Paul Leiby

Intertemporal Permit Trading for the Control of Greenhouse Gas Emissions

This paper integrates two themes in the intertemporal permitliterature through the construction of an intertemporal bankingsystem for a pollutant that creates both stock and flow damages. A permit banking system for the special case of a pollutant thatonly causes stock damages is also developed. This latter,simpler case corresponds roughly to the greenhouse gas emissionreduction regime proposed by the U.S. Department of State as ameans of fulfilling the U.S. commitment to the FrameworkConvention on Climate Change. This paper shows that environmentalregulators can achieve the socially optimal level of emissionsand output through time by setting the correct total sum ofallowable emissions, and specifying the correct intertemporaltrading ratio for banking and borrowing. For the case ofgreenhouse gases, we show that the optimal growth rate of permitprices, and therefore the optimal intertemporal trading rate, hasthe closed-form solution equal to the ratio of current marginalstock damages to the discounted future value of marginal stockdamages less the decay rate of emissions in the atmosphere. Given a non-optimal negotiated emission path we then derive apermit banking system that has the potential to lower net socialcosts by adjusting the intertemporal trading ratio taking intoaccount the behavior of private agents. We use a simplenumerical simulation model to illustrate the potential gains fromvarious possible banking systems.

Possible Responses to Global Climate Change: Integrating Mitigation and Adaptation

Abstract How do we as cities, nations, and global communities best respond to global climate change? Mitigation+urtailing greenhouse gas emissions- dominated initial discussions of the Intergovernmental Panel on Climate Change and international conferences on global climate change. Now that climate change has become a clear and present danger, however, adaptation-lessening the harm and maximizing the benefits of climate change-has received more attention. Analysis reveals that integrating the two responses, though challenging, may be the most effective approach.

The outlook for US oil dependence

Abstract Oil dependence is defined as a dynamic problem of short- and long-run market power. The potential monopoly power of an oil cartel depends on its market share and the elasticities of oil supply and demand, while the economic vulnerability of oil-consuming states depends most directly on the quantity of oil imported and the oil cost share of gross domestic product (GDP). Of these factors, only the market share of the Organization of Petroleum Exporting Countries (OPEC) cartel and the rate of growth of world oil demand are clearly different than they were 25 years ago. OPEC still holds the majority of world oil and, in the future, will regain market share. A hypothetical 2-year supply reduction in 2005–2006, similar in size to those of 1973–1974 or 1979–1980, illustrates the potential benefits to OPEC and harm to the US economy of a future oil price shock. OPECs revenues are estimated to increase by roughly

Forest/biomass based mitigation strategies: Does the timing of carbon reductions matter?

0.7 trillion, while the US economy loses about

An analysis of alternative fuel credit provisions of US automotive fuel economy standards

0.5 trillion. Strategic petroleum reserves seem ineffective against a determined, multi-year supply curtailment. Increasing the markets price responsiveness by improving the technologies of oil supply and oil demand can greatly reduce the costs of oil dependence. Each element of this interpretation of the oil dependence problem is well supported by previous studies. This papers contribution is to unite these elements into a coherent explanation and to point out the enormously important implications for energy policy.

Systems Analysis of Hydrogen Transition with HyTrans

Abstract Many of the strategies proposed for using forest managememt to mitigate the increasing concentration of atmospheric CO2 are characterized by C emissions reductions which are not uniform over time. A simple model of the carbon budgets of different forest management schemes illustrates the possibilities and poses the question whether the timing of emissions reductions matters.

Global economic effects of US biofuel policy and the potential contribution from advanced biofuels

Abstract In the United States, alternative fuel vehicles are treated favorably in the calculations that are used to determine compliance with automotive fuel efficiency standards. We estimate that this favorable treatment is worth approximately

Transitions in Light-Duty Vehicle Transportation: Alternative-Fuel and Hybrid Vehicles and Learning

550–

Regional Credit Trading: Economic and Greenhouse Gas Impacts of a National Low Carbon Fuel Standard

1100 per alternative fuel vehicle in terms of avoided penalties. We use a dynamic simulation model to examine the implications of this favorable treatment of alternative fuel vehicles for the goals of oil displacement contained in the United States Energy Policy Act. Welfare analysis shows that the favorable treatment of alternative fuel vehicles costs

Cost of Oil and Biomass Supply Shocks under Different Biofuel Supply Chain Configurations

66 million or about 84 cents per gallon of gasoline displaced in the base case. Policy scenarios show greater costs. Whether this money is well spent depends on ones views of the need to build alternative fuel and vehicle infrastructure and the goal of oil displacement.