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The Kyoto Protocol: A Cost-Effective Strategy for Meeting Environmental Objectives?

This paper has three purposes: 1) to identify the near-term costs to the United States of ratifying the Kyoto Protocol; 2) to assess the significance of the Protocol's "flexibility provisions"; and, 3) to evaluate the Kyoto targets in the context of the long-term goal of the Framework Convention. We find that the short-term U.S. abatement costs of implementing this Protocol are likely to be substantial. These costs can be reduced through international trade in emission rights. The magnitude of the costs will be determined by the number of countries participating in the trading market, the shape of each country's marginal abatement cost curve, and the extent to which buyers can satisfy their obligation through the purchase of emission rights. Finally and perhaps most important: unless the ultimate concentration target is well below 550 ppmv, the Protocol seems to be inconsistent with a long-term strategy for stabilizing global concentrations.

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Energy Specializations: Energy Modeling – Other; Energy and the Environment – Climate Change and Greenhouse Gases; Energy and the Environment – Policy and Regulation

JEL Codes:
C59 - Econometric Modeling: Other
Q54 - Climate; Natural Disasters and Their Management; Global Warming
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General

Keywords: Kyoto protocol, Climate policy, MERGE EMF16, greenhouse gas abatement costs

DOI: 10.5547/ISSN0195-6574-EJ-Vol20-NoSI-2

Published in Volume 20, Special Issue - The Cost of the Kyoto Protocol: A Multi-Model Evaluation of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.