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Assessing Emission Regulation in Europe: An Interactive Simulation Approach

Christoph Bohringer, Tim Hoffmann, Andreas Lange, Andreas Loschel, and Ulf Moslener

Year: 2005
Volume: Volume 26
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol26-No4-1
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Abstract:
Reimplementation of an EU-wide emissions trading system by means ofNational Allocation Plans is at the core of the European environmental policy agenda. EU Member States must allocate their national emission budgets under the EU Burden Sharing Agreement between energy-intensive sectors that are eligible for European emissions trading and the remaining segments of their economies that will be subject to complementary domestic emission regulation. We show that such hybrid emission regulation may lead to substantial excess costs compared to a comprehensive emissions trading system covering all segments of the economy. Furthermore, the hybrid system associated with the current design of National Allocation Plans is likely to discriminate against sectors that are not part of the emissions trading scheme. The interested reader can make use of a web-based interactive simulation model in order to specify and evaluate alternative settings of the EU emissions trading system.



Promoting Renewable Energy in Europe: A Hybrid Computable General Equilibrium Approach

Christoph Bohringer and Andreas Loschel

Year: 2006
Volume: Hybrid Modeling
Number: Special Issue #2
DOI: 10.5547/ISSN0195-6574-EJ-VolSI2006-NoSI2-7
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Abstract:
We illustrate the use of a large-scale computable general equilibrium model to investigate the economic and environmental effects of renewable energy promotion within the European Union. Our hybrid model incorporates the technological explicitness of bottom-up energy system models for the electricity sector while production possibilities in other sectors are described at an aggregate level through top-down constant-elasticities-of-substitution (transformation) functions. The discrete activity analysis of technology options within conventional top-down computable general equilibrium models is possible when adopting the so-called mixed complementarity problem approach � a flexible mathematical representation of market equilibrium conditions which accommodates weak inequalities and complementary slackness.



Efficiency Gains from "What"-Flexibility in Climate Policy An Integrated CGE Assessment

Christoph Bohringer, Andreas Loschel and Thomas F. Rutherford

Year: 2006
Volume: Multi-Greenhouse Gas Mitigation and Climate Policy
Number: Special Issue #3
DOI: 10.5547/ISSN0195-6574-EJ-VolSI2006-NoSI3-21
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Abstract:
We investigate the importance of �what�-flexibility on top of �where�- and �when�-flexibility for alternative emission control schemes that prescribe long-term temperature targets and eventually impose additional constraints on the rate of temperature change. We find that �what�-flexibility substantially reduces the economic adjustment costs. When comparing policies that simply involve long-term temperature targets against more stringent strategies with constraints on the rate of temperature increase, it turns out that the latter involve much higher costs. The cost difference may be interpreted as additional insurance payments if climate damages should not only depend on absolute temperature change but also on the rate of temperature change.





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