A MODEL INTERCOMPARISON OF THE WELFARE EFFECTS OF REGIONAL COALITIONS FOR AMBITIOUS CLIMATE MITIGATION TARGETS

Author:

AKIN-OLÇUM GÖKÇE1,GHOSH MADANMOHAN23,GILMORE ELISABETH24,JOHNSTON PETER2,KHABBAZAN MOHAMMAD M.567,LUBOWSKI RUBEN189,MCCALLISTER MARGARET1,MACALUSO NICK2,PETERSON SONJA10,WINKLER MALTE1011,DUAN MAOSHENG11,LI MENGYU12,PARRADO RAMIRO13,RAUSCH SEBASTIAN1415

Affiliation:

1. Environmental Defense Fund, 18 Tremont Street, Boston, MA 02108, USA

2. Environment and Climate Change Canada, 200 Boulevard Sacré-Coeur, Gatineau, QC J8X 4C6, Canada

3. Bank of Canada, Canadian Economic Analysis Department, 234 Wellington Street, Ottawa ON K1A 0G9, Canada

4. Department of Civil and Environmental Engineering, Carleton University, 3432 Mackenzie, 1125 Colonel By Drive, Ottawa, ON, K1S 5B6, Canada

5. Workgroup for Economic and Infrastructure Policy (WIP), Berlin University of Technology (TU Berlin), Strasse Des 17. Juni 135, 10623 Berlin, Germany

6. DIW Berlin, Department of Energy, Transport, and Environment, Mohrenstrasse 58, 10117 Berlin, Germany

7. Research Unit Sustainability and Global Change Center for Earth System Research and Sustainability, University of Hamburg, Grindelberg 5, 20144 Hamburg, Germany

8. Lombard Odier Asset Management, 452 5th Avenue, 25th Floor, New York, NY 10018 USA

9. Columbia University, 420 West 118th Street, New York, NY 10027, USA

10. Kiel Institute for the World Economy (IfW), Kiellinie 66, D-24105 Kiel, Germany

11. Perspectives Climate Group GmbH, Rübekamp 33, 25421 Pinneberg, Germany

12. Institute of Energy, Environment and Economy, Room C300, Energy Science Building Tsinghua University, Beijing, P. R. China

13. RFF-CMCC European Institute on Economics and the Environment Centro Euro-Mediterraneo Sui Cambiamenti Climatici, Via della Libertà, 12 - 30175 Venezia (VE), Italy

14. ZEW-Leibniz Centre for European Economic Research, L7 1, 68161 Mannheim Germany

15. Centre for Energy Policy and Economics (CEPE) ETH, Zurichbergstrasse 18, 8092 Zurich, Switzerland

Abstract

This paper presents the overall and distributional welfare effects of alternative multi-regional emissions trading coalitions relative to unilateral action. It focusses on meeting Paris Agreement pledges and more emissions reduction targets consistent with 2C and 1.5C temperature pathways in 2030. The results from seven computable general equilibrium (CGE) models are compared. Across all models, welfare gains are highest with a global market and increase with the stringency of targets. All regional coalitions also show overall welfare gains, although lower gains than the global market. The models show more variability in the gains by a participant. Depending on the model, participants may benefit more from some regional arrangements than from a global market or face modest losses compared to the domestic reductions alone, due to interactions between carbon targets and fossil fuel markets. The scenario with a joint China–European Union emissions trading system in all sectors is consistently favorable for participants and provides the highest economic gains per unit of emissions abated.

Funder

the German Federal Ministry of Education and Research

Publisher

World Scientific Pub Co Pte Ltd

Subject

Management, Monitoring, Policy and Law,Economics and Econometrics,Global and Planetary Change

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