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Table
7-3: Results of model comparison from the Energy Modeling Forum.a |
(a) Calculated losses (as % of total
GDP) for various postulated trading regimes associated with meeting
the Kyoto targets in Annex B countries. |
Model |
No Trading |
No Trading
Annex I Trading |
CANZ |
USA |
OECD
Europe |
Japan |
CANZ |
USA |
OECD
Europe |
Japan |
ABARE-
GTEM
AIM
CETA
G-Cubed
GRAPE
MERGE3
MS-MRT
RICE |
1.96
0.59
1.83
2.02
1.83
0.96 |
1.96
0.45
1.93
0.42
1.06
1.88
0.94 |
0.94
0.31
1.50
0.81
0.99
0.63
0.55 |
0.72
0.25
0.57
0.19
0.80
1.20
0.78 |
0.23
0.36
0.72
1.14
0.88
0.54 |
0,47
0.31
0.67
0.24
0.51
0.91
0.56 |
0.13
0.17
0.61
0.81
0.47
0.13
0.28 |
0.05
0.13
0.45
0.10
0.19
0.22
0.30 |
(b) Marginal abatement costs (in
1990 US$ per t C; 2010 Kyoto target). |
Model |
CANZ |
USA |
OECD
Europe |
Japan |
Annex I Trading |
ABARE-
GTEM
AIM
CETA
Fund
G-Cubed
GRAPE
MERGE3
MIT_EPPA
MS-MRT
RICE
SGM
WorldScan |
425
147
157
250
247
213
145
201
46 |
322
153
168
76
264
193
236
132
188
85 |
665
198
227
204
218
276
179
159
407
20 |
645
234
97
304
500
501
402
251
357
122 |
106
65
46
14
53
70
135
76
77
62
84
20 |
(c) Costs of Kyoto Protocol implementation
for oil-exporting countries according to various models.b |
Modelc |
Without Tradingd |
With Annex I Trading |
With "Global Trading" |
G-Cubed
GREEN
GTEM
MS-MRT
OPEC
CLIMOX
|
-25% oil revenue
-3% real income
0.2% GDP loss
1.39% welfare loss
-17% OPEC revenue
n/a |
-13% oil
revenue
"substantially
reduced loss"
<0.05%
GDP loss
1.15%
welfare loss
-10% OPEC
revenue
-10% some oil
exporters' revenues |
-7% oil
revenue
n/a
n/a
0.36%
welfare loss
-8% OPEC
revenue
n/a |
a. Table 7-3a derived from WGIII
TAR Table TS-5, Table 7-3b from WGIII
TAR Table TS-4, and Table 7-3c from WGIII
TAR Table TS-6.
b. The definition of oil-exporting country varies.
For G-Cubed and the OPEC models, it is the OPEC countries; for GREEN,
a group of oil-exporting countries; for GTEM, Mexico and Indonesia;
for MS-MRT, OPEC countries plus Mexico; and for CLIMOX, west Asian
and north African oil exporters.
c. The models report impact on the global economy
in the year 2010 with mitigation according to the Kyoto Protocol
targets (usually in the models applied to CO2 mitigation
by the year 2010 rather than greenhouse gas emissions to the period
2008-2012) achieved by imposing a carbon tax or auctioned emission
permits with revenues recycled through lump-sum payments to consumers.
No ancillary benefits, such as reductions in local air pollution
damages, are taken into account in the results.
d. "Trading" denotes trading in emission
permits between countries.
n/a = not available. |
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7.19 |
Emission constraints on Annex I countries have
well-established, albeit varied, "spill-over" effects16
on non-Annex I countries.
-
Oil-exporting, non-Annex I countries: Analyses
report costs differently, including, inter alia, reductions in projected
GDP and reductions in projected oil revenues. The study reporting
the lowest costs shows reductions of 0.2% of projected GDP with no
emissions trading, and less than 0.05% of projected GDP with Annex
B emissions trading in the year 2010. 17
The study reporting the highest costs shows reductions of 25% of projected
oil revenues with no emissions trading, and 13% of projected oil revenues
with Annex B emissions trading in the year 2010 (see Table 7-3c).
These studies do not consider policies and measures 18
other than Annex B emissions trading, which could lessen the impact
on non-Annex I, oil-exporting countries, and therefore tend to overstate
both the costs to these countries and overall costs. The effects on
these countries can be further reduced by removal of subsidies for
fossil fuels, energy tax restructuring according to carbon content,
increased use of natural gas, and diversification of the economies
of non-Annex I, oil-exporting countries.
-
Other non-Annex I countries: They may be adversely
affected by reductions in demand for their exports to OECD nations
and by the price increase of those carbon-intensive and other products
they continue to import. These countries may benefit from the reduction
in fuel prices, increased exports of carbon-intensive products, and
the transfer of environmentally sound technologies and know-how. The
net balance for a given country depends on which of these factors
dominates. Because of these complexities, the breakdown of winners
and losers remains uncertain.
-
Carbon leakage: The possible relocation of some
carbon-intensive industries to non-Annex I countries and wider impacts
on trade flows in response to changing prices may lead to leakage
on the order of 5-20%.19
Exemptions (e.g., for energy-intensive industries) make the higher
model estimates for carbon leakage unlikely, but would raise aggregate
costs. The transfer of environmentally sound technologies and know-how,
not included in models, may lead to lower leakage and especially on
the longer term may more than offset the leakage.
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7.20 |
Some sources of greenhouse gas emissions can be
limited at no, or negative, net social cost to the extent that policies
can exploit no-regret opportunities. This may be achieved by removal
of market imperfections, accounting for ancillary benefits (see Question
8), and recycling revenues to finance reductions in distortionary
taxes ("double dividend").
-
Market imperfections: Reduction of existing
market or institutional failures and other barriers that impede adoption
of cost-effective emission reduction measures can lower private costs
compared to current practice. This can also reduce private costs overall.
-
Ancillary benefits: Climate change mitigation
measures will have effects on other societal issues. For example,
reducing carbon emissions in many cases will result in the simultaneous
reduction in local and regional air pollution. It is likely that mitigation
strategies will also affect transportation, agriculture, land-use
practices, and waste management and will have an impact on other issues
of social concern, such as employment, and energy security. However,
not all of the effects will be positive; careful policy selection
and design can better ensure positive effects and minimize negative
impacts. In some cases, the magnitude of ancillary benefits of mitigation
may be comparable to the costs of the mitigating measures, adding
to the no-regret potential, although estimates are difficult to make
and vary widely.
-
Double dividend: Instruments (such as taxes
or auctioned permits) provide revenues to the government. If used
to finance reductions in existing distortionary taxes ("revenue
recycling"), these revenues reduce the economic cost of achieving
greenhouse gas reductions. The magnitude of this offset depends on
the existing tax structure, type of tax cuts, labor market conditions,
and method of recycling. Under some circumstances, it is possible
that the economic benefits may exceed the costs of mitigation.
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