissions paths and a ceiling on emissions trading
In: Nota di lavoro 2000,1
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In: Nota di lavoro 2000,1
Climate change is one of the key challenges facing the international community. The world's industrial countries and those with economies in transition have, under the 1997 Kyoto Protocol, collectively agreed sharp limitations of their greenhouse gas emissions. Innovative provisions in this Protocol offer potentially cost-effective ways to meet these pledges. They allow investors - nations, as well as companies - to credit emission reductions they accomplish in foreign countries against their own commitments. The two schemes, Joint Implementation and the Clean Development Mechanism, will encourage investment in climate-friendly projects worldwide, especially in developing countries. So far, however, no detailed rules have been adopted to govern the new mechanisms or to evaluate just how many emission credits a particular project should generate. Rigorous methodological analysis is required before any decision can be taken. This book provides that analysis, examining issues in the development of emission baselines in four key sectors: electricity; cement; energy efficiency; and iron and steel. This book moves the debate from the theoretical to the practical. It provides insights on how to develop credible, workable and transparent baselines from which to quantify the mitigation effects of projects initiated under the "Kyoto mechanisms". In so doing, it sails uncharted waters. It attempts, indeed, to "estimate the unknown".
Awarding Certified Emission Reductions to Clean Development Mechanism (CDM) projects under the Kyoto Protocol involves comparing the actual emissions of the project to a counterfactual "baseline" emissions level. The baseline of a project is intended to represent the emissions that would have occurred in the absence of the project. Accordingly, there is a high degree of uncertainty in determining CDM baselines. In the years since the emergence of the CDM, scientific and political debates have occurred about how best to cut through this uncertainty and arrive at the fixed, quantitative figures necessary for the quantification and commodification of greenhouse gas emissions. My research explores the decision-making process by which practical quantifying conventions are adopted in order to narrow the operational realm of uncertainty. It focuses on the role of scientists and the use of scientific rhetoric in the negotiation process and also explores risk and the perceptions of risk held by a range of important actors. This exploratory paper is intended to serve as a springboard for future work by providing a description of the nature of the uncertainty in CDM baselines, and by exploring the ramifications of decision-making in the face of this uncertainty. It concludes with a list of future questions that probe the ways in which different actors may be expected to maneuver within this uncertainty.
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In the era of the fourth industrial revolution, the international community is striving to establish a coordinated system to prevent fatal climate change in a global sense. As a result of such changes in business environments, a new issue, sustainability, has recently presented a paradigm shift and new research opportunity in which the theories and practices in traditional production and operations management are being reinterpreted and reapplied in relation to this emerging issue. Under this research background, we consider an optimal emission-trading problem under a cap-and-trade (CAT) emission regulation when the customers&rsquo ; demand is given as an arbitrary probability distribution. Such a CAT approach to reduce the amount of emissions is a normative system for the sustainable production of manufacturing firms, which is also closely related to a well-known open innovation in literature of inventory management. Then, we formulate two stochastic inventory optimization models, which can be applied immediately for two famous CAT policies that exist in reality. In particular, our objective is to draw theoretical and practical implications for baseline credit emission regulations, which are innovative and government-led emission regulation policies, with a well-known newsvendor analysis. For our analytical results, we first show that our objective functions are piecewise linear and (quasi)-concave. Thus, it is found that there exists a unique optimal solution to the problem. Second, we successfully obtain the closed-form optimal solutions for the two models considered. Finally, we conduct a sensitivity analysis through a comparative static analysis to examine how the model parameters can affect the optimal solution in each model. All these analytical results and implications are consistent with previous studies in the literature, as well as with our insights for the models.
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The "first track" of Joint Implementation under the Kyoto Protocol gives host and investor countries total freedom in choosing a baseline for a project reducing or sequestering greenhouse gases. This is due to the fact that an overly generous granting of emission credits leads to a corresponding reduction of the host country's emission budget. Standardised, multi-project baselines can reduce transaction costs, especially in relatively homogeneous sectors such as electricity production or landfill methane collection. Host countries need capacity to calculate such baselines which currently does not exist. "Boundary organisations" can bridge the gap between technical analysis and strategic considerations. Interviews with government officials and other stakeholders in East European EU accession countries lead us to the conclusion that countries have not yet realised the chances and pitfalls of baseline definition under the first track, especially as they assume that the EU will define the "acquis communautaire" as the baseline. However, this would make international emissions trading more attractive than JI.
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In: Climate policy, Band 18, Heft 4, S. 459-470
ISSN: 1752-7457
In: Journal of policy modeling: JPMOD ; a social science forum of world issues, Band 24, Heft 7-8, S. 667-678
ISSN: 0161-8938
In: Applied economic perspectives and policy, Band 44, Heft 4, S. 2034-2048
ISSN: 2040-5804
AbstractThe European Green Deal aims to reduce net greenhouse gas emissions to zero by 2050. The effort required to meet greenhouse gas emission targets or other sustainable development goals depends on the difference between baseline levels and policy targets. This paper provides a set of plausible world agricultural baseline scenarios through 2050 with a variety of agricultural indicators: food calories consumed, crop calories produced, average crop yields, and associated greenhouse gas emissions. Growth of agricultural activity varies widely across world regions, from Europe with a relatively stable population to sub‐Saharan Africa with rapidly growing populations and per‐capita incomes.
Executive Summary: The California Climate Action Registry, which was initially established in 2000 and began operation in Fall 2002, is a voluntary registry for recording annual greenhouse gas (GHG) emissions. The purpose of the Registry is to assist California businesses and organizations in their efforts to inventory and document emissions in order to establish a baseline and to document early actions to increase energy efficiency and decrease GHG emissions. The State of California has committed to use its "best efforts" to ensure that entities that establish GHG emissions baselines and register their emissions will receive "appropriate consideration under any future international, federal, or state regulatory scheme relating to greenhouse gas emissions." Reporting of GHG emissions involves documentation of both "direct" emissions from sources that are under the entity's control and indirect emissions controlled by others. Electricity generated by an off-site power source is considered to be an indirect GHG emission and is required to be included in the entity's report. Registry participants include businesses, non-profit organizations, municipalities, state agencies, and other entities. Participants are required to register the GHG emissions of all operations in California, and are encouraged to report nationwide. For the first three years of participation, the Registry only requires the reporting of carbon dioxide (CO2) emissions, although participants are encouraged to report the remaining five Kyoto Protocol GHGs (CH4, N2O, HFCs, PFCs, and SF6). After three years, reporting of all six Kyoto GHG emissions is required. The enabling legislation for the Registry (SB 527) requires total GH G emissions to be registered and requires reporting of "industry-specific metrics" once such metrics have been adopted by the Registry. The Ernest Orlando Lawrence Berkeley National Laboratory (Berkeley Lab) was asked to provide technical assistance to the California Energy Commission (Energy Commission) related to the Registry in three areas: 1) assessing the availability and usefulness of industry-specific metrics, 2) evaluating various methods for establishing baselines for calculating GHG emissions reductions related to specific actions taken by Registry participants, and 3) establishing methods for calculating electricity CO2 emission factors. The third area of research was completed in 2002 and is documented in Estimating Carbon Dioxide Emissions Factors for the California Electric Power Sector (Marnay et al., 2002). This report documents our findings related to the first areas of research. For the first area of research, the overall objective was to evaluate the metrics, such as emissions per economic unit or emissions per unit of production that can be used to report GHG emissions trends for potential Registry participants. This research began with an effort to identify methodologies, benchmarking programs, inventories, protocols, and registries that use industry-specific metrics to track trends in energy use or GHG emissions in order to determine what types of metrics have already been developed. The next step in developing industry-specific metrics was to assess the availability of data needed to determine metric development priorities. Berkeley Lab also determined the relative importance of different potential Registry participant categories in order to asses s the availability of sectoral or industry-specific metrics and then identified industry-specific metrics in use around the world. While a plethora of metrics was identified, no one metric that adequately tracks trends in GHG emissions while maintaining confidentiality of data was identified. As a result of this review, Berkeley Lab recommends the development of a GHG intensity index as a new metric for reporting and tracking GHG emissions trends.Such an index could provide an industry-specific metric for reporting and tracking GHG emissions trends to accurately reflect year to year changes while protecting proprietary data. This GHG intensity index changes while protecting proprietary data. This GHG intensity index would provide Registry participants with a means for demonstrating improvements in their energy and GHG emissions per unit of production without divulging specific values. For the second research area, Berkeley Lab evaluated various methods used to calculate baselines for documentation of energy consumption or GHG emissions reductions, noting those that use industry-specific metrics. Accounting for actions to reduce GHGs can be done on a project-by-project basis or on an entity basis. Establishing project-related baselines for mitigation efforts has been widely discussed in the context of two of the so-called "flexible mechanisms" of the Kyoto Protocol to the United Nations Framework Convention on Climate Change (Kyoto Protocol) Joint Implementation (JI) and the Clean Development Mechanism (CDM). Issues regarding the development of entity-specific baselines, which can be used by such entities as companies, municipalities, and organizations, have been explored in the context of baseline protection, emissions trading, credit for early action initiatives, and climate change registries. Berkeley Lab developed a baseline typology and assessed the complexity and robustness of each type of baseline vis-a-vis potential future emissions limits and/or emissions trading schemes. Berkeley Lab found that only a statutorily established future target baseline and an ex-post reconstructed baseline were robust enough to be considered as a basis for granting credits for early actions of these two baseline types, the future target baseline is the easiest to contruct; the ex-post reconstructed baseline is accurate because actual emissions are known and reductions can be verified by a third party, but it can be more complex and costly. Finally, Berkeley Lab conducted three case studies in order to explore iss ues related to both industry-specific metrics and baselines. These case studies were done for Advanced Micro Devices (AMD), Fetzer Vineyards, and the City of Berkeley. The case studies demonstrated numerous issues related to the use of metrics and recommended that industry-specific metrics be disaggregated to a certain degree, depending upon both the specific sector and data availability, in order to best capture the energy or GHG emissions trends experienced at the participant s facilities. The case studies also discussed various baseline issues and concluded that it is difficult to clearly identify any one baseline that is preferable to another based on the limited number of years of data available as well as due to the wide variation observed in the differences between the baselines and actual GHG emissions. Data availability, basel ine complexity, baseline robustness, and the ultimate desired use of the baseline must all be considered when choosing a baseline upon which to measure future GHG emissions reductions.
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In: California Climate Change Center report series number 2007-009
In: California Climate Change Center report series no. 2007-008
For projects under the Clean Development Mechanism (CDM), a baseline has to be set to allow calculation of the greenhouse gas emissions reductions achieved. An important obstacle to CDM project development is the lack of data for baseline definition; often project developers do not have access to data and therefore incur high transaction costs to collect them. The government of Vietnam has set up all necessary institutions for CDM, wants to promote CDM projects and thus is interested to reduce transaction costs. We calculate emission factors of the Vietnam electricity grid according to the rules defined by the CDM Executive Board for small scale projects and for large renewable electricity generation projects. The emission factors lie between 365 and 899 g CO2/kWh depending on the specification. The weighted operating and build margin reaches 600 g for 2003, while grid average reaches 399 g. Using three-year averages, a combined build and operating margin of 705 g is calculated. We hope that these data facilitate CDM project development in the electricity supply and energy efficiency improvement in Vietnam.
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In: CEPR Discussion Paper No. DP8952
SSRN
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