The Kyoto Protocol and beyond

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The Kyoto Protocol and beyond
Johannes Bollen RIVM Netherlands Institute of
Public Health and the Environment
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Key elements for analysis
Banking of hot-air, permit price
Emission increases by non-participants
Leakage rate
Emission reductions by participants
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Key Assumptions

• Reference Scenario (IPCC-A1F/A2)
• WorldScan
• Only CO2 and 1st / 2nd budget period
• Policy

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Setup of Analysis
Emissions Trading without USA and banking by
Russia
Alternatives 1 USA ratification 2
sectoral exemptions 3 withdrawal Russia
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Carbon Leakage increases over time
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Carbon Leakage depends on who participates
Leakage in 2nd budget period
percentage
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• Leakage through
• 1 energy channel
• 2 trade channel (non-energy)
• Decomposition
• non-energy trade more important from
• price elasticity
• openness
• market power
• Armington elasticities
• energy content of energy-intensive goods

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Contribution of the trade channel (non-energy) to
leakage in the 2nd budget period in A1F and A2
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Effects of mechanisms from USA ratification on
the share of the trade channel (non-energy) to
carbon leakage
Mechanism A1F A2
Price elasticity
Openness - --
Armington - -
Market power - -
Energy content
Total --
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Emissions and AA of Russia in all scenarios
between 2010-2015
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Permit exports revenues in 1st budgetperiod in
A1F of Russia
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Banking by Russia in A1F
first budget period (2010) first budget period (2010) first budget period (2010) first budget period (2010) first budget period (2010) first budget period (2010)
Banking (percentage) 10 20 50 55 60
Revenues (bn US) 4.9 5.1 4.6 4.4 4.1
Permit price (US / tC) 26 30 45 47 50
Second budget period (2015) Second budget period (2015) Second budget period (2015) Second budget period (2015) Second budget period (2015) Second budget period (2015)
Banking (percentage) 0 0 0 0 0
Revenues (bn US) 7.3 8.5 10.7 10.9 11.0
Permit price (US / tC) 87 80 62 58 56
Hotelling-price (US / tC) at 4.7 interest rate 33 38 57 58 63
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Effects on macro-indicators in A1F and A2
A1F A2 A1F A2
2010 2010 2015 2015
Central Europe GNI 0.6 0.2 0.4 0.3
GDP -0.4 -0.1 -0.5 0.0
Terms-of-Trade 0.2 0.1 0.2 0.1
Permit Trade 0.7 0.2 0.4 0.2
Interest Payments 0.1 0.0 0.2 0.0
Russia GNI 0.7 0.2 1.4 0.2
GDP 0.3 0.0 0.6 0.0
Terms-of-Trade -0.1 0.0 -0.1 0.0
Permit Trade 0.5 0.2 0.9 0.2
Interest Payments 0.0 0.0 0.0 0.0
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Sensitivity of effects on macro-indicators in
Russia in A1F
BASE BASE Sectoral Exemptions USA ratification Withdrawal former East-Bloc
2010 Permit Price in US / tC Permit Price in US / tC 47 65 115 102
GNI () GNI () 0.7 1.0 1.6 0.4
GDP () GDP () 0.3 0.4 0.8 0.6
Terms-of-Trade () Terms-of-Trade () -0.1 0.0 -0.2 -0.1
Permit Trade () Permit Trade () 0.5 0.7 1.1 0.0
Interest Payments () Interest Payments () 0.0 0.0 -0.1 0.0
2015 Permit Price in US / tC Permit Price in US / tC 58 80 141 146
GNI () GNI () 1.4 1.9 2.8 0.6
GDP () GDP () 0.6 0.8 1.3 0.8
Terms-of-Trade () Terms-of-Trade () -0.1 -0.1 -0.2 -0.2
Permit Trade () Permit Trade () 0.9 1.2 1.9 0.0
Interest Payments () Interest Payments () 0.0 0.0 -0.1 0.0