A Dynamic Analysis of the Efficiency and Equity of Tradeable Greenhouse Gas Emissions Permits

Abstract

In December 1997, 38 industrialized and transitional countries agreed to the Kyoto Protocol, which committed them to targets and timetables to reduce six greenhouse gases (GHGs). In November 1998, in Buenos Aires, at the Fourth Conference of the Parties to the Framework Convention on Climate Change (COP-4), efforts were made to improve upon Kyoto by expanding the number of co-operating countries and enhancing the range of policy instruments to implement its objectives. However, COP-4 was a failure, as only two developing countries made commitments, and little progress was made in increasing the flexibility of policy implementation.

Adam Rose is Professor and Head of the Department of Energy, Environmental, and Mineral Economics, The Pennsylvania State University, University Park, PA. Brandt Stevens is an Economist with the Demand Analysis Office, California Energy Commission, Sacramento, CA. The authors wish to thank Shu Yi Liao for his assistance in compiling some of the data and in running the simulations. The views expressed here are solely those of the authors and do not necessarily represent the positions of the institutions with which they are affiliated.