Ulf Moslener

Assessing Emission Regulation in Europe: An Interactive Simulation Approach

Implementation of an EU-wide emissions trading system by means of National Allocation Plans is at the core of European environmental policy agenda. Member States are faced with the problem of allocating their national emission budgets under the EU Burden Sharing Agreement between energy-intensive sectors that are eligible for international emissions trading and the remaining segments of their economies that will be subject to complementary domestic emission regulation. The country-specific segmentation of national emission budgets between trading sectors and non-trading sectors will determine the cost efficiency of the EU emissions trading system and the gains for each Member State vis-a-vis domestic abatement policies. We present an interactive simulation model where users can specify the design of National Allocation Plans for each EU Member State and then evaluate the induced economic effects. Our numerical framework is based on marginal abatement cost curves for (emissions) trading and non-trading sectors of the EU-15 economies. Illustrative simulations highlight the importance of a coordinated design of National Allocation Plans in order to avoid substantial excess costs of regulation and drastic burden shifting between nontrading and trading sectors.

Optimal Abatement in Dynamic Multi-Pollutant Problems When Pollutants Can Be Complements or Substitutes

We analyze a dynamic multi-pollutant problem where abatement costs of several pollutants are not separable. The pollutants can be either technological substitutes or complements. Environmental damage is induced by the stock of accumulated pollution. We find that optimal emission paths are qualitatively different for substitutes and complements. We derive general properties governing optimal emission paths and present numerical examples to illustrate our main results. In particular we find that optimal emission paths need not be monotonic, even for highly symmetric pollutants. Finally, we describe a comparatively simple method to implement the optimal path without explicitly knowing its shape.

Macroeconomic impacts of the CDM: the role of investment barriers and regulations

This paper quantifies the macroeconomic impacts of the Kyoto Protocols Clean Development Mechanism (CDM) employing a computable general equilibrium model of international trade and energy use. We incorporate project-based CDM supply data in order to assess the relative importance of transaction costs and investment risks, as well as CDM regulations through supplementarity and additionality criteria. The numerical results show that the macroeconomic impacts of transaction costs and investment risks are negligible. Given the large supply of cheap project-based emissions abatement in developing countries, compliance with the Kyoto Protocol can be achieved at a very low cost. However, regulatory restrictions such as a supplementarity criterion can substantially curtail the potential efficiency gains from ‘where-flexibility’ in climate policy.

Hot air for sale: a quantitative assessment of Russia’s near-term climate policy options

Since January 1st the European Union has launched an EU-internal emissions trading scheme (EU ETS) for emission-intensive installations as the central pillar to comply with the Kyoto Protocol. The EU ETS may be linked at some time to a Kyoto emissions market where greenhouse gas emission allowances of signatory Kyoto countries can be traded. In this paper we investigate the implications of Russian market power for environmental effectiveness and regional compliance costs to the Kyoto Protocol taking into account potential linkages between the Kyoto emissions market and the EU ETS. We find that Russia may have incentives to join the EU ETS as long as the latter remains separated from the Kyoto international emissions market. In this case, Russia can exert monopolistic price discrimination between two separated markets thereby maximizing revenues from hot air sales. The EU will be able to substantially reduce compliance costs when it does not restrain itself to EU-internal emission regulation schemes. However, part of the gains from extra-EU emissions trading will come at the expense of environmental effectiveness as (more) hot air will be drawn in.

What Does Europe Pay for Clean Energy? – Review of Macroeconomic Simulation Studies

This paper analyses the macroeconomic costs of environmental regulation in European energy markets on the basis of existing macroeconomic simulation studies. The analysis comprises the European emssion trading scheme, energy taxes, measures in the transport sector, and the promotion of renewable energy sources. We find that these instruments affect the European economy, in particular the energy intensive industries and the industries that produce internationally tradeable goods. From a macroeconomic point of view, however, the costs of environmental regulation appear to be modest. The underlying environmental targets and the efficient design of regulation are key determinants for the cost burden.

Efficiency Losses from Overlapping Economic Instruments in European Carbon Emissions Regulation

Energy markets and energy-intensive industries in all EU member states – especially in Germany – are subject to a diverse set of policies related to climate change. We analyse the potential efficiency losses from simultaneous application of emission taxes and emissions trading in qualitative and quantitative terms within a partial equilibrium framework for the EU. It turns out that those firms within the EU Emissions Trading Scheme (EU ETS) which at the same time are subject to domestic energy or carbon taxes will abate inefficiently much while other firms within the EU ETS will benefit from lower international emission permit prices. The same logic disproves the argument that additional national emission taxes will reduce inefficiencies in abatement supposed to be resulting from allowance (over-) allocation. In essence, unilateral emission taxes within the EU ETS are ecologically ineffective and subsidise net permit buyers. Thus, all firms that are subject to emissions trading and any CO2 emission taxes at the same time should be exempt from the latter. The foregone tax revenue could be generated by auctioning a small fraction of the permits instead. This would be cheaper for the emissions trading sectors as a whole and could be compatible even with the tight auctioning restrictions of the EU directive.

Optical and evaporative cooling of cesium atoms in the gravito-optical surface trap

Abstract We report on cooling of an atomic caesium gas closely above an evanescent-wave atom mirror. At high densities, optical cooling based on inelastic reflections is found to be limited by a density-dependent excess temperature and trap loss due to ultracold collisions involving repulsive molecular states. Nevertheless, very good starting conditions for subsequent evaporative cooling are obtained. Our first evaporation experiments show a temperature reduction from 10 μK down to 300 nK along with a gain in phase-space density of almost two orders of magnitude.

On the Transition from Instantaneous to Time-Lagged Capital Accumulation: The Case of Leontief-Type Production Functions

We formulate an optimal control capital accumulation model with a Leontief-type production function and an exogenously given time-lag between investment and the accumulation of the capital stock, to analyze the qualitative and quantitative influence of time-lags on the system dynamics. As known from the time-to-build literature, optimal investment paths for positive and finite time-lags are in general cyclical, in contrast to the monotonic optimal paths for instantaneous capital accumulation. We show that the transition between instantaneous and time-lagged capital accumulation is continuous, in the sense that the greater is the time-lag between investment and capital accumulation, the more likely and more pronounced becomes cyclical behavior of the optimal paths.

Macroeconomic Impacts of the Clean Development Mechanism: The Role of Investment Barriers and Regulations

This paper quantifies the macroeconomic impacts of the Clean Development Mechanism (CDM) under the Kyoto Protocol based on a computable general equilibrium (CGE) model of international trade and energy use. Employing project-based CDM supply data we assess the relative importance of transaction costs and investment risks as well as CDM regulations through supplementarity and additionality criteria. Our numerical results show that the macroeconomic impacts of transaction costs and investment risks are negligible: Given the large supply of cheap project-based emissions credits in developing countries, compliance to the Kyoto Protocol can be achieved at a very low cost. However, regulatory restrictions such as a supplementarity criterion can substantially curtail the potential efficiency gains from where-flexibility in climate policy.

Time Lags in Capital Accumulation

We formulate an optimal control capital accumulation model with an exogenously given time lag between investment and the accumulation of the capital stock to analyze the qualitative and quantitative influence of time lags to the system dynamics. Optimal investment paths for a finite time lag are shown to be cyclic as opposed to the monotone paths for instantaneous capital accumulation. Furthermore, we show how to reformulate the retarded differential equation in a suitable way so that sophisticated numerical methods for optimal control can be applied to analyze the impact of the length of the time lag. It turns out that both the frequency and the amplitude of the cycles depend on the length of the investment period.