CO_2 EMISSIONS TRADING MARKET SYSTEMS AS AN ENVIRONMENTAL POLICY OPTION AND ASSESSMENT OF ITS EFFECT - EVALUATING INTERTEMPORAL TRADING IN PARTICULAR

摘要

In the theory of economics, to get the whole of GHG reduction targets satisfied efficiently, it is imperative to set a target amount of GHG reductions achievable by each country at a marginal cost equal to all countries. But, there is actually a gap between theory and a given target. In efficiency terms, it is desirable if each country could freely trade on the market "gap," or any difference between an optimal reduction amount for a country and a target specified by the politically compromised Kyoto Protocol. Emissions trading provides a mechanism of adjustment by selling or buying emissions (emissions permits). To explain clearly why emissions trading can have a cost reduction effect with a theoretical model in use, this paper first verifies an inherent function of emissions trading, which helps minimize a total reduction in cost by adjusting any "gap" between optimal and political targets, in both spatial and temporal terms. A Lagrangian function of a bilateral two-period trading model is used in the verification. Also, in order to demonstrate an effect of intertemporal trading, the "World Energy Industry Model," originally provided with an inter-area emissions trading function, was modified and given an additional intertemporal trading function to inter-area one before run for simulation.