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Dealing with surplus emissions in the climate negotiations after Copenhagen: What are the options for compromise?

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  • den Elzen, Michel
  • Roelfsema, Mark
  • Slingerland, Stephan

Abstract

This paper analyses the environmental and financial consequences of various strategies of dealing with surplus emission allowances in the aftermath of the Copenhagen Accord. This topic remains relevant, in particular, with respect to the Russian negotiation position, as this country is the largest holder of surplus emissions. It is concluded that not addressing the surplus problem is not a feasible negotiation option, as the sheer size of the surpluses would jeopardise the environmental integrity of any future agreement. Cancelling surpluses against Russia's will, though viable, is not desirable, as it might well lead to this country opting out of this climate treaty. Three options for compromise have been selected and analysed here: (1) stricter targets for Annex I countries; (2) strategic reserve for Russia; (3) institutionalising optimal banking. It is concluded that, whereas option 1 is environmentally the best, in the present political context it is probably less feasible. The other two options, although environmentally suboptimal, seem politically more favourable. Our analysis suggests that maximal revenues for surplus-holding countries arise by releasing only a limited amount of surplus credits to the market. The institutionalisation of this effect could be a key lever to a politically feasible agreement on surplus emissions.

Suggested Citation

  • den Elzen, Michel & Roelfsema, Mark & Slingerland, Stephan, 2010. "Dealing with surplus emissions in the climate negotiations after Copenhagen: What are the options for compromise?," Energy Policy, Elsevier, vol. 38(11), pages 6615-6628, November.
  • Handle: RePEc:eee:enepol:v:38:y:2010:i:11:p:6615-6628
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    References listed on IDEAS

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    1. Alexander Golub & Jos Cozijnsen & Annie Petsonk, 2009. "Linking Russia with the European and global greenhouse gas emissions trading markets: three paths for greening the Russian assigned amount under the Kyoto Protocol," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 14(5), pages 433-453, June.
    2. Böhringer, Christoph, 2001. "Climate politics from Kyoto to Bonn: from little to nothing?!?," ZEW Discussion Papers 01-49, ZEW - Leibniz Centre for European Economic Research.
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    Cited by:

    1. Maria Garbuzova & Reinhard Madlener, 2012. "Towards an efficient and low carbon economy post-2012: opportunities and barriers for foreign companies in the Russian energy market," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 17(4), pages 387-413, April.
    2. Peterson, Everett B. & Schleich, Joachim & Duscha, Vicki, 2011. "Environmental and economic effects of the Copenhagen pledges and more ambitious emission reduction targets," Energy Policy, Elsevier, vol. 39(6), pages 3697-3708, June.
    3. Zhao, Zhen-yu & Sun, Guang-zheng & Zuo, Jian & Zillante, George, 2013. "The impact of international forces on the Chinese wind power industry," Renewable and Sustainable Energy Reviews, Elsevier, vol. 24(C), pages 131-141.
    4. Michel Elzen & Malte Meinshausen & Andries Hof, 2012. "The impact of surplus units from the first Kyoto period on achieving the reduction pledges of the Cancún Agreements," Climatic Change, Springer, vol. 114(2), pages 401-408, September.

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