What to expect from an international system of tradable permits for carbon emissions

Costs, Structure and Equity of International Regimes for Climate Change Mitigation

“…This result is shown in Bosello and Roson (1999) for banking, Westskog (1999) for banking and borrowing, Manne and Richels (1999a,b), McKibbin et al (1998) and many others for global emission trading. If in addition the incentives to innovation provided by flexibility mechanisms are taken into account, then compliance costs are even lower (Buonanno et al 1999).…”

“…Hence, it may be useful to compute the costs of unilateral participation as a benchmark case, which identifies costs that can only be reduced when a coalition forms and flexibility mechanisms are implemented among signatory countries. Notice the importance of a careful assessment of leakage and of trade and financial repercussions of climate policies (McKibbin et al 1998;Rutherford et al 1998). Notice also that the above arguments concern costs but not benefits of climate policies.…”

The Role of International Carbon Offsets in a Second-Best Climate Policy: A Numerical Evaluation

“…In that setting, terms-of-trade deterioration and tax-interaction effects prevail and emission trading leads to welfare losses in some regions. In the same manner, McKibbin et al (1999) demonstrated how a country may lose from falling terms of trade after engaging in international emissions trading. Buonanno et al (2000) assessed the pros and cons of introducing ceilings to emission trading in a model with endogenous technical change (ETC-RICE).…”

Effects of international climate policy for India: evidence from a national and global CGE model

“…In some cases these financial flows can be substantial and can influence exchange rates and thus competitiveness of countries. This issue was first debated between Keynes and Ohlin in 1929, but has also been applied to climate change regimes (McKibbin et al, 1999a(McKibbin et al, , 1999b Concerning price repercussions on international markets, ambitious climate policy has the effect that carbon intensive products become (relatively) more expensive, and that fossil fuels are demanded less. Countries that are net importers of fossil fuels -such as India -can thus profit from lowered energy prices (net of carbon prices) through improved terms of trade.…”