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Global CO2 Agreements: A Cost-Effective Approach

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  • Snorre Kverndokk

Abstract

In this paper I specify CO2 abatement cost functions for five different world regions. A cost-effective CO2 agreement is defined by the emissions that follow from minimising the total abatement costs, given a specified CO2 emission limit. Under the cost-effective agreement, the industrialised countries bear all reductions, while developing countries are actually allowed to increase emissions compared to the 1990 level. The developing countries will, nevertheless, bear the highest burdens under this treaty. The agreement is also analysed under different tradeable permit regimes and compared to uniform percentage reductions. The transfers from tradeable permit systems are high, and may be difficult for political leaders to justify. An allocation based on historical CO2 emissions is the only simple rule which ensures every region is better off than under uniform percentage reductions.

Suggested Citation

  • Snorre Kverndokk, 1993. "Global CO2 Agreements: A Cost-Effective Approach," The Energy Journal, , vol. 14(2), pages 91-122, April.
    • Handle: RePEc:sae:enejou:v:14:y:1993:i:2:p:91-122
    DOI: 10.5547/ISSN0195-6574-EJ-Vol14-No2-5
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    1. World Bank, 1985. "World Development Report 1985," World Bank Publications - Books, The World Bank Group, number 5968.
    2. Alan Manne & Richard Richels, 1992. "Buying Greenhouse Insurance: The Economic Costs of CO2 Emission Limits," MIT Press Books, The MIT Press, edition 1, volume 1, number 026213280x, December.
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    Cited by:

    1. Zhang, ZhongXiang & Baranzini, Andrea, 2004. "What do we know about carbon taxes? An inquiry into their impacts on competitiveness and distribution of income," Energy Policy, Elsevier, vol. 32(4), pages 507-518, March.
    2. repec:ags:aare05:139338 is not listed on IDEAS
    3. Zhang, Zhong Xiang, 1995. "Energy conservation in China : An international perspective," Energy Policy, Elsevier, vol. 23(2), pages 159-166, February.
    4. Culas, Richard J., 2006. "Forestry, non-forest sector policies and the environment: a review," 2006 Conference (50th), February 8-10, 2006, Sydney, Australia 174100, Australian Agricultural and Resource Economics Society.
    5. Hajime Takatsuka, 2020. "Uniform emission taxes, abatement, and spatial disparities," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 64(4), pages 1133-1166, October.
    6. Zhongxiang Zhang, 1994. "Setting Targets and the Choice of Policy Instruments for Limiting CO2 Emissions1," Energy & Environment, , vol. 5(4), pages 327-341, December.
    7. Juris Justitio Hakim Putra & Nabilla Nabilla & Fidelia Yemima Jabanto, 2021. "Comparing Carbon Tax and Cap and Trade as Mechanism to Reduce Emission in Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 11(5), pages 106-111.
    8. Fankhauser, Samuel & Kverndokk, Snorre, 1996. "The global warming game -- Simulations of a CO2-reduction agreement," Resource and Energy Economics, Elsevier, vol. 18(1), pages 83-102, March.
    9. Hettich, Frank, 2000. "The implications of international cooperation for economic growth, environmental quality and welfare," Wirtschaftswissenschaftliche Diskussionspapiere 08/2000, University of Greifswald, Faculty of Law and Economics.
    10. Bruvoll, Annegrete & Glomsrod, Solveig & Vennemo, Haakon, 1999. "Environmental drag: evidence from Norway," Ecological Economics, Elsevier, vol. 30(2), pages 235-249, August.
    11. Christoph Bohringer & Heinz Welsch, 2006. "Burden sharing in a greenhouse: egalitarianism and sovereignty reconciled," Applied Economics, Taylor & Francis Journals, vol. 38(9), pages 981-996.
    12. Gjerde, Jon & Grepperud, Sverre & Kverndokk, Snorre, 1999. "Optimal climate policy under the possibility of a catastrophe," Resource and Energy Economics, Elsevier, vol. 21(3-4), pages 289-317, August.
    13. Golombek, Rolf & Hagem, Cathrine & Hoel, Michael, 1995. "Efficient incomplete international climate agreements," Resource and Energy Economics, Elsevier, vol. 17(1), pages 25-46, May.
    14. Vennemo, Haakon, 1997. "A dynamic applied general equilibrium model with environmental feedbacks," Economic Modelling, Elsevier, vol. 14(1), pages 99-154, January.
    15. Michael Finus & Bianca Rundshagen, 1998. "Renegotiation–Proof Equilibria in a Global Emission Game When Players Are Impatient," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 12(3), pages 275-306, October.
    16. Finus, Michael & Rundshagen, Bianca, 1998. "Toward a Positive Theory of Coalition Formation and Endogenous Instrumental Choice in Global Pollution Control," Public Choice, Springer, vol. 96(1-2), pages 145-186, July.
    17. Hoel,M., 2001. "Allocating greenhouse gas emissions among countries with mobile populations," Memorandum 20/2001, Oslo University, Department of Economics.

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    More about this item

    Keywords

    Climate agreements; CO2 emissions; Tradeable permits; cost-effective;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General

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