Title: Simulation of tradable CO₂ emission permits with the New Earth 21 Model

Authors: Kenji Yamaji, Katsura Sato, Yasumasa Fujii, Keigo Akimoto

Addresses: Department of Electrical Engineering, University of Tokyo, 7-3-1, Hongo, Bunkyo-ku, Tokyo 113, Japan. Power & Electrical Systems Team, Mitsubishi Corp., 2-6-3 Marunouchi, Chiyoda-ku, Tokyo 100-86, Japan. Division of Electrical and Computer Engineering, Yokohama National University, 156 Tokiwadai, Hodogaya-ku, Yokohama 240, Japan. Division of Electrical and Computer Engineering, Yokohama National University, 156 Tokiwadai, Hodogaya-ku, Yokohama 240, Japan

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.

Keywords: energy model, CO₂ emission, tradable emission permit, transaction cost, joint implementation.

DOI: 10.1504/IJGEI.1998.000820

International Journal of Global Energy Issues, 1998 Vol.11 No.1/2/3/4, pp.23-32

Published online: 24 Jul 2003 *

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