2017-1-16

Will international emissions trading help achieve the objectives of the Paris Agreement?

Shinichiro Fujimori, Izumi Kubota, Hancheng Dai, Kiyoshi Takahashi, Tomoko Hasegawa, Jing-Yu Liu, Yasuaki Hijioka, Toshihiko Masui and Maho Takimi

Information of Paper

Will international emissions trading help achieve the objectives of the Paris Agreement?

Authors:Shinichiro Fujimori1,2, Izumi Kubota1, Hancheng Dai1, Kiyoshi Takahashi1, Tomoko Hasegawa1,2, Jing-Yu Liu1, Yasuaki Hijioka1, Toshihiko Masui1 and Maho Takimi3

1 Center for Social and Environmental Systems Research, National Institute for Environmental Studies (NIES)
2 International Institute for Applied Systems Analysis
3 Mizuho Information & Research Institute, Inc.

Year:2016
Information of Journal:Environmental Research Letters

Link to the paper

Abstracts

Under the Paris Agreement, parties set and implement their own emissions targets as nationally determined contributions (NDCs) to tackle climate change. International carbon emissions trading is expected to reduce global mitigation costs. Here, we show the benefit of emissions trading under both NDCs and a more ambitious reduction scenario consistent with the 2 °C goal. The results show that the global welfare loss, which was measured based on estimated household consumption change in 2030, decreased by 75% (from 0.47% to 0.16%), as a consequence of achieving NDCs through emissions trading. Furthermore, achieving the 2 °C targets without emissions trading led to a global welfare loss of 1.4%–3.4%, depending on the burden-sharing scheme used, whereas emissions trading reduced the loss to around 1.5% (from 1.4% to 1.7%). These results indicate that emissions trading is a valuable option for the international system, enabling NDCs and more ambitious targets to be achieved in a cost-effective manner.

Figure1. Welfare loss rates in the year 2030 compared to the baseline scenarios for all of the regions in the INDC_w/ET and INDC_w/o ET scenarios. The blue area is the global total and the red area is OECD countries.
Figrue2. Carbon prices for all regions in the INDC_w/ET and INDC_w/o ET scenarios. The blue area is the global total and the red area is OECD countries.