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Incentives and Effects of No-Lose Targets to Include Non-Annex I Countries in Global Emission Reductions

Author

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  • Vicki Duscha

    (Fraunhofer Institute for Systems and Innovation Research)

  • Karl-Martin Ehrhart

    (Karlsruhe Institute of Technology, Institute ETS)

Abstract

We analyze the potential of no-lose targets used as an instrument to integrate non-Annex I countries in global emission reduction efforts. We set up a game-theoretical model to derive the participation conditions for a non-Annex I country and evaluate the effect of a no-lose target on the reduction of global emissions. Our analyses show that meaningful contributions from non-Annex I countries are possible, but their contribution to global emission reductions is limited and depends on several factors. Ambitious targets for the Annex I countries are a precondition. Further determining factors are differences in the abatement potentials between Annex I and non-Annex I countries, and market power on the certificate market. Nonetheless, in contrast to other funding mechanisms, no-lose targets, rather than requiring additional funding, can actually reduce costs for the Annex I countries.

Suggested Citation

  • Vicki Duscha & Karl-Martin Ehrhart, 2016. "Incentives and Effects of No-Lose Targets to Include Non-Annex I Countries in Global Emission Reductions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(1), pages 81-107, September.
    • Handle: RePEc:kap:enreec:v:65:y:2016:i:1:d:10.1007_s10640-016-0015-5
    DOI: 10.1007/s10640-016-0015-5
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    Cited by:

    1. Michael Finus & Bianca Rundshagen, 2016. "Game Theory and Environmental and Resource Economics—In Honour of Alfred Endres, Part Two," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(1), pages 1-4, September.
    2. Wang, Xu & Zhu, Lei & Liu, Pengfei, 2021. "Manipulation via endowments: Quantifying the influence of market power on the emission trading scheme," Energy Economics, Elsevier, vol. 103(C).

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