Energy and economic impacts of an international multi-regional carbon market

The establishment of a global multi-regional carbon market is considered to be a cost effective approach to facilitate global emission abatement and has been widely concerned.The ongoing planned linkage between the European Union's carbon market and a new emission trading system in Australia in 2015 would be an important attempt to the practice of building up an international carbon market across different regions.To understand the abatement effect of such a global carbon market and to study its energy and economic impact on different market participants,this article adopts a global dynamic computable general equilibrium model with a detailed representation of the interactions between energy and economic systems.Our model includes 20 economic sectors and 19 regions,and describes in detail 17 energy technologies.Bundled with fossil fuel consumptions,the emission permits are considered to be essential inputs in each of the production and consumption activities in the economic system to simulate global carbon market policies.Carbon emission permits are endogenously set in the model,and can be traded between sectors and regions.Considering the current development of the global carbon market,this study takes 2020 as the study period.Four scenarios(reference scenario,independent carbon market scenario,Europe Union(EUh-Australia scenario,and China-EU-Australia scenario) are designed to evaluate the impact of the global carbon market involving China,the EU,and Australia.We find that the carbon price in the three countries varies a lot,from $32/tCO_2 in Australia,to $17.5/tCO_2 in the EU,and to $10/tCO_2 in China.Though the relative emission reduction(3%) in China is lower than that in the EU(9%) and Australia(18%),the absolute emission reduction in China is far greater than that in the EU and Australia.When China is included in the carbon market,which already includes the EU and Australia,the prevailing global carbon price falls from $22 per ton carbon dioxide(CO_2) to $12/tCO_2,due to the relatively lower abatement cost in China.Seventy-one percent of the EU's and eighty-one percent of Australia's domestic reduction burden would be transferred to China,increasing 0.03%of the EU's and 0.06%of Australia's welfare.The emission constraint improves the energy efficiency of China's industry sector by 1.4%,reduces coal consumption by3.3%,and increases clean energy by 3.5%.

Could the EU carbon border adjustment mechanism promote climate mitigation?An economy-wide analysis

Due to concerns about carbon leakage and sectoral competitiveness,the European Union(EU)proposed implementing the carbon border adjustment mechanism(CBAM).The effectiveness and potential negative consequences of CBAM have aroused extensive discussion.From the perspective of the economy-wide analysis,this study uses a global computable general equilibrium model to explore the rationality of CBAM from the aspects of socioeconomic impact and the effects of promoting climate mitigation.Furthermore,the potential alternative mechanism of CBAM is proposed.The results show that CBAM can reduce the EU's gross domestic product(GDP)loss;however,the GDP loss in all other regions increases.Moreover,CBAM raises household welfare losses in most regions,including the EU.Second,although CBAM can reduce the marginal abatement cost in eight regions,it comes at the cost of greater economic losses.Furthermore,the economic and household welfare cost of raising emissions reduction targets in regions like the USA and Japan is substantially higher than the impact of passively accepting the CBAM;therefore,CBAM's ability to drive ambitious emission reduction initiatives may be limited.Finally,for the potential alternative mechanism,from the perspective of reducing economic cost and household welfare losses,the EU could implement domestic tax cuts in the short-term and promote global unified carbon pricing in the long-term.

全球多区域CGE模型的构建及其3E扩展

全球多区域可计算一般均衡模型(computable general equilibrium,CGE)是最重要的全球气候政策评估工具之一。该文给出了自主开发的全球多区域可计算一般均衡模型(global applied general equilibrium model,GAGE)的理论框架,描述了区域内框架的地区账户收入分配方案和生产模块的嵌套结构以及区域间框架的国际贸易结构和2个虚拟国际机构的构建,即建立国际运输部门和国际银行用于描述国际贸易的运输服务供需以及投资的区域间流动。在标准GAGE模型的基础上进行了能源-环境-经济扩展,以描述能源与资本之间以及各类能源之间的替代关系。碳减排情景研究结果验证了GAGE模型理论框架的合理性,展示了能源替代对于减排潜力的显著影响。

An assessment of China-Japan-Korea Free Trade Agreement＇s economic and environmental impacts on China

Recently, China, Japan, and the Republic of Korea （Korea） are conducting a government-commis- sioned feasibility study on the Free Trade Agreement among the three countries （CJKFTA） to form a regional free trade zone in East Asia. Considering that freer trade can cause unexpected impact on domestic environment, there is a need to evaluate the environmental impact of such a trade policy. This move should be made to help negotiators understand and pay more attention to environ- mental issues during CJKFTA negotiations, and to help lobby with the government to carry out appropriate policy instruments for adaptation or mitigation. Following the Chain Reaction Assessment Method that integrates and links the elements of trade, production, and environment, the present research aims to quantitatively assess CJKFTA＇s possible impact on China＇s environment. This is done by estimating the variations of China＇s major conventional pollutants and greenhouse gases （GHGs） emission in two policy scenarios to represent CJKFTA＇s scale and composition effects on China＇s environment. Estimating the variations is based on a static Computable General Equilibrium model, working with Global Trade Analysis Project （GTAP） 7 database and China＇s energy- environment statistics. Based on these assessments, CJKFTA is predicted to lead to notable environmental impact, including increased emissions of agricultural total nitrogen, agricultural total phosphorus, chemical oxygen demand, and GHGs. On the other hand, decreased emissions of industrial SO2 and dust are also expected to happen. Suitable policies need to be made to combat negative effects and amplify positive ones, while aiming at a more sustainable regional freer trade system.