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Emissions trading between Russia and the European Union: a CGE analysis of potentials and impacts

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  • Roman Lokhov

    (University of Oldenburg)

  • Heinz Welsch

    (University of Oldenburg)

Abstract

A computable general equilibrium analysis of emissions trading between Russia and the European Union (EU) is presented using a complete and consistent input-output database for the Russian Federation and several baseline scenarios for Russia’s future economic development. We find that emissions trading, besides being beneficial for the EU countries, implies a significant rise in Russia’s GDP and welfare, along with a considerable drop in Russia’s output. Emissions trading thus implies a substitution of rents for produced income. The decline in Russia’s output mainly concerns the energy-producing and energy-intensive industries. As investment goods, consumption goods, and service sectors benefit, this can be seen as a modernization of the Russian economy. The favorable effects for the EU of emissions trading with Russia are larger under a “pessimistic” business-as-usual development of the Russian economy and are smaller under an “optimistic” development.

Suggested Citation

  • Roman Lokhov & Heinz Welsch, 2008. "Emissions trading between Russia and the European Union: a CGE analysis of potentials and impacts," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 9(1), pages 1-23, March.
    • Handle: RePEc:spr:envpol:v:9:y:2008:i:1:d:10.1007_bf03353972
    DOI: 10.1007/BF03353972
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    References listed on IDEAS

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    Cited by:

    1. Christophe Heyndrickx & Victoria Alexeeva-Taleebi & Natalia Tourdyeva, 2014. "To raise or not to raise: Impact assessment of Russia's gas price reform," ERSA conference papers ersa14p1535, European Regional Science Association.
    2. Liu, Yu & Tan, Xiu-Jie & Yu, Yang & Qi, Shao-Zhou, 2017. "Assessment of impacts of Hubei Pilot emission trading schemes in China – A CGE-analysis using TermCO2 model," Applied Energy, Elsevier, vol. 189(C), pages 762-769.
    3. Christophe Heyndrickx & Natalia Tourdyeva & Victoria Alexeeva-Talebi, 2011. "The SUSTRUS model: a CGE model on regional level for sustainability policies in Russia," ERSA conference papers ersa11p1565, European Regional Science Association.
    4. Shaolong Zeng & Qinyi Fu & Fazli Haleem & Yang Shen & Weibin Peng & Man Ji & Yilong Gong & Yilong Xu, 2024. "China’s carbon trading pilot policy, economic stability, and high-quality economic development," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-15, December.
    5. Nong, Duy & Meng, Sam & Siriwardana, Mahinda, 2017. "An assessment of a proposed ETS in Australia by using the MONASH-Green model," Energy Policy, Elsevier, vol. 108(C), pages 281-291.
    6. Heyndrickx, Christophe & Alexeeva-Talebi, Victoria & Tourdyeva, Natalia, 2012. "To raise or not to raise? Impact assessment of Russia's incremental gas price reform," ZEW Discussion Papers 12-052, ZEW - Leibniz Centre for European Economic Research.

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