Trade-offs in sulfur emission trading in Europe

How to implement emission trading is one question in the current negotiations on a new sulfur protocol in Europe. Whereas the current protocol stipulates a 30 percent uniform reduction, national emission ceilings included in the proposed new protocol imply differentiated reductions. In addition, emission and fuel standards are proposed. This paper examines the costs and environmental impacts of emission trading. Emission trading combined with regulations is a new element in the paper. Calculations using the RAINS (Regional Acidification INformation and Simulation) model suggest that overlaying emission trading on regulations not only reduces the cost savings but has beneficial impacts as well: ecosystem protection is not changed and significant decreases in environmental benefits for countries are largely avoided. Emission trading can also be used to decrease emissions and increase ecosystem protection. If combined with existing legislation, emission trading minimizes losses in expected environmental benefits for some countries, and most countries gain. However, the initial distribution of emission ceilings has to be used so that some countries are not confronted with higher costs. Trade-offs appear to exist between the use of emission trading to achieve cost savings on the one hand, and ecosystem protection and distributional equity on the other.     

The U.S. allowance trading system for sulfur dioxide: An update on market experience

In 1990, the U.S. Congress passed legislation that amended the Clean Air Act to create a new program to mitigate the effects of acid deposition in the U.S. through emission reductions of sulfur dioxide (SO₂) and nitrogen oxides (NO_x) at electric utility plants across the country. The SO₂ reductions, totalling a 40% reduction nationally from 1980 levels or a 10 million ton reduction annually, are achieved largely through an emission trading system, the largest program of its kind designed to date. This trading system has the potential to save up to half of the compliance costs associated with more traditional source-by-source emission limit programs.This paper briefly discusses background on the acid rain issue in the United States, and the principal features of the program, including: a permanent cap on utility emissions of SO₂ beginning in 2010, decision to grant up-front allocation of emission credits to reduce individual approvals of trades, the use of continuous emission monitors and automatic penalties to ensure compliance, and integration of the Acid Rain program requirements with other Clean Air Act programs. The paper also discusses the development of the allowance trading market to date, including the types of compliance options chosen and quantity and type of emissions trading being conducted.The U.S. Government right to retain a non-exclusive, royalty free licence in and to any copyright is acknowledged.     

On the Use of Exchange Rates as Trading Rules in a Bilateral System of Transferable Discharge Permits

The use of a system of transferable discharge permitsto control the harmful effects of non-uniformly mixedpollutants requires the application of trading rulesin order to prevent permit trading among sources fromviolating environmental standards. The elements andproperties of bilateral trading rules can be analyzedmore easily once formulated as exchange rates, whichwould convert, in a cost-effective way, the emissionright potentially given up by the seller into an offsetting emission right acquired by the buyer. Inthis article, a new expression for such exchange ratesis proposed and then analyzed to infer someunexplored properties of the system.     

Creating Markets for Air Pollution Control in Europe and the USA

This paper surveys recent efforts to relax the rigid regulatory frameworks for air pollution control in Europe and the USA. European policies have mainly taken the form of bubbles and compensation or offset schemes. Emission trading has been limited to intra-firm solutions for various reasons: industry structure, absence of real scarcity, and too restrictive trading rules. Bubbles have been granted to homogenous sectors only and can be characterized as direct regulation for a group rather than tradable permit systems. By contrast, the sulphur allowance program in the USA has laid down the foundation for a pollution permit market with few formal restrictions. Problems that arise are mainly related to local environmental and public utility controls. Europe can learn from the USA that regular national permit markets could be installed, preferably for homogenous sectors. In designing the permit system, the differences between the USA and Europe in terms of ecosystem sensitivity, stringency of regulation and differentiation of regional environmental policy have to be taken into account.     

我国排污权交易污染因子和交易区域的选取策略研究

梳理我国排污权交易污染因子和交易区域选取现状,总结污染因子和交易区域选取的特点,分析目前尚存在的问题,探索排污权交易污染因子和交易区域选取的原则,结果表明:(1)目前我国开展排污权交易的选取的污染因子不科学,交易区域选取过于行政化;(2)试点污染物的选取应综合考虑污染物特性、监测能力及总量因素;(3)交易区域的选取应综合考虑污染源数量、扩散特性及污染程度等因素。     

New directions in emissions trading: the potential contribution of new institutional economics

Once an arcane topic even among environmental economists, emissions trading systems have substantially increased during this past decade in the USA. Moreover, the implementation of these systems has necessitated increased involvement of professionals in many fields besides economics. This paper reviews the practical experience of the six major types of emissions trading systems, focusing on credit market development, participation and results, including transaction costs. Five more recent applications of emissions trading also are considered, as well as the possibility of inter-pollutant trading. While inter-pollutant trading has been successfully used for chlorofluorocarbons (CFCs), the applicability of this experience is probably very limited. Additionally, it would be highly premature to attempt an evaluation of these newer emissions trading systems, some of which have yet to be even partially implemented. In order to improve these latter and future programs, the paper considers the potential contribution of the New Institutional Economics (NIE) to emissions trading. The NIE is used to develop theoretical insights and a series of predictions about the performance of a range of emissions trading systems.     

Regulation of Stock Externalities with Correlated Abatement Costs

We study a dynamic regulation model where firms’ actions contribute to a stock externality. The regulator and firms have asymmetric information about serially correlated abatement costs. With price-based policies such as taxes, or if firms trade quotas efficiently, the regulator learns about the evolution of both the stock and costs. This ability to learn about costs is important in determining the ranking of taxes and quotas, and in determining the value of a feedback rather than an open-loop policy. For a range of parameter values commonly used in global warming studies, taxes dominate quotas, regardless of whether the regulator uses an open-loop or a feedback policy, and regardless of the extent of cost correlation.Early versions of this paper were presented at the Fifth California Workshop on Environmental and Resource Economics, University of California, Santa Barbara, CA, May 5–6, 2000, and at the annual meeting of the Canadian Agricultural Economics Society, University of British Columbia, Vancouver, BC, Canada, June 1–3, 2000. We thank these conference participants, and two anonymous referees of this journal for their comments, without implicating them in any remaining errors. The opinions expressed in this paper do not necessarily reflect the views of the Asian Development Bank.     

西部试行排污权交易制度的再思考

排污权交易制度是以市场为基础的保护环境的方式,即在保持一定区域污染物排放总量不变的前提下,确立排污权,允许各个排污单位的排污权像商品那样买卖。针对西部污染等环境问题,本文阐述了西部试行排污权交易制度的必要性和构想,提出了良好的制度才能建立人与环境的和谐关系,鼓励公众参与,在排污权初始分配中借鉴期权理论,环境政策的整体策动效应是完善此制度的有效措施等观点。     

The exchange rate cycle in Argentina

This article discusses the secular volatility of output, inflation, the exchange rate, and poverty in Argentina. Inflation, currency devaluation and a wide gross domestic product (GDP) cycle have been recurrent problems in Argentina for several decades. The literature has extensively discussed those issues from different viewpoints. This study focuses on a relatively unexplored theme that may contribute to a partial explanation. It deals with the continuous tendency to equalize different profitabilities resulting, in turn, from remarkably different sectoral purchasing power parities. Thus, for any given exchange rate, an incessant tendency toward the equalization of profitabilities generates opposing inflationary and devaluatory pressures. The resulting inflation-devaluation cycle feeds income redistribution, GDP fluctuation, real exchange rate instability, and high levels of uncertainty.     

汇率变动、对外贸易与经济增长——以湖南省为例

选取了2005年7月汇改以来至2013年12月的季度数据,通过建立联立方程模型,利用3SLS(三阶段最小二剩法)计量方法就人民币汇率的变动对湖南省对外贸易、经济增长的影响进行实证研究。实证结果表明:人民币实际有效汇率升值1%,经济增长速度降低0.612%;湖南省进出口额的增长速度降低2.79%,人民币实际有效汇率升值对湖南省经济总量的增长有紧缩效应。     

A Note on Market Power in an Emission Permits Market with Banking

In this paper, we investigate the effect of market power on equilibrium path of an emission permits market in which firms can bank current permits for use in later periods. In particular, we study the market equilibrium for a large (potentially dominant) firm and competitive fringe with rational expectations. We characterize the equilibrium solution for different permits allocations and discuss the large firm’s stock-holding constraints needed for credible market manipulation.     

The innovation impact of the EU Emission Trading System — Findings of company case studies in the German power sector

This paper provides a detailed analysis of how the European Emission Trading System (EU ETS) as the core climate policy instrument of the European Union has impacted innovation. Towards this end, we investigate the impact of the EU ETS on research, development and demonstration (RD&D), adoption, and organizational change. In doing so, we pay particular attention to the relative influences of context factors (policy mix, market factors and public acceptance) and firm characteristics (value chain position, technology portfolio, size and vision). Empirically, our qualitative analysis is based on multiple case studies with 19 power generators, technology providers and project developers in the German power sector which were conducted in 2008/09. We find that the innovation impact of the EU ETS has remained limited so far because of the scheme's initial lack of stringency and predictability and the relatively greater importance of context factors. Additionally, the impact varies significantly across technologies, firms, and innovation dimensions and is most pronounced for RD&D on carbon capture technologies and organizational changes. Our analysis suggests that the EU ETS on its own may not provide sufficient incentives for fundamental changes in corporate innovation activities at a level which ensures political long-term targets can be achieved.     

欧洲大气颗粒物污染治理

欧洲历史上曾长期遭受大气颗粒物污染问题的困扰,比如,发生过1930年比利时马斯河谷事件及1952年伦敦烟雾事件。但最近几十年来,经过长期努力,欧洲对大气颗粒物的治理工作取得了显著成绩。目前,我国大气颗粒物来源情况与欧洲存在较大的差异,但欧洲通过在交通和能源等方面对污染源的治理有效减少大气颗粒物排放的经验,对我国治理“雾霾”具有重要的借鉴意义。     

从社会资本角度探索创新排污权初始分配模式

文章主要探讨排污权初始分配的制度性缺陷,分析我国将排污权免费分配给企业的弊端,提出将排污权在初始分配环节按人头免费发放给每一位社会公民的制度设想。分析论证在此制度框架内,政府、企业和社会公众的利益如何实现动态均衡,强化政府对环境保护的监督管理职能,降低寻租可能性;刺激企业降低排污总量,合理决策排污权购买量和治污技术投入量的水平;强化社会公众对于环境保护的动力机制,鼓励全民监督污染源;加快发展第三方中介机构,完善排污权市场的功能。最后提出要实现这一制度设想,还必须破解科学技术、法律政策和环保设施等现实制约条件。     

Valuing Health Impacts from Air Pollution in Europe

Health impacts make up asignificant portion of the damage costs fromair pollution. In lack of European valuationstudies on morbidity impacts, cost-benefitanalyses, transport and energy externalitystudies, and green accounting exercises inEurope have all used values from more than tenyear old US valuation studies. Results from anew Contingent Valuation study, using animproved version of the survey design of themost transferred US morbidity study, show thatrespiratory symptom days and asthma attacks arevalued lower in Norway than in the US.Correction were made for differences inpurchase power between the two countries, butthe US values are still expressed in 1986dollar values; indicating that the differencebetween the two estimates could be even higher.Thus, the practise of transferring US estimatesand only adjusting the values with the consumerprice index could lead to highly biased valuesin the Norwegian case. The difference betweenthe US and Norwegian values can be explained byimproved CV survey and sample design, differentpreferences in Norway compared to the US, anddifferent public health care systems. We do notknow if we can generalise the results from thisNorwegian study to the rest of Europe, but thestudy clearly illustrates the uncertainty intransferring results from one country toanother.     

The value of health benefits from ambient air quality improvements in Central and Eastern Europe: An exercise in benefits transfer

This study is an initial effort to estimate one important category of benefits of environmental improvements in Central and Eastern Europe (CEE), those related to the effects of air pollution on human health. Our estimates are derived from data on ambient air quality in selected CEE locations, together with a model that links these ambient conditions to physical impacts on health and attaches economic values (in dollar terms) to these impacts. Given data limitations, our focus here is on three pollutants: particulates (PM), sulfur dioxide (SO₂), and lead (Pb). Our data set includes ambient concentrations for these pollutants in four CEE countries: Bulgaria, Hungary, Poland, and Ukraine.Given the ambient data, dose-response functions taken from the clinical and epidemiological literature in the U.S., Canada, and Western Europe are used to generate estimates of the change in physical effects. These effects then are given an economic value by applying two approaches for scaling unit valuation figures applicable to the U.S. A Monte Carlo model is constructed to propagate the uncertainties of the dose-response functions and unit values to obtain confidence intervals on the total benefits from pollutant reductions in each country. We examine scenarios where the CEE countries improve ambient conditions for the pollutants in question to meet European Community (EC) standards and then compare these scenarios to ones involving uniform percentage ambient reductions across locations in each country.     

Dynamic Efficiency with Multi-Pollutants and Multi-Targets The Case of Acidification and Tropospheric Ozone Formation in Europe

In this paper we consider two important aspectsin the complex problem of transboundary airpollution in Europe, namely (i) theinterdependence of the problems of troposphericozone and acidification and (ii) the dynamicprocesses related to soil acidification. Wedevelop an optimal control model to analyse theinteraction between acidification as a stockpollutant and tropospheric ozone as a flowpollutant for several countries. Using acost-benefit framework an analysis is performedto determine efficient emission paths fornitrogen oxides, sulphur dioxide and volatileorganic compounds. The model jointly analysesacidification and ozone. The current Europeanreduction plans do not fully take into accountthe multi-pollutants multi-targets nature ofthe problem. In addition, the plans allow fortemporary exceedance of critical loads withoutconsidering the consequences for the temporaldevelopment of the soil quality. This papershows the complex relations and interactionswhich one should deal with while designingpolicies that are efficient with respect to thecross-effects between the differentenvironmental problems. It also shows howdynamic efficient abatement strategies wouldlook if the cross effects and the dynamicprocesses in soil acidification are explicitlyincorporated in the analysis.     

Estimating exchange rate dynamics with diffusion processes: an application to Greek EMU data

Recently various exchange rate models capturing the dynamics during the transition from an exchange rate arrangement of floating rates into a currency union have been derived. Technically, these stochastic equilibrium models are diffusion processes which have to be estimated by discretely sampled observations. Using daily exchange rate data prior to the Greek EMU-entrance on 1 January 2001, we develop a rigorous estimation procedure. Our estimates point to an increasing interventionist economic policy in the run-up to the Greek EMU entrance. A comparison of this econometric indication with policy information provided (ex-post) by the Bank of Greece (BoG) in its Annual Report 2000 reveals that the BoG indeed pursued such an active policy stance (so-called institutional frontloading strategies).