Simulation of tradable CO₂ emission permits with the New Earth 21 Model
by Kenji Yamaji, Katsura Sato, Yasumasa Fujii, Keigo Akimoto
International Journal of Global Energy Issues (IJGEI), Vol. 11, No. 1/2/3/4, 1998

Abstract: The theoretical potential of tradable CO₂ emission permits has attracted much interest as a means of achieving the efficiency and equity of CO₂ control. This paper presents a simulation of the global market of CO₂ emission permits with the New Earth 21 Model. The analysis focuses on the initial allocation of CO₂ emission permits, the effects of transaction costs and the impact of those regions out of the market. Major findings are as follows: 1) A significant amount of income transfer is realised from developed regions to developing regions with the initial allocation in proportion to each regional population; 2) As transaction costs increase, the efficiency of the market decreases; and 3) North America and China play a key role in the success of the tradable permits market. The results suggest the use of joint implementation as a realistic means of realising tradable CO₂ emission permits.

Online publication date: Thu, 24-Jul-2003

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