Bjart Holtsmark

Can multi-criteria rules fairly distribute climate burdens? OECD results from three burden-sharing rules

An important feature of the Protocol concluded in Kyoto, Japan, in December 1997 is the differentiation of the climate targets of the industrialized countries. A more systematic approach to burden sharing than that leading to the Kyoto Protocol could help negotiating targets after 2012, and when including developing countries in the group of countries with climate targets at a later stage. The article discusses a number of concepts of equity, examines three specific burden sharing rules and formulae, and presents cost calculations on the burden sharing rules. The three formulae that are explored have some ability to adapt to national circumstances, but none of them creates a burden sharing arrangement that completely equalizes the national income losses as percentage of GDP across the OECD. Nonetheless, the results show that burden sharing rules can be useful tools and provide some, but not all, of the guiding framework for climate policy negotiations.

Emission trading under the Kyoto Protocol--effects on fossil fuel markets under alternative regimes

Abstract The consequences of the Kyoto Protocol for the fossil fuel markets depend on which policy instruments are used in order to reach the emission targets. This paper uses a numerical model to assess the significance of international emissions trading for the oil, coal and gas markets. Three different trading regimes are compared. Particular attention is devoted to the EU proposal about limits on acquisitions and transfers of emission permits. We find that the EU proposal will be non-binding for buyers of emission permits but will significantly constrain the sale of emission permits from Eastern Europe. The EU proposal will increase the level of abatement in Annex B countries and will cause a sharp increase in the price of permits compared to the free trade equilibrium.

Greenhouse gas taxation and the distribution of costs and benefits: the case of Norway

Abstract Already in 1991, as part of a unilateral greenhouse gas abatement policy, the Norwegian authorities introduced taxes on emissions of carbon dioxide (carbon taxes). This paper gives an empirical description of how the differentiated carbon tax across fuels gives rise to large variations in how the various sectors of the economy are affected by this tax scheme. Furthermore, we indicate how a cost-effective regulation of the greenhouse gas emissions in Norway can change the distribution of costs across the various sectors. The primary aim of this article is to explore the advantages and disadvantages of a uniform regulation scheme for various sectors including all greenhouse gases listed in the Kyoto Protocol. Due to the lack of reliable data on abatement costs our approach is static, keeping emissions constant. The results show in general that private households and firms in the production of oil and gas would gain from such a change, whereas the energy-intensive process industry will experience losses under all circumstances. The findings add support to the explanations of the positions taken by parties that have traditionally sought to protect this industry and that repeatedly oppose measures that would regulate emissions on a more uniform basis.