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"The Clean Development Mechanism (CDM) is an offset mechanism designed to reduce the overall cost of implementing a given global target for greenhouse gas (GHG) emissions in industrialized "Annex B" countries of the Kyoto Protocol. This paper discusses various ways in which CDM projects do not imply full offset of emissions, thus leading to an overall increase in global GHG emissions when considering the Annex-B emissions increase allowed by the offsets. The authors focus on two ways in which this may occur: baseline manipulation; and leakage. Baseline manipulation may result when agents that carry out CDM projects have incentives to increase their initial (or baseline) emissions in order to optimize the value of CDM credits. Leakage occurs because reductions in emissions under a CDM project may affect market equilibrium in local and/or global energy and product markets, and thereby increase emissions elsewhere. Remedies against these problems are discussed. Such remedies are more obvious for the baseline problem (where one is simply to choose an exogenous baseline independent of the project) than for the leakage problem (which is difficult to prevent, and where a prediction of the effect must rely on information about overall market equilibrium effects). "--World Bank web site.

Greenhouse gas mitigation.

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Greenhouse gas mitigation --- Costs

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"The Clean Development Mechanism (CDM) is an offset mechanism designed to reduce the overall cost of implementing a given global target for greenhouse gas (GHG) emissions in industrialized "Annex B" countries of the Kyoto Protocol. This paper discusses various ways in which CDM projects do not imply full offset of emissions, thus leading to an overall increase in global GHG emissions when considering the Annex-B emissions increase allowed by the offsets. The authors focus on two ways in which this may occur: baseline manipulation; and leakage. Baseline manipulation may result when agents that carry out CDM projects have incentives to increase their initial (or baseline) emissions in order to optimize the value of CDM credits. Leakage occurs because reductions in emissions under a CDM project may affect market equilibrium in local and/or global energy and product markets, and thereby increase emissions elsewhere. Remedies against these problems are discussed. Such remedies are more obvious for the baseline problem (where one is simply to choose an exogenous baseline independent of the project) than for the leakage problem (which is difficult to prevent, and where a prediction of the effect must rely on information about overall market equilibrium effects). "--World Bank web site.

Greenhouse gas mitigation.

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Emissions trading --- Greenhouse gas mitigation --- Regional Greenhouse Gas Initiative.

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The tradable permits instrument has recently received increased attention from authorities in charge of limiting the emissions of various pollutants. This interest is growing considerably, particularly in Europe, since the signing of the Kyoto Protocol (December 1997) which allows for the trading of rights to emit greenhouse gases. This doctoral dissertation investigates the tradable emission permits instrument by studying the impact of some of its key design features which have not been analyzed until now. From our theoretical and empirical analyses, we derive the following three main policy-oriented results. First, the presence of intermediaries (market makers) on the market for permits has an impact on trades and on the total number of permits to be allocated by the environmental agency. Consequently, the expected microstructure of markets for emission permits must be taken into account when designing such a system. This proves to be particularly important under non-competitive microstructures and under incomplete information on the polluters technology, features which are very likely to characterize the introduction of a program. Second, in the context of climate change, treaties among nations must be signed on a voluntary basis since no supranational authority is able to impose such international agreements. Therefore, no country or group of countries should be worse off under a world tradable permit system limiting emissions of greenhouse gas than under a non cooperative situation, i.e. the agreement needs to be individually or coalitionally rational. We find that, even when such a realistic requirement is taken into account, long term allocations of greenhouse gases emission permits may to some extent be driven by equity principles. Third, the Kyoto Protocol allows countries to carry over unused permits from one commitment period to the next. Such a banking provision has a crucial impact on the price of the permits during the Kyoto commitment period (2008-2012). Moreover, it leads to substantial cost savings, provided post-Kyoto commitments are negotiated early.Keywords : Tradable Permits, Microstructure, Climate Change Les permis d’émission négociables ont récemment connu un regain d’intérêt par les autorités en charge de la limitation des émissions de divers polluants. Cet intérêt a cru considérablement, particulièrement en Europe, depuis la signature du Protocole de Kyoto (décembre 1997) qui autorise l’échange de droits d’émettre des gaz à effet de serre. Cette thèse s’intéresse à l’instrument ‘permis d’émission négociables’ et analyse l’impact de plusieurs de ses caractéristiques majeures qui n’ont pas été étudiées jusqu’à présent. De nos recherches théoriques et empiriques se dégagent une série de résultats dont les trois suivants sont susceptibles d’aider les décideurs en la matière. En premier lieu, la présence d’intermédiaires (teneurs de marché) sur le marché des permis a un impact sur les échanges de permis et sur le nombre de permis que l’autorité doit allouer. En conséquence, la microstructure attendue des marchés de permis d’émission doit être prise en compte lors de la conception d’un tel système. Cela s’avère particulièrement important en présence de microstructures non-concurrentielles et d’information incomplète sur la technologie des producteurs, ce qui est généralement le cas lors de l’introduction d’un programme. En deuxième lieu, dans le contexte des changements climatiques, les traités internationaux doivent être signés de manière volontaire par les nations parce qu’aucune autorité supranationale n’est capable d’imposer de tels accords. Dès lors, aucun pays ou groupe de pays ne doit se retrouver moins bien avec un système international de limitation des émissions de gaz à effet de serre qu’en l’absence d’un tel système ; en d’autres termes, l’accord international doit être individuellement rationnel ou même rationnel au sens des coalitions. Nous trouvons que, même lorsqu’une telle contrainte est prise en compte, l’allocation de permis d’émission entre pays dans le long terme peut néanmoins être guidée par des considérations d’équité. En troisième lieu, le Protocole de Kyoto autorise les pays à reporter à une période ultérieure des permis d’émission inutilisés. Une telle possibilité d’épargner des permis a un impact déterminant sur le prix des permis durant la période d’engagement 2008-2012 (Kyoto). De plus, cette possibilité permet de diminuer significativement les coûts de réduction des émissions, pour autant que des engagements post-Kyoto soient négociés rapidement. Mots-Clés : Permis négociables, Microstructure, Changements climatiques

Emissions trading --- Greenhouse gas mitigation