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Tradable Permit Systems: Considering Uncertainty in Emission Estimates

Chapter

Abstract

We simulate the market for emission permits by considering uncertainty in emission inventory reports. The approach taken in this analysis is to enhance the emissions reported in each region by a certain part of their uncertainty when compliance with the Kyoto targets is being proved. While this formulation is not new in the literature, we define the uncertainty component in a way that enables comparison with the approach of effective permits presented in Nahorski, Horabik, and Jonas (2007) Compliance and emissions trading under the Kyoto protocol: Rules for uncertain inventories, (this issue). We show and explain that the transformation to effective permits bears additional costs apart from those resulting from shifting the Kyoto targets.

Keywords

emissions trading Kyoto Protocol inventory uncertainty effective permits 

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Copyright information

© Springer Science + Business Media B.V. 2007

Authors and Affiliations

  1. 1.Systems Research InstitutePolish Academy of SciencesWarsawPoland

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