Abstract:
Among Kyoto flexible mechanisms, emission trading (ET) shows more promise in cost efficiency but less flexibility in practice than Joint Implementation (JI) and the Clean Development Mechanism (CDM). The problem draws our attention to whether JI and CDM can replace ET in terms of cost efficiency under certain emission reduction actions such as the Kyoto Protocol. In this research, we firstly simulate the flexible mechanisms within a top-down framework by approximating JI and CDM as a partial form of ET. Secondly, we examine the difference in cost efficiency between ET, JI and CDM in empirical scenarios. We find that for Kyoto compliance or post-Kyoto stabilisation JI or CDM between energy sectors can nearly substitute for the ET in terms of cost efficiency. In particular, the electricity sector will play a key role in improving cost efficiency. In other words, full-scale ET is not necessary for the Kyoto Protocol and post-Kyoto stabilisation.
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Reference:
H. Pan (2005). The cost efficiency of Kyoto flexible mechanisms: a top-down study with GEM-E3 world model. Environmental Modelling and Software, Vol. 20.
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