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GTAP-E Presentation on Global Emissions Policy Implications

Explore the impact of excluding USA in emission policies with detailed insights on energy substitution, tax implications, and more. Learn about market trends, targets, and potential outcomes. Presented by esteemed experts.

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GTAP-E Presentation on Global Emissions Policy Implications

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  1. GTAP_E Presented by Belay Fekadu, Farzad Taheripour, Patrick Georges, David Mayer-Foulkes, Marianne Aasen, Hyun-Sik Chung, Kenatro Katsumata, Christa Clapp

  2. Presentation Outline • Annex 1 without USA • Emissions targets • Energy Substitution Possibilities • Tax Replacement Implications • Concluding Comments

  3. Annex 1 without USA: main results Price of emissions decreases: cheaper hot air

  4. Change in CO2 Emissions by Producers Quantity: Non-restricted countries increase emitting production a little

  5. Percent Change in Value of Exports by Industry Trade: EU and non-restricted countries increase emitting production considerably

  6. Price Index of Domestic Purchases (Producers) Price: However, expected price differences small in non-constrained countries

  7. Annex 1 without USA but “good” US behaviour • USA out of Annex 1 for political reasons • but USA wants to do something independently • Self-imposed emission reduction: -36% • Example: “California does more to reduce CO2 emissions than many Annex 1-countries” • What to expect? • Cost of this political decision for USA: • it deprives itself from the benefit of trading permits

  8. When US is out of Annex 1 but behaves nicely: it fulfills its own quota • US must reduce emission by more than if it was in Annex 1 • “Rest of Annex 1” has a less ambitious target (same excess supply of permits; less excess demand  overall quota target for Annex 1 is easier to achieve.

  9. Large increase in carbon tax in the US/ lower increase in rest of Annex 1Small decrease in US private household welfare (really small---why)Decrease in welfare in Russia: permits have less values when USA is out of Annex 1

  10. Market price of energy in USA Market price of Coal, Oil and Gas tends to fall as we go from bad to good behavior Market price of electricity tends to increase Substitution out of coal, oil and gas and into electricity

  11. Emissions targets

  12. Energy Substitution Possibilities

  13. Tax Replacement Implications

  14. Concluding Comments

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