carbon leakage and capacity based allocations is the eu right competitiveness and carbon leakage are major concerns for the design of co2 emissions permits markets in the absence of a global carbon tax and of border carbon adjustments output based allocation is a third best solution and is actually implemented australia california new zealand the eu has followed a different route free allowances are allocated to existing or new capacities in proportion to a benchmark independent of actual production this paper compares these two schemes in a formal setting and shows that the optimal one is in fact a combination of both schemes or output based allocation alone if uncertainty is limited a key assumption of our analysis is that the short term import pressure depends both on the existing capacities and the level of demand which is typical in capital intensive and internationally traded sectors a calibration of the model is used to discuss the eu scheme for the cement sector in the third phase of the eu ets 2013 2020 this allows for a quantification of various policies in terms of welfare investment production company profits public revenues and leakage

a novel inclusion of intermittent generation resources in long term energy auctions abstract long term energy auctions are positioning as a valuable tool in order to attract new investments into power systems especially in latin american countries where emergent economies characteristics and their correspondent risks are usually present even though the focus of these auctions is the long term there are short term issues involved which actual auction designs fail to include resulting in an energy allocation that is not necessarily optimal for the system a condition which becomes more evident in the presence of intermittent renewable technologies a novel mechanism is formulated to obtain the optimal allocation in long term energy auctions considering short term generation profiles from both intermittent and conventional base load technologies and also their risk aversions the proposed mechanism is developed and simulations are made for some scenarios in the chilean power market with different levels of renewable penetration significant cost savings are achieved for the final consumers in relation to energy purchases in comparison with a mechanism that follows the demand profile as more renewable intermittent capacity enters the power system it is evident the need for changes in the energy auctions allocation mechanisms including elements to exploit the synergies among participants in the short term

trading for the future signaling in permit markets abstract permit markets are celebrated as a policy instrument since they allow i firms to equalize marginal costs through trade and ii the regulator to distribute the burden in a politically desirable way these two concerns however may conflict in a dynamic setting anticipating the regulator s future desire to give more permits to firms that appear to need them firms purchase permits to signal their need this raises the price above marginal costs and the market becomes inefficient if the social cost of pollution is high and the government intervenes frequently in the market the distortions are greater than the gains from trade and non tradable permits are better the analysis helps to understand permit markets and how they should be designed

allowance price and distributional effects under a personal carbon trading scheme abstract personal carbon trading pct is a downstream cap and trade scheme to reduce carbon emissions from the household sector in comparison to an upstream carbon trading scheme pct is a progressive scheme in which the poorer consumers are mostly winners as their levels of emissions are generally lower this paper investigates the equilibrium price for allowances and distributional effects under a pct scheme first we propose an equilibrium model for pct from which we derive an equilibrium price for allowances second a consumer surplus analysis is conducted to examine the welfare changes caused by the pct scheme generally we find that the pct scheme is progressive and can provide a buffer between the energy and allowance price based on these results the implications are discussed and suggestions for a future study are provided

long run equilibrium modeling of emissions allowance allocation systems in electric power markets carbon dioxide allowance trading systems for electricity generators are in place in the european union and in several u s states an important question in the design of such systems is how allowances are to be initially allocated by auction by giving away fixed amounts grandfathering or by allocating based on present or recent output investment or other decisions the latter system can bias investment operations and product pricing decisions and increase costs relative to the other systems a nonlinear complementarity model is proposed for investigating the long run equilibria that would result under alternative systems for power markets characterized by time varying demand and multiple technology types existence of equilibria is shown under mild conditions solutions for simple systems show that allocating allowances to new capacity based on fuel use or generator type can yield large distortions in capacity investment invert the operating order of power plants and inflate consumer costs the distortions can be smaller for tighter co2 restrictions and are somewhat mitigated if there is also a market for electricity capacity or minimum run restrictions on coal plants distortions are also less if allowances are allocated to plants in proportion to sales rather than capacity

research advances in environmentally and socially sustainable operations abstract consumers and governments are pressuring firms to strike a balance between profitability and sustainability however this balance can only be maintained in the long run if the firm can take a holistic approach to sustain the financial flow profit resource flow planet and development flow people for the entire ecosystem comprising poor producers in emerging developing markets global supply chain partners consumers in developed countries and the planet by considering the flows associated with different entities within the ecosystem we classify and summarize recent operations research management science or ms research developments also we identify several gaps for future research in this important area

climate policy and fiscal constraints do tax interactions outweigh carbon leakage climate policymaking faces twin challenges of carbon leakage and public sector revenue requirements a large literature advocates the use of carbon dioxide co2 pricing and recycling the revenues to lower distorting taxes as a way to minimize costs in this paper we explore the implications of labor tax interactions for the cost effectiveness of border adjustments and other measures to cope with leakage we find that for plausible values of labor supply elasticities the cost savings from revenue recycling are significant from 15 to 25 percent the cost savings from anti leakage measures are generally smaller but also significant particularly for small coalitions or more binding reduction targets tax interactions further enhance the cost savings from border adjustments but make other measures like rebates or exemptions less attractive

benchmarking in the european union emissions trading system abatement incentives abstract this paper investigates abatement incentives for allowance allocation based on output and sector specific benchmarks here called output based allocation or benchmarking special attention is given to updated allocation and we assume that allowances can be traded with other sectors open cap we confirm earlier studies that output based allocation based on ex ante data provide the same abatement incentives as auction or grandfathering and also confirm that output based allocation with updated output and ex ante benchmarks provides as high abatement incentives as auction but constitutes a production subsidy however we also find that benchmarking with updated output and updated benchmarks reduces abatement incentives somewhat but less so than updated grandfathering an allocation rule where the sector cap is prescribed ex ante for instance based on historic emissions and distributed to installations in proportion to their updated production preserves full abatement incentives and avoids some of the costs associated with the determination of benchmarks however this rule also constitutes a production subsidy which decreases with industry concentration if a sector is split into smaller groups each with one benchmark per sub sector benchmarking evolves toward grandfathering since benchmarking is conditioned on production this allocation method protects production from leakage i e migrating to areas where firms face no emissions cost this may actually be the most compelling reason for choosing benchmarking

output based allocations and revenue recycling implications for the new zealand emissions trading scheme abstract the new zealand emissions trading scheme nz ets is more comprehensive in its coverage of emissions than schemes introduced or proposed to date in any other country in that it includes agricultural greenhouse gases which account for half of new zealand s total emissions but motivated by concerns for the international competitiveness of emissions intensive trade exposed industrial and agricultural activities current legislation provides for substantial ongoing free allocations to such activities linked to their output here we use a computable general equilibrium model to analyse the impacts of output based allocation given the possibility of recycling net revenues to reduce prior distorting taxes unlike previous modelling studies of alternative nz ets designs we allow for a more realistic modelling both of capital and labour supply we find that as suggested by theoretical results interactions between the ets and existing taxes are important given any level of output based allocation the negative macroeconomic impacts can be reduced by recycling net revenues as efficiently as possible less obviously we find that there may be an optimal non zero level of output based allocation this optimal level increases as the carbon price and or factor supply elasticities increase but decreases if revenues are recycled with greater efficiency

a dynamic analysis of a demand curve based capacity market proposal the pjm reliability pricing model because of high generation adequacy standards in the power industry some peaking capacity operates for a limited time during the year and may not receive sufficient energy revenues to meet its fixed costs this is particularly true when energy prices are capped in order to mitigate market power the northeastern u s independent system operators isos have responded to this issue by establishing capacity obligations for loads and markets for installed capacity thus providing a capacity revenue stream to generators the installed capacity icap markets in the northeastern u s markets are a response to this need for additional incentives to construct generation the federal energy regulatory commission ferc has accepted the pjm interconnection s pjm proposal to replace the present fixed icap requirement that is placed upon load serving entities lses with a demand curve based system in which the iso would be responsible for acquiring residual capacity on behalf of lses the demand curve approach pays more when reserve margins are smaller and provides a reduced incentive for investment when installed reserves are above the target another goal is to make revenues more predictable for generators making investment less costly and ultimately lowering prices for consumers a dynamic representative agent model is presented for projecting effects upon reserve margins generator profitability and consumer costs and is applied to alternative demand curves proposed for the pjm market the consumer costs resulting from a sloped demand curve are robustly lower compared to the present fixed requirement under a wide range of assumptions concerning behavior of generation owners including risk attitudes bidding behavior and willingness to build capacity as a function of forecast profit the cost savings arise from lower capital costs to generators due to reduced risk and risk premiums also average installed capacity is less for the same level of reliability because of reduced fluctuations in installed reserves

spillover effects of distribution grid tariffs in the internal electricity market an argument for harmonization abstract in many countries distribution grid tariffs are being reformed to adapt to the new realities of an electricity system with distributed energy resources in europe legislative proposals have been made to harmonize these reforms across country borders many stakeholders have argued that distribution tariffs are a local affair while the european institutions argued that there can be spillovers to other countries which could justify a more harmonized approach in this paper we quantify these spillovers in a simplified numerical example to give insight and an order of magnitude we look at different scenarios and find that the spillovers can be both negative and positive to be able to quantify these effects we developed a long run market equilibrium model that captures the wholesale market effects of distribution grid tariffs the problem is formulated as a non cooperative game involving consumers generating companies and distribution system operators in a stylized electricity market

an assessment of a proposed ets in australia by using the monash green model abstract using the monash green model and a database containing detailed energy sectors this paper evaluates the effects of a proposed emissions trading scheme on the australian economy and the emissions levels the simulation results indicate that the price of carbon permits has to increase from a 4 1 per tonne in 2015 through a 13 1 per tonne in 2020 to a 41 3 per tonne in 2030 to achieve a target of 28 below the 2005 level in 2030 the main buyers of permits would be the agricultural sector black coal electricity sector and brown coal electricity sector compared to the business as usual scenario australia s gdp is projected to be 0 85 lower in 2020 and 1 6 lower in 2030 household welfare measured in terms of equivalent variations will increase due to compensations provided by the government the results also lend strong support towards the transition to renewable energy the stylised model was adapted to inform the results of the full model

an equilibrium model of consumer energy choice using a personal carbon trading scheme based on allowance price abstract changes in consumer behavior due to a personal carbon trading pct scheme are theoretically attractive yet untested in practice in this paper simulations on the basis of an equilibrium model are used to examine the effects of carbon allowance prices on energy use choice under a particular pct scheme it is shown that the equilibrium price of allowances would emerge under the pct scheme considered here further analyses indicate that the quantity of energy consumption under pct is a nonlinear function of the allowance price with a sharp kink at the point of equilibrium when the allowance price is below the equilibrium price consumers would prefer higher carbon energy in contrast when the allowance price is above the equilibrium price consumers would choose lower carbon energy however when the allowance price equals the equilibrium value consumers would purchase lower carbon energy and higher carbon energy simultaneously furthermore it is shown that the initial allowance allocation could also affect energy use choice on the basis of these results one of the main implications is that the allowance price should exceed the breakeven price to stimulate consumers to switch to green energy and progressively live a low carbon lifestyle

costs and benefits of livestock systems and the role of market and nonmarket relationships in developing countries livestock are kept not only for their physical products but also for insurance financing and to display status though this range of purposes is acknowledged livestock policies nevertheless often emphasize physical production a limited perspective that hampers the formulation and implementation of effective livestock policies this article presents a comprehensive appraisal of costs and benefits of livestock systems that takes into account the institutional environment of livestock keepers indicators are developed that capture quantify and organize not only the benefits resulting from the physical production but also those from the intangible functions the method is illustrated by an analysis of cattle in the western province of zambia the results indicate that the perspective on livestock systems developed more closely reflects the observed decisions of the livestock keepers

agricultural effects of changes in financial markets in this paper i will argue that nominal interest rates are being increased by rising real rates real rates are being driven by demands to finance economic development and infrastructural management in recent decades they have been suppressed by highly regulated domestic financial markets and distorted by less developed international financial markets

can personal gasoline permit trading be effective an investigation into permit demand this study proposes a personal gasoline permit trading scheme to limit the total gasoline consumption thus reducing its environmental impact we studied the effectiveness of this scheme by analyzing the permit demand of a gasoline driven vehicle in transportation sector a general utility optimization model is formulated and a cobb douglas utility function is further assumed to analyze the response of permit demand to its price changes with the slutsky decomposition of price effects the results when defined in economic terms indicate that the permit demand of consumers in higher income groups are negatively related to permit price permit demand are also negatively related to permit price for consumers in medium income groups but with positive income effect and the direct relationship between permit demand of lower income groups and the price is defined as a giffen good effect that is for those low income groups when the permit price rises their demand for permits would also increase then us and singapore household expenditure data are used to show comparable results of a pilot personal gasoline permit trading scheme further some regulations on critical parameters such as permit allocation and permit prices in the policy design are proposed to make the scheme feasible in different income groups based on these results implications limitation and suggestions for future study are discussed

carbon dioxide emissions allocation a review carbon dioxide co2 emissions allocation plays a fundamental role in determining reduction responsibility at economy level or emission permits at firm level past decades have seen the development and applications of various methods for co2 emissions allocation this paper provides a literature review of co2 emissions allocation with emphasis on the evolution of allocation methods used it begins with a summary of the most popular allocation principles and criteria that lay a foundation for the development of allocation methods we then classify the existing allocation methods into four groups namely indicator optimization game theoretic and hybrid approaches the main features and findings of past studies are identified and summarized while the fairness principle prevails in earlier studies the efficiency principle has been found to receive increasing attention recently we also present a comparison of the empirical results based on ten popular indicator methods to show how indicator choice affects the allocation results issues related to selecting appropriate methods in co2 emissions allocation are finally discussed further research may be carried out to strike a balance between fairness and efficiency so that the allocation results become more widely acceptable and economically feasible

dynamic modeling of thermal generation capacity investment application to markets with high wind penetration modeling the dynamics of merchant generation investment in market environments can inform the making of policies whose goals are to promote investment in renewable generation while maintaining security of supply such models need to calculate expected output costs and revenue of thermal generation subject to varying load and random generator outages in a power system with high penetrations of wind this paper presents a dynamic investment simulation model where the short term energy market is simulated using probabilistic production costing using the mix of normals distribution mond technique to represent residual load load net of wind output price mark ups due to market power are accounted for an energy only market setting is used to estimate the economic profitability of investments and forecast the evolution of security of supply simulated results for a great britain gb market case study show a pattern of increased relative security of supply risk during the 2020s in addition many new investments can recover their fixed costs only during years in which more frequent supply shortages push energy prices higher

differentiated products increasing returns to scale and heterogeneous firms in a cge model of the australian coal sector we use a computable general equilibrium cge model to re evaluate the effects of the introduction of a tax on co2 emissions in australia after incorporating a number of important aspects of australian coal production while other studies for example commonwealth of australia 2008a clarke and waschik 2012 model coal as a single aggregate sector we disaggregate coal into black and brown coals brown coal is non traded while most black coal is exported and brown coal has a higher emission intensity than black coal coal is a differentiated product whose production is characterized by the existence of very large fixed costs and considerable differences in the ratio of capital expenditures to capacity between coal mines so we use balistreri and rutherford 2012 and melitz 2003 to incorporate increasing returns to scale production technology and heterogeneous productivities between monopolistically competitive coal firms we find that while the aggregate effects of achieving a given level of abatement are largely unaffected by disaggregation of coal the effects within the black and brown coal sectors are very different the introduction of increasing returns to scale and heterogeneous firms does have important effects on the aggregate welfare costs of achieving a given level of abatement when monopolistically competitive coal producers face more inelastic demand welfare costs rise firm exit falls and the carbon price needed to achieve a given level of abatement falls

carbon emissions trading scheme exploration in china a multi agent based model abstract to develop a low carbon economy china launched seven pilot programs for carbon emissions trading cet in 2011 and plans to establish a nationwide cet mechanism in 2015 this paper formulated a multi agent based model to investigate the impacts of different cet designs in order to find the most appropriate one for china the proposed bottom up model includes all main economic agents in a general equilibrium framework the simulation results indicate that 1 cet would effectively reduce carbon emissions with a certain negative impact on the economy 2 as for allowance allocation the grandfathering rule is relatively moderate while the benchmarking rule is more aggressive 3 as for the carbon price when the price level in the secondary cet market is regulated to be around rmb 40 per metric ton a satisfactory emission mitigation effect can be obtained 4 the penalty rate is suggested to be carefully designed to balance the economy development and mitigation effect and 5 subsidy policy for energy technology improvement can effectively reduce carbon emissions without an additional negative impact on the economy the results also indicate that the proposed novel model is a promising tool for cet policy making and analyses

emissions trading with updated allocation effects on entry exit and distribution allocation of emissions allowances may have significant distributional and efficiency effects it is well known that cost efficiency may be achieved if allowances are auctioned or distributed in a lump sum manner e g based on emissions levels before the start of the system grandfathering bohringer and lange eur econ rev 49 2041 2055 2005 show that a cost effective outcome can also be achieved if the base year for allocation is continually updated updating given that banking and borrowing are prohibited in this paper we examine whether updating alters the entry and exit conditions for firms compared to grandfathering and how it affects profits for new and existing firms we find that the two schemes function surprisingly similar first the incentives to entry and exit are identical second the total value of free quotas to existing firms based on emissions before the system starts is also identical without any auctioning with updating initial claims for free allowances have a shorter lifetime compared to grandfathering but quota prices are higher as firms anticipate the effect of current emissions on future claims to free allowances the two effects exactly cancel each other out if there is some combination of auction and free allocation the total value of free quotas will always be highest under grandfathering if the auction rate is the same entry and exit incentives are still equal

exploring the impacts of regional unbalanced carbon tax on co_2 emissions and industrial competitiveness in liaoning province of china carbon tax is regarded as a useful policy instrument to achieve the environmental target efficiently however the effect of regional unbalanced carbon tax is still unknown in this study an improved two region computable general equilibrium cge model is developed to fill this research gap with liaoning province and the rest of china roc as the study area business as usual bau and nine carbon tax scenarios are designed results show that in 2030 the highest carbon tax of 221 usd ton co 2 in taxc4p8 scenario in liaoning province will lead to carbon reduction of 44 92 with the cost of 5 54 gross domestic product gdp loss price effect and scale effect are the two mechanisms that affect the changes in gdp industrial output and co 2 emissions industrial structure energy consumption and carbon intensity of liaoning are overwhelmingly affected by the price effect most less energy intensive industries belong to the winner industries due to the higher influence of domestic market by contrast loser industries including most of the energy intensive industries are mainly affected by the changes of provincial and international markets roc region is mainly affected by the price effect suggestions about preferential developmental industries are offered to balance the environmental and economic concerns

evaluating the application of different pricing regimes and low carbon investments in the european electricity market the eu ets is the first measure initiated by the eu to contribute to the decarbonization of the european energy sector it is a cap and trade system that requires industries participating to the program to procure allowances to cover their emissions electricity intensive industries eiis have complained that the system put their european plants at disadvantage compared to facilities located outside the eu they have asked for actions to mitigate this effect one of them is to have access to long term contracts with electricity suppliers ideally with those operating carbon free plants this paper presents and illustrates a method for assessing the impact of this measure on eiis participating to the eu cap and trade system we model a power market segmented in two consumer groups eiis and the rest of the market n eiis these two groups are subject to different price regimes eiis purchase electricity from dedicated base load power plants at average cost price while n eiis are supplied at marginal cost the french exeltium and the belgian blue sky consortia are existing examples of this market organization the expanse of the territories that can be covered by these systems depends on the organization of transmission organization and on national energy position relative to carbon free generation we examine two different types of long term average cost based contracts that differ by the organization of transmission and study their impact under different national energy policies we formulate the problem of operations and investment in this market as a spatial equilibrium model where generators can invest in new capacity subject to different regional constraints transmission is organized according to a flow based approach as foreseen by regulatory authorities and transmission system operators in europe we also examine the impact of nuclear policies co 2 emission allowances are auctioned and tradable we describe the models and discuss their policy implications through a stylized case study of the central western european electricity market mathematical properties are provided in the appendices published in the supplementary materials of this paper 2012 elsevier b v

optimal production planning with emissions trading emissions trading is a market based mechanism for curbing emissions and it has been implemented in europe north america and several other parts of the world to study its impact on production planning we develop a dynamic production model where a manufacturer produces a single product to satisfy random market demands the manufacturer has access to both a green and a regular production technology of which the former is more costly but yields fewer emissions to comply with the emissions regulations the manufacturer can buy or sell the allowances in each period via forward contracts in an outside market with stochastic trading prices while needing to keep a nonnegative allowance account balance at the end of the planning horizon we first derive several important structural properties of the model and based upon them we characterize the optimal emissions trading and production policies that minimize the manufacturer s expected total discounted cost in particular the optimal emissions trading pol

cooperation between rivals informal know how trading it has long been recognized that it is difficult for an innovating firm to fully appropriate the benefits arising from its innovations and that desired research might therefore not be performed nelson 1959 pp 297 306 one sometimes possible solution to this dilemma is cooperative r d conducted by firms who share the costs and benefits of particular r d projects johnson 1973

asymmetric industrial energy prices and international trade this paper measures the response of bilateral trade flows to differences in industrial energy prices across countries using a panel for the period 1996 2011 including 42 countries 62 sectors and covering 60 of global merchandise trade we estimate the short run effects of sector level energy price asymmetry on trade we find that changes in relative energy prices have a statistically significant but very small impact on imports on average a 10 increase in the energy price difference between two country sectors increases imports by 0 2 the impact is larger for energy intensive sectors even in these sectors however the magnitude of the effect is such that changes in energy price differences across time explain less than 0 01 of the variation in trade flows simulations based on our model predict that a 40 65 tco2 price of carbon in the eu ets would increase europe s imports from the rest of the world by less than 0 05 and decrease exports by 0 2

the effect of allowance allocations on cap and trade system performance abstractan implication of the coase theorem is that under certain conditions the market equilibrium in a cap and trade system will be cost effective and independent of the initial allocation of tradable rights that is the overall cost of achieving a given aggregate emission reduction will be minimized and the final allocation of permits will be independent of the initial allocation we call this the independence property this property is important because it means that the government can establish the overall pollution reduction goal for a cap and trade system by setting the cap and leaving it up to the legislature to construct a constituency in support of the program by allocating the allowances to various interests without affecting either the environmental performance of the system or its aggregate social costs we examine the conditions under which the independence property is likely to hold both in theory and in practice

designing climate mitigation policy this us paper provides an exhaustive review of critical issues in the design of climate mitigation policy by pulling together key findings and controversies from diverse literatures on mitigation costs damage valuation policy instrument choice technological innovation and international climate policy the authors begin with the broadest issue of how high assessments suggest the near and medium term price on greenhouse gases would need to be both under cost effective stabilization of global climate and under net benefit maximization or pigouvian emissions pricing the remainder of the paper focuses on the appropriate scope of regulation issues in policy instrument choice complementary technology policy and international policy architectures

output based allocations in pollution markets with uncertainty and self selection we study pollution permit markets in which a fraction of permits are allocated to firms based on their output output based allocations which are receiving increasing attention in the design of carbon markets around the world e g europe california new zealand are shown to be optimal under demand and supply volatility despite the output distortions they may create in a market that covers multiple sectors the optimal design combines auctioned permits with output based allocations that are specific to each sector and increasing in its volatility when firms are better informed about the latter or must self select the regulator resort to some free i e lump sum allocations to sort firms out numerical exercises illustrate the policy relevance of our results the gains from considering output based allocations can be substantial

the welfare implications of climate change policy abstract the response to three different climate change policies is measured within a general equilibrium model of world output technological change greenhouse gas emissions and climate driven changes in productivity the proposed policies including an approximation to the kyoto protocol are shown to differ greatly in how they mitigate climate change support economic growth and allocate rents across generations benefits of alternative policies relative to the status quo do not necessarily accrue to the generations that bear the costs the results also show that the chosen rent distribution rule has a profound effect on policy evaluation in particular policies which allocate rents on a per capita basis are shown to be systematically welfare preferred to situations where emissions rights are grandfathered to emitting firms this implies that both the optimal level of emissions and the welfare cost of reaching a given target of emissions or atmospheric concentration would be lower under a per capita allocation of emissions permits or carbon tax revenues

robust technology policy against emission leakage the case of upstream subsidies asymmetric regulation of a global pollutant between countries can alter the competitiveness of industries and lead to emissions leakage which hampers countries welfare in order to limit leakage governments consider supporting domestic trade exposed firms by subsidizing their investments in abatement technology the suppliers of such technologies tend to be less than perfectly competitive particularly when both emissions regulations and advanced technologies are new in this context of twin market failures we consider the relative effects and desirability of subsidies for abatement technology we find a more robust recommendation for upstream subsidies than for downstream subsidies downstream subsidies tend to increase global abatement technology prices reduce pollution abatement abroad and increase emission leakage on the contrary upstream subsidies reduce abatement technology prices and hence also emissions leakage

the impact of investors risk aversion on the performances of capacity remuneration mechanisms abstract this paper analyses the impact of risk aversion on the performances of capacity remuneration mechanisms with investors facing an uncertain peak load three market designs are studied for this purpose a competitive energy only market a capacity market and a strategic reserve mechanism a simulation model based on system dynamics is developed in order to represent investment decisions and analyse the behaviour of each market design risk aversion is modelled through the computation of conditional value at risk the results are discussed in terms of impact on the reliability ability to limit shortages and cost total generation costs of the studied market designs when comparing the three market designs the capacity market seems to be the least affected by the introduction of risk aversion both in terms of cost and reliability this result suggests that implementing a capacity market is preferable in order to deal with the adverse effects of risk aversion given the simulations and parameters that were used

a market approach to long term security of supply the problem of ensuring that there is enough generation capacity to meet future demand has been an issue in market design since the beginning of the deregulation process although ideally the market itself should be enough to provide adequate investment incentives there are several factors that prevent this result from being achieved and some actual markets have already experienced problems related with a lack of generation capacity a regulatory framework to address this question is presented the procedure is based on an organized market where reliability contracts based on financial call options are auctioned so both their price and their allocation among the different plants are determined through competitive mechanisms this results in a stabilization of the income of the generators and provides a clear incentive for new generation investment with a minimum of regulatory intervention additionally the method represents a market compatible mechanism to hedge demand from the occurrence of high market prices

pollution taxes and revenue recycling abstract discussions of environmental policy and the tax system have emphasized the value of pollution tax revenues which can be used to reduce other tax distortions in the economy however by raising private marginal production costs environmental taxes also tend to reduce gdp and exacerbate the welfare costs of conventional taxes for environmental taxes in consumption goods industries the net welfare change from these two effects is negative unless this good is a relatively weak substitute for leisure an estimate for the optimal pollution tax with full revenue recycling is 63 to 78 of marginal environmental damages

consignment auctions of free emissions allowances abstract while the initial distribution of emissions allowances is usually thought to be independent of the emissions outcome free allocation can affect the efficiency and fairness of allowance trading inefficiency may result from thin allowance markets poor price discovery and regulatory or organizational complexities that hinder the recognition of opportunity costs concerns about fairness may result from intransparency in the process of transferring substantial allowance value we explore the role of consignment auctions in mitigating these concerns these revenue neutral auctions return the financial value of allowances to their original holders while revealing prices and directing allowances to their highest valued use they also can be used to support a minimum price when allowances are freely distributed which may facilitate program linkage consignment auctions have minimal administrative costs and do not necessarily involve government experience indicates that they can play an important role especially in new markets

generation capacity expansion in a risky environment a stochastic equilibrium analysis we cast models of the generation capacity expansion type formally developed for the monopoly regime into equilibrium models better adapted for a competitive environment we focus on some of the risks faced today by investors in generation capacity and thus pose the problem as a stochastic equilibrium model we illustrate the approach on the problem of the incentive to invest agents can be risk neutral or risk averse we model risk aversion through the cvar of plants profit the cvar induces risk adjusted probabilities according to which investors value their plants the model is formulated as a complementarity problem including the cvar valuation of investments an illustration is provided on a small problem that captures several features of today s electricity world a choice often restricted to coal and gas units a peaky load curve because of wind penetration uncertain fuel prices and an evolving carbon market we assess the potential of the approach by comparing energy only and capacity market organizations in this risky environment our results can be summarized as follows a deterministic analysis overlooks some changes of capacity structure induced by risk whether in the capacity market or energy only organizations the risk neutral analysis also misses a shift towards less capital intensive technologies that may result from risk aversion last risk aversion also increases the shortage of capacity compared to the risk neutral view in the energy only market when the price cap is low this may have a dramatic impact on the bill to the final consumer the approach relies on mathematical programming techniques and can be extended to full size problems the results are illustrative and may deserve more investigation

designing an emissions trading scheme for china with a dynamic computable general equilibrium model abstract to fulfill its copenhagen pledges to control carbon emissions and mitigate climate change china plans to establish a nationwide emissions trading scheme ets in 2016 this paper develops a multi sector dynamic computable general equilibrium model with an ets module to study the appropriate ets policy design including a carbon cap permit allocation and supplementary policies e g penalty policies and subsidy policies the main results are as follows 1 to achieve china s copenhagen pledge the equilibrium nationwide carbon price is observed to be between 36 and 40 rmb yuan per metric ton 2 the ets policy has a cost effective mitigation effect by improving china s production and energy structures with relatively little economic harm 3 various ets sub policies should be carefully designed to balance economic growth and carbon mitigation in particular the carbon cap should be set according to china s copenhagen pledge a relatively large distribution ratio of free permits the output based grandfathering rule for free permits a penalty price on illegitimate emissions slightly above the carbon price and a sufficient subsidy from ets revenue are strongly recommended in the early stages to avoid significant economic loss these designs can be adjusted in later stages to enhance the mitigation effect

state government efforts in industrial modernization using theory to guide practice gittell r j and kaufman a 1996 state government efforts in industrial modernization using theory to guide practice reg studies 30 477 492 this paper presents a theoretical framework that incorporates economic and political considerations to gain insight into state government industrial modernization efforts the discussion highlights how information asymmetries and traditional business norms may justify the organization of a public manufacturing extension service we suggest however that if left solely to private or to public means one might expect either the provision of too few or too many manufacturing extension services difficulties in calculating benefits and in sharing information can inhibit spontaneous private collective action on the other hand we suggest that public officials have incentives to institute manufacturing services independent of private demand to balance private and public incentives we suggest the need for a public private partnership along with specific recommen

performance evaluation and a flow allocation decision model for a sustainable supply chain of an apparel industry abstract there is a growing concern that business enterprises and their supply chains focus primarily on economic activities and ignore their impact on the environment and society this paper aims to help decision makers managers and practitioners to achieve economic growth societal development and environmental protection by developing sustainable supply chain performance measures and proposes a partner selection and flow allocation decision making model survey data from 278 business organizations from the indian apparel industry supply chain network were used and an integrated method of structural equation modeling fuzzy analytical hierarchy process and fuzzy multi objective linear programming was applied to the proposed model the results of the structural equation modeling analysis indicate that the survey respondents considered sustainable production performance to be of prime importance which thus indicates its significance in developing a sustainable supply chain for the apparel industry to illustrate the use of the proposed model for partner selection and flow allocation decision making real time data from an apparel manufacturer are presented optimal results were obtained for two strategies sustainability and cost saving to show a cost benefit trade off when developing a sustainable supply chain using comparative performance a decision maker can choose an appropriate strategy based on cost benefit analysis of the presented trade offs

switching to carbon free production processes implications for carbon leakage and border carbon adjustment climate policy under partial global compliance raises concerns regarding carbon leakage while border carbon adjustment bca measures are a potential remedy they have also been criticised on various grounds this paper therefore investigates whether a policy fostering the switch to carbon free technologies can substitute for bcas a reason for the effectiveness of a targeted technology policy is that major leakage prone sectors such as iron and steel have two main sources of carbon emissions combustion of fossil fuels and industrial processes while combustion emissions can be reduced relatively easy by increasing energy efficiency reducing process emissions requires a switch to low carbon production processes e g in steel production by deploying electrolysis based on large scale solar electricity we show by means of a multi regional computable general equilibrium analysis that such a switch in steel production technology can eliminate a significant fraction of carbon leakage and also increase sectoral output and welfare since the necessary technologies are not available at large scale yet however are likely to be by 2020 a transitional bca scheme may be a crucial supportive instrument to foster such technology switches yet in the long run bca should be phased out to preserve the incentive for carbon free innovation

tiered gasoline pricing a personal carbon trading perspective abstract this paper proffers a tiered gasoline pricing method from a personal carbon trading perspective an optimization model of personal carbon trading is proposed and then an equilibrium carbon price is derived according to the market clearing condition based on the derived equilibrium carbon price this paper proposes a calculation method of tiered gasoline pricing then sensitivity analyses and consumers surplus analyses are conducted it can be shown that a rise in gasoline price or a more generous allowance allocation would incur a decrease in the equilibrium carbon price making the first tiered price higher but the second tiered price lower it is further verified that the proposed tiered pricing method is progressive because it would relieve the pressure of the low income groups who consume less gasoline while imposing a greater burden on the high income groups who consume more gasoline based on these results implications limitations and suggestions for future studies are provided

output based allocation of emissions permits for mitigating tax and trade interactions the allocation of tradable emissions permits has important efficiency as well as distributional effects when tax and trade distortions are taken into account we compare different rules for allocating carbon allowances within sectors lumpsum grandfathering output based allocation oba auctioning and among sectors historical emissions or value added shares the output subsidies implicit in oba mitigate tax interactions unlike grand fathering oba with sectoral distributions based on value added is similar to revenue recycling with auctioning oba based on historical emissions supports heavier polluters more effectively counter acting carbon leakage but at higher welfare costs less energy intensive sectors are also sensitive to allocation rules

the double dividend hypothesis in a cge model specific factors and the carbon base abstract we use a computable general equilibrium model to empirically examine the double dividend dd hypothesis using the gtap model data for australia we examine three environmental taxes on the production of energy goods following bento and jacobsen 2007 we examine the role played by specific factors in the production of energy goods our results provide support for the existence of a strong dd in australia when revenue is recycled through reductions in consumption taxes the strong dd is larger when the share of specific factors is higher and is much more pronounced when carbon taxes are charged on the production origin based accounting rather than the usage destination based accounting of carbon these results draw attention to the importance of the definition of the carbon base and have implications for the scale of carbon leakage

enhanced models and improved solution for competitive biofuel supply chain design under land use constraints abstract this paper studies the effect of government regulation on farmland use to balance food and energy production in a competitive biofuel supply chain design framework we propose a stackelberg nash game model with a direct land use constraint that captures farmland food and fuel market equilibrium to provide farmers with incentives to comply with the land use regulation we implement the land use constraint through a cap and trade mechanism which we show attains equivalent land use patterns we further prove the existence of optimal solutions of the two equivalent discretely constrained mathematical program with equilibrium constraints dc mpec models two adaptive relax and tighten schemes integrality and lagrangian duality based relaxation are proposed to handle the binary variables in a mixed integer formulation of the models the proposed methodology is tested in a case study for the state of illinois the computational results demonstrate the superiority of our customized algorithms to publicly available solvers for solving problems with realistic sizes finally the efficiency of the cap and trade mechanism is demonstrated through comparisons of scenarios with and without regulation as well as a sensitivity analysis on the cap and trade level the cap and trade policy is found to effectively reduce biomass farmland use and profits of the biofuel industry it may have different impacts on social welfare depending on problem settings and market parameters cap and trade levels also affect system behavior and thus should be carefully selected

labor market distortions and welfare decreasing international emissions trading using a multi region multi sector computable general equilibrium model this paper analyzes the effects of international emissions trading iet with a focus on labor market distortions we construct four separate models with several different labor market specifications 1 a model without labor market distortions 2 a model with taxinteraction effects in the labor market 3 a model with a minimum wage and 4 a model in which a wage curve determines wages we use these models to analyze how the effects of iet change according to model specification the main results from the analysis are as follows first we found that iet generates gains for all participants in the model without labor market distortions second even in the models with labor market distortions importers of emissions permits are highly likely to benefit conversely we show that the possibility of a welfare loss from iet is not as small for exporters of permits in particular in the minimum wage and wage curve models we found that the exporters of emissions permits are likely to be disadvantaged however this also depends on the region in question for example china is likely to suffer under iet whereas russia is likely to benefit finally if we implement policies to alleviate labor market distortion simultaneously with emissions regulation all regions receive benefit from iet

venture capital high technology and regional development florida r l and kenney m 1988 venture capital high technology and regional development reg studies 22 33 48 this paper explores the role of venture capital in technological innovation and regional development both aggregate data and a unique firm level data base are employed to determine the location of major centres of venture capital flows of venture capital investments and patterns of investment syndication or coinvestment among venture capital firms three major centres of venture capital are identified california san francisco silicon valley new york and new england massachusetts connecticut as well as three minor venture capital centres illinois chicago texas and minnesota venture capital firms are found to cluster in areas with high concentrations of financial institutions and those with high concentrations of technology intensive enterprises venture capital firms which are based in financial centres are typically export oriented while those in technology centres tend t

a computable general equilibrium model of international sanctions in iran we detail recent international sanctions against the iranian economy and its government imposed by a subset of developed countries the effects of these sanctions on the iranian economy in general and upon upper and lower income rural and urban iranian households as well as the iranian government are modelled using a computable general equilibrium cge model we supplement the global trade analysis project 8 data set using income and expenditure shares from the urban and rural household income and expenditure survey from the statistical centre of iran sci the model is calibrated to simulate the effects of international sanctions as closely as possible we use endogenous trade taxes to simulate the effects of sanctions on iranian oil and petrochemical exports and iranian imports of petroleum products metal products and motor vehicles our study finds that international sanctions reduced aggregate iranian welfare by 14 15 rural households in iran suffered welfare losses which were almost double those experienced by urban households and the poorest urban and rural households experienced the largest welfare losses in the order of 5 10 but the government of iran sees a decrease in real revenue of 40 50 due to the large negative effect of sanctions on the iranian oil sector

economic and environmental impact analysis of carbon tariffs on chinese exports as an alternative measure for the proposal of border tax adjustments btas advocated by the countries that seek to abate co2 emissions hereafter referred to as abating countries export carbon tax ect voluntarily conducted by the developing countries has been widely discussed in recent years this paper uses the multi regional and multi commodity computable general equilibrium cge model and the gtap8 1 database to investigate the economic and environmental effects of carbon tariffs on chinese exports the following three policy scenarios are considered 1 the abating countries implement cap and trade emission programs without btas 2 the unilaterally abating countries levy import tariffs and export subsidies on non abating countries and 3 the abating countries implement unilateral climate policies combined with ect imposed by china the ect policy of china is evaluated with a carbon price set at 17 us t co2 results illustrate that the ect voluntarily implemented by china is ineffective in reducing its domestic co2 emissions moreover ect merely has a minor impact on global emissions finally the competitiveness of china s energy intensive and trade exposed eite industries suffers substantial losses if export tariffs are imposed however china s gains in terms of welfare and gross domestic product gdp would be slightly improved if an ect policy is implemented compared to the scenario where china is subjected to btas levied by the abating coalition in the light of the tradeoff between tariff revenue for welfare and competiveness losses of the eite industries it is therefore difficult to conclude that carbon tariff on chinese exports is an alternative policy to btas

emissions targets and the real business cycle intensity targets versus caps or taxes for reducing greenhouse gas emissions intensity targets are attracting interest as a flexible mechanism that would better allow for economic growth than emissions caps for the same expected emissions however the economic responses to unexpected productivity shocks differ using a real business cycle model we find that a cap dampens the effects of productivity shocks in the economy on all variables except for the shadow value of the emissions constraint an emissions tax leads to the same expected outcomes as a cap but with greater volatility certainty equivalent intensity targets maintain higher levels of labor capital and output than other policies with lower expected costs and no more volatility than with no policy

comparing policies to combat emissions leakage border carbon adjustments versus rebates we explore conditions determining which anti leakage policies might be more effective complements to domestic greenhouse gas emissions regulation we consider four policies that could be combined with unilateral emissions pricing to counter effects on international competitiveness a border charge on imports a border rebate for exports full border adjustment and domestic output based rebating each option faces different potential legal hurdles in international trade law each also has different economic impacts while all can support competitiveness none is necessarily effective at reducing global emissions nor is it possible to rank order the options effectiveness depends on the relative emissions rates elasticities of substitution and consumption volumes we illustrate these results with simulations for the energy intensive sectors of three different economies the united states canada and europe although most controversial full border adjustment is usually most effective but output based rebating for key manufacturing sectors can achieve many of the gains

regional carbon policies in an interconnected power system how expanded coverage could exacerbate emission leakage abstract interconnected regional electricity markets are often subject to asymmetric carbon policies with partial coverage for co2 emissions while the resulting problem of carbon leakage has been well studied its mitigation has received relatively less attention we devise a proactive carbon policy via a bi level modelling approach by considering the impact of an emission cap that limits the cost of damage from a regional power market in particular a welfare maximising policymaker sets the cap when facing profit maximising producers and the damage costs from their emissions at two nodes a partial coverage policy could degrade maximised social welfare and increase total regional co2 emissions with potential for carbon leakage due to a higher nodal price difference a modified carbon policy that considers co2 emissions from both nodes tightens the cap which increases maximised social welfare and decreases total co2 emissions vis a vis the partial coverage policy albeit at the cost of greater scope for carbon leakage as it causes nodal prices to diverge as a compromise an import coverage policy implemented by california that counts only domestic and imported co2 emissions could alleviate carbon leakage at the cost of lower maximised social welfare with higher total emissions vis a vis the modified coverage policy

downstream regulation of co2 emissions in california s electricity sector this paper examines the implications of alternative forms of cap and trade regulations on the california electricity market specific focus is given to the implementation of a downstream form of regulation known as the first deliverer policy under this policy importers i e first deliverers of electricity into california are responsible for the emissions associated with the power plants from which the power originated even if those plants are physically located outside of california we find that absent strict non economic barriers to changing import patterns such policies are extremely vulnerable to reshuffling of import resources the net impact implies that the first deliverer policies will be only marginally more effective than a conventional source based regulation

future directions for food and agricultural trade policy during the 1970s u s agriculture experienced an unprecedented export boom this export boom produced an unusual albeit short lived period of prosperity for agriculture land previously idled by government programs was brought back into production and new land cleared with the result that by 1981 cropland in production was a record high 391 million acres in constant value 1967 dollars terms net farm income rose from 12 2 billion in 1971 to an unusual peak of 25 1 billion in 1973 the need for direct government support of agriculture declined in the 1980s this strong export performance of u s agriculture has been reversed the physical volume of exports reached a peak in 1980 and the value of exports reached a peak in 1981 both volume and value have steadily declined since those peaks total value of exports declined from 43 8 billion in 1981 to 34 8 billion for the 1983 fiscal year a decline of 21 this decline in foreign markets has contributed to a serious income problem in agriculture net farm income declined to an unprecedentedly low figure of 7 6 billion in 1967 dollars in 1982 it also contributed to a serious financial crisis in agriculture as expanded debt commitments based on an export driven expectation of continued prosperity for agriculture was met with significantly reduced farm incomes serious cash flow problems and reduced equity as land values declined the decline in farm markets has also created a serious challenge to farm programs and policy makers from negligible program costs in the 1970s except for the dairy program the costs of farm programs burgeoned out of control by 1981 they were up to 3 2 billion in 1982 they tripled to 10 billion and for 1983 the regular program costs are expected to more than triple again to 21 8 billion commodity stocks also burgeoned to very high levels as recordand near record breaking crops were met with slumping markets the acre equivalent of the decline in exports of corn cotton wheat and soybeans from 1980 to 1983 was 22 6 million acres u s agriculture obviously faced a serious adjustment problem the administration s response to this crisis was the payment in kind pik program which removed close to 82 million acres of land from production in 1983 the pik program is expected to add anywhere from 12 to 21 billion to this year s outlays for farm programs that means that total program costs for 1983 may well be as large as 35 billion but as important as program costs is the paid idling of some of this nation s most productive resources at the very time it is attempting to recover from the worst economic slump in the post world war ii period it is no exaggeration to say that u s agriculture and agricultural policy are at a crossroads if its export performance does not improve it will be forced to deal with a sizable adjustment problem of transferring resources out of agriculture it can do that by letting market forces do their job or by costly government programs in the form of paid diversion large export subsidies or some other means to bring supply in balance with demand or some combination of the two in this paper i want to address the export performance issues the emphasis on export performance rather than trade policy is a considered one i find it impossible to discuss trade policy without considering domestic commodity programs the two are inextricably intertwined hence i choose the generic concept of export performance since i will discuss both domestic program issues and trade policy issues the first part of this paper reviews the changes in the international economy over the last fifteen to twenty years these changes are g edward schuh is a professor and head department of agricultural and applied economics university of minnesota

impacts of climate policy on the competitiveness of canadian industry how big and how to mitigate competitiveness concerns have been at the forefront of climate policy debates in canada particularly as a result of its high energy intensity and significant exposure to international markets this paper uses a dynamic computable general equilibrium model to assess the likely impacts on sectoral competitiveness that would accompany efforts to meet greenhouse gas mitigation targets that have been set by the canadian government additionally it evaluates several design mechanisms that could be used to reduce the negative competiveness impacts associated with adoption of domestic climate policies the analysis suggests that several sectors would likely face significant competiveness challenges under a reference scenario in which permits are given to emitters in lump sum however it finds that competiveness impacts can be minimized by using output based recycling of permits or by using border tax adjustments

using output based allocations to manage volatility and leakage in pollution markets abstract output based allocations obas are typically used in emission trading systems ets with a fixed cap to mitigate leakage in sectors at risk recent work has shown they may also be welfare enhancing in markets subject to supply and demand shocks by introducing some flexibility in the total cap resulting in a carbon price closer to marginal damage we extend previous work to simultaneously include both leakage and volatility we study how oba permits can be implemented under an overall cap that may change with the level of production in contrast with a design that deducts oba permits from the overall permit allocation as is the current practice in the eu ets and california we show that introducing oba permits while keeping the overall cap fixed would only increase price fluctuations and induce severe welfare losses to non oba sectors

effects of unilateral climate policy on terms of trade capital accumulation and welfare in a world economy we present a two good two country overlapping generations model where emissions arise from production and each country has a domestic emission permit system when one country unilaterally reduces her cap on emissions her output available for domestic and foreign consumption diminishes more than in the other country with unchanged consumption expenditure shares for both goods the domestic terms of trade improve while capital stocks decline in the reducing and less strongly in the non reducing country improving terms of trade in the reducing country and falling capital stocks lead in total to welfare losses in both countries however if the country which unilaterally reduces her emission permits is a net creditor to the world economy and the golden rule applies her own welfare loss remains below that of the non reducing country

carbon control policies competitiveness and border tax adjustments abstract several propositions have recently been made to use border tax adjustments btas to address the loss of competitiveness induced by unilateral stringent domestic pollution control policies this paper explores in a general equilibrium framework the sectoral and welfare implications of a unilateral domestic ghg control policy combined with a bta scheme using the canadian economy as an illustration we assess the extent to which btas achieve their objectives and analyze the impacts of different methods of recycling the bta proceeds to support domestic industries our simulation results suggest that imposing btas on the imports of non fossil and energy intensive products reduces or removes completely the negative competitiveness impacts that domestic industries suffer from the use of the proceeds of the btas to support domestic energy intensive industries improves their competitiveness and more importantly in some cases overprotects them as it allows them to even increase their output in comparison to the benchmark without emissions control our results also shed light on the existence of heterogeneity in the composition of energy intensive industries as far as the recycling method of the bta proceeds is concerned energy intensive industries that are more oriented toward the domestic market are better off with the recycling of the bta proceeds towards gross output than towards exports alone finally abstracting from the environmental benefits of reduced emissions we find that a bta entails a higher welfare cost to households

climate change policy s interactions with the tax system abstract this paper presents a range of insights from recent literature on how climate change policies and other environmental policies interact with the fiscal system it explores four issues associated with fiscal interactions first it examines how these interactions influence the prospects for a double dividend both an environmental improvement and a reduction in the costs of the tax system second it analyzes how the use of revenues from a carbon tax or from a cap and trade system involving auctioned emissions allowances influences these policies economic costs third it addresses the question whether carbon taxes or cap and trade programs represent more efficient sources of government revenue than other more traditional revenue sources such as income sales or payroll taxes finally it analyzes how fiscal interactions affect the choice between co 2 emissions pricing instruments carbon taxes and cap and trade and other climate policy instruments

revenue raising vs other approaches to environmental protection the critical significance of pre existing tax distortions using analytical and numerical general equilibrium models we show that preexisting factor taxes produce a tax interaction effect that increases the costs of pollution taxes and quotas under policies that raise revenue and recycle it through cuts in marginal factor tax rates this effect is partially offset by a revenue recycling effect grandfathered pollution quotas such as those used under the 1990 clean air act amendments to regulate electric utilities so2 emissions do not benefit from this offset preexisting taxes raise this regulation s cost by over 70 more than half of this additional cost could be avoided by auctioning quotas and exploiting the revenue recycling effect

international technology oriented agreements to address climate change much discussion has surrounded possible alternatives for international agreements on climate change particularly post 2012 among these alternatives technology oriented agreements toas are perhaps the least well defined we explore what toas may consist of why they might be sensible which toas already exist in international energy and environmental governance and whether they could make a valuable contribution to addressing climate change we find that toas aimed at knowledge sharing and coordination research development or demonstration could increase the overall efficiency and effectiveness of international climate cooperation but are likely to have limited environmental effectiveness on their own technology transfer agreements are likely to have similar properties unless the level of resources expended is large in which case they could be environmentally significant technology specific mandates or incentives could be environmentally effective within the applicable sector but are more likely to make a cost effective contribution when viewed as a complement to rather than a substitute for flexible emissions based policies these results indicate that toas could potentially provide a valuable contribution to the global response to climate change the success of specific toas will depend on their design implementation and the role they are expected to play relative to other components of the policy portfolio

emissions taxes versus intensity standards second best environmental policies with incomplete regulation the best emissions tax or emissions cap may be an inferior instrument under incomplete regulation leakage without leakage an intensity standard regulating emissions per unit of output is inferior due to an implicit output subsidy this inefficiency can be eliminated by an additional consumption tax with leakage an intensity standard can dominate the optimal emissions tax since the implicit output subsidy prevents leakage the addition of a consumption tax improves an intensity standard s efficiency may prevent leakage and may be efficient comparing intensity standards to output based updating shows that the latter dominates if updating is sufficiently flexible

the impacts of carbon pricing on coastal megacities a cge analysis of singapore abstract pricing carbon is a widely used policy instrument for climate change mitigation quantitative analysis of carbon pricing are mainly conducted at the regional and national level rarely at the city level due to data availability as a representative of coastal megacities that are vulnerable to both climate change and climate policies singapore has announced to impose carbon tax on large direct emitters as a complementary mitigation option to technical measures a city level computable general equilibrium cge model is developed to simulate potential impacts of carbon pricing on the city including paying border carbon adjustment bca on exports or introducing a domestic carbon tax different sector coverages and carbon tax revenue recycling schemes are investigated for domestic carbon tax the simulation results show that a domestic carbon tax is a more cost effective option than paying bca given an identical carbon price at s 10 t co 2 gdp total exports and household consumption would decline less and average abatement cost is much smaller in the carbon tax scenarios compared to the bca scenario in terms of absolute emissions reduction a carbon tax that covers energy manufacturing and land transport sectors would be preferred making emissions around 2 7 lower than 2010 baseline level