Title: The European Union’s potential for strategic emissions trading through permit sale contracts
Authors: Eyckmans, Johan ×
Hagem, C. #
Issue Date: Jan-2011
Series Title: Resource and Energy Economics vol:33 issue:1 pages:247-267
Abstract: Strategic market behavior by permit sellers will harm the European Union (EU) as it is expected to become a large net buyer of permits in a follow-up agreement to the Kyoto Protocol. In this paper, we explore how the EU could benefit from making permit trade agreements with non-EU countries. These trade agreements involve permit sales requirement, complemented by a financial transfer from the EU to the other contract party. Such agreements would enable the EU to act strategically in the permit market on behalf of its member states, although each member state is assumed to behave as a price taker in the permit market. Using a stylized numerical simulation model, we show that an appropriately designed permit trade agreement between the EU and China could significantly cut the EU’s total compliance cost. This result is robust for a wide range of parameterizations of the simulation model.
ISSN: 0928-7655
Publication status: published
KU Leuven publication type: IT
Appears in Collections:Research Center of Energy, Transport and Environment, Leuven
Research Centre for Economics and Corporate Sustainability, Campus Brussels
Faculty of Economics and Business (FEB) - miscellaneous
× corresponding author
# (joint) last author

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