Table Of ContentGOALS AND ECONOMIC INSTRUMENTS FOR THE ACHIEVEMENT
OF GLOBAL WARMING MITIGATION IN EUROPE
Goals and Economic
Instruments for the
Achievement of Global
Warming Mitigation in
Europe
Proceedings of the EU Advanced Study Course
held in Berlin, Germany, July 1997
Edited by
JÜRGEN HACKER
Environmental Management Consultancy UMB Hacker GmbH,
Berlin, Germany
and
ARTHUR PELCHEN
Environmental Management Consultancy UMB Hacker GmbH,
Berlin, Germany
Advanced Study Course, sponsored by DG XII/D Environment and Climate RTD Programme,
European Commission
SPRINGER-SCIENCE+BUSINESS MEDIA, B.V.
A CLP. Catalogue record for this book is available from the Library of Congress.
ISBN 978-94-010-5987-9 ISBN 978-94-011-4726-2 (eBook)
DOI 10.1007/978-94-011-1726-2
Printed on acid-free paper
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© 1999 Springer Sciences-Business Media Dordrecht
Originally published by Kluwer Academic Publishers in 1999
Softcover reprint of the hardcover 1st edition 1999
No part of the material protected by this copyright notice may be reproduced or
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TABLE OF CONTENTS
Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. ix
Preface ............................................ xi
Acknowledgments .................................... xiii
SECTION I. STATE OF SCIENTIFIC KNOWLEDGE IN
CLIMATE CHANGE
K. HASSELMANN and U. CUBASCH
Climate and its Influencial Factors, especially the Anthropogene
Enhancement of the Greenhouse Effect and its Possible Impacts -
Results of the Second Assessment Report of the IPCC ............... 3
B. LIM, P. BOILEAU and Y. BONDUKI
The IPCCIOECD/IEA Greenhouse Gas Inventories Programme:
International Methods for the Estimation, Monitoring and Verification
of GHG Emission Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
M. HADUONG
Necessities and Problems of Coupling Climate and Socioeconomic
Models for Integrated Assessments Studies from an Economist's
Point of View . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
F. TOTH, G. PETSCHEL-HELD and T. BRUCKNER
Climate Change and Integrated Assessment: The Tolerable Windows
Approach
(The ICLIPS Project: Integrated assessment of CLimate Protection Strategies) ...... 55
G. PETSCHEL-HELD and F. REUSSWIG
Climate Change and Global Change: The Syndrome Concept
(The QUESTIONS Project: QUalitativE Dynamics of Syndromes and
TransiTION to Sustainibility) . . . . . . . . . . . . . . . . . . . . . . • • . . . . . • • . . 79
SECTION II. FROM SCIENTIFIC RESULTS TO THE
POLITICAL AGENDA ................................. 97
G. MciNNES
A Comparison of GHG Inventories and Reduction Goals for Different
Countries in Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
vi
U. COLLIER
Allocating Emission Reduction Targets in the European Union-
Issues and Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 113
C. BAIL
The EU Position in the Negotiation Process towards a Protocol on
the Limitation and Reduction of Greenhouse Gas Emissions ......... 129
SECTION III. POLITICAL AND ECONOMICAL INSTRUMENTS
AN OVERVIEW
- INTRODUCTION - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 137
J. HACKER
The Range of Possible Political and Economical Instruments for the
Mitigation of Global Climate Change . . . . . . . . . . . . . . . . . . . . . . .. 139
A. PELCHEN
A Framework for the Evaluation of Political and Economical Instruments
for Global Warming Mitigation. . . . . . . . . . . . . . . . . . . . . . . . . . .. 145
- VOLUNTARY APPROACHES - 159
K. MUSCHEN
Global and European Voluntary Approaches in Mitigation of Greenhouse
Gas Emissions on Municipal Level and their Results .............. 161
F. SCHAFHAUSEN
Voluntary Commitments to Mitigate Greenhouse Gas Emissions -
The Example of German Industry and Trade ................... 169
K. RENNINGS, K.L. BROCKMANN and H. BERGMANN
Voluntary Agreements in Climate Protection - Experiences in
Germany and Future Perspectives ........ . . . . . . . . . . . . . . . . .. 183
-TAXES - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 20S
R.BARON
Carbon and Energy Taxes in OECD Countries . . . . . . . . . . . . . . . . .. 207
vii
S. BILL
European Commission's Experience in Designing Environmental
Taxation for Energy Products ............................. 231
T.BARKER
Limits of the Tax Approach for Mitigating Global Warming ......... 239
-JOINT IMPLEMENT AT ION - • • • . . • . • • • • • • . • • • • • • • • • • •• 253
C.J. JEPMA
Activities Implemented Jointly (AU) as an Instrument for the
Mitigation of Global Warming ............................ 255
F.TATTENBACH
Practical Examples of Activities Implemented Jointly (AU)
in Costa Rica ....................................... 273
J. HACKER
Problems and Limitations of AU and the JI Potential
from the Perspective of a German Project Broker . . . . . . . . . . . . . . .. 283
SECTION IV. TRADEABLE EMISSION PERMITS
- A PRACTABLE EXAMPLE:
TRADEABLE EMISSION PERMITS FOR SOl - •••••••••••••• 293
B. McLEAN
US Experience with Tradeable S02 allowances . . . . . . . . . . . . . . . . .. 295
K.L. BROCKMANN, H. KOSCHEL and T.F.N. SCHMIDT
A European Model for Tradeable S02-Emission Permits . . . . . . . . . . .. 309
- DESIGN OF A COl EMISSION SYSTEM - . . • • • • • • . • • • • • • •. 329
J. OLIVEIRA MARTINS
Efficiency, Equity and Optimal Carbon Abatement ............... 331
viii
P. KOUTST AAL
Posibilities of an EU System of CO Emission Permits . . . . . . . . . . . .. 339
2
F. T. JOSHUA
Launching a Plurilateral Greenhouse Gas Emissions Trading System
- the UNCT AD-Earth Council Initiative ...................... 357
S. VAUGHAN
Tradeable Emissions Permits and the WTO .................... 367
- PERSPECTIVE OF A CO EMISSION SYSTEM - ............ 377
2
J. DEPLEDGE
Status of Discussion and Negotiation for a System of Tradeable
CO Emission Permits within the UNFCCC . . . . . . . . . . . . . . . . . . .. 379
2
J. WOLFE
The United States Proposal for an International CO Emissions
2
Trading System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 385
-EMISSION QUOTA TRADE - A SIMULATION EXPERIMENT - . 395
A. PELCHEN
Results of the Emission Quota Trade Simulation Experiment
by the Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 397
SECTION V.
COMPARISON OF INSTRUMENTS AND SUMMARY .•......• 407
A. ENDRES
Assessing the Different Instruments in Climate Change Mitigation
from the Perspective of Economics ......................... 409
A. PELCHEN
Assessment of the Different Economic Instruments by the Participants and
Selected Results of the Working Groups ...................... 427
List of Authors ...................................... 441
List of Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 447
Colour Plate Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 457
FOREWORD
Climate change poses important challenges to research and policy. Within three
decades, an issue that was initially confined to the attention of a few scientists
became the topic of large-scale research programmes, national and European
policies and an international Convention. While significant uncertainties remain on
the timing and scale of the changes to be expected and of their impacts, an appreci
ation emerged of the high ecological, economic, political and social stakes involved
and lead to governmental, business and citizens' initiatives.
After focusing on the understanding of climate processes and the possible
impacts of climate change on ecosystems, European research - and international
research more generally - started addressing also the social, economic and policy
causes of and responses to climate change. In the meantime, local, national and
European measures started being developed to mitigate carbon dioxide emissions,
a European target was agreed to achieve the stabilization of carbon dioxide by 2000
at the levels of 1990, the Framework Convention on Climate Change (FCCC) was
adopted and was followed by its Kyoto Protocol.
When the Advanced Study Course "Goals and Economic Instruments for the
Achievement of Global Warming Mitigation in Europe" was held, the research and
policy communities in Europe and worldwide were intensely debating what targets
should be agreed in Kyoto, what instruments and policies could be developed to
mitigate greenhouse gases' emissions, how should the responsibility and costs for
such mitigation be shared across countries and socio-economic sectors. The Ad
vanced Study Course complemented other research initiatives, such as the series of
policy-research interface workshop "EU Climate Policy: Research Support for
Kyoto and beyond", undertaken by DG XII (Directorate General for Science,
Research and Development) on socio-economic aspects of climate change. The
Course focused on the formulation and use of the so-called 'flexibility instruments'
(such as joint implementation and emission trading) that were among the most
intensely debated issues at the Conference of the Parties of the FCCC in Kyoto and
that remain among the 'pending issues' after such Conference.
There is no doubt that the organizers of the Course identified a policy relevant
issue, and an issue where the need for improved understanding and capacity build
ing - including training of young researchers - was needed. The quality of the
contributions by the academic and policy experts and the enthusiasm shown by the
students made the Course a useful and challenging event. Given the fact that climate
change is a long-term issue which complexity is far from being 'managed', the
transmission of analytical and practical knowledge to younger generations seems an
effort worth pursuing.
Angela Liberatore
Unit on socio-economic environmental research
DG XII-DS, European Commission
PREFACE
From July 20 to 26, 1997 an Advanced Study Course "Goals and Economic Instru
ments for the Achievement of Global Warming Mitigation in Europe" was held at
the Technical University of Berlin, Germany. The Course has been carried out by
UMB UmweltManagementBeratung Hacker GmbH on behalf of the European
Commission, Directorate-General XII/D Environment and Climate RTD Pro
gramme.
The Course was attended by fifty-one young scientists from twelve EU and
seven non-EU nations. Lectures were given by twenty-nine experts from eleven
dift:erent EU universities or research institutions, seven international organizations
and five governments or governmental agencies. The lectures were structured in
five sections like this volume. Additionally, there was an excursion to the Potsdam
Institute for Climate Impact Research near Berlin. In four working groups the
participants evaluated the results of the lectures of each section and presented and
discussed their evaluations in plenary sessions. In the second part of the Course the
participants performed an simulation experiment for emission trading.
The aims of the Advanced Study Course were:
- to improve the communication between students and scientists on a European
level as well as fostering the interdisciplinary discussion of the subject of
global warming,
- to bridge the gap between the scientific knowledge about mitigation of global
warming on the one hand and the practical implementation of the scientifi
cally necessary measures for the reduction of GHG-emissions in the political
process on the other hand,
- to evaluate the different political and economical instruments for the mitiga
tion of global warming that are in today's public, political and scientific
discussion in relation to their accuracy of reaching the agreed targets and
their cost-efficiency.
To enhance the sustainability of these aims the proceedings are published in this
book, also sponsored by the European Commission. Part of the papers presented
here are the original lectures, part of them are versions modified after the Course.
Since especially the contributions concerning the political implementation are very
time-related, their date of completion is given at their beginning.
We hope that this book stimulates the ongoing public, political and scientific
discussion and helps to find sustainable, efticient and fair solutions to the problem
of global warming.
JUrgen Hacker
Dr. Arthur Pelchen
ACKNOWLEDGMENTS
We wish to acknowledge with sincere thanks all of those responsible for the fun
ding, preparation and organization of the EU Advanced Study Course, which was
the basis for editing this book.
Firstly, we are grateful to the European Commission, DG XIIID Environment
and Climate RTD Programme, for funding the Advanced Study Course and this
book. Special thanks is given to Dr. Angela Liberatore, the scientific responsible in
the Commission, for her help to cope with all needs of the Commission's admini
stration.
Secondly, we wish to thank the members of the Scientific Panel of the Course,
Prof. Dr. Jiirgen Starnick (Technical University of Berlin), Dr. Gerhard Petschel
Held (Potsdam-Institute for Climate Impact Research), Prof. Dr. Alfred Endres
(Distance Teaching University Hagen), Joaquim Oliveira Martins (Organisation for
Economic Co-operation and Development) and again Dr. Angela Liberatore for
their advice and comments on the programme of the Course and the selection of the
lecturers. Especially we thank the Chairman, Prof. Dr. Starnick, for the hospitality
of the Technical University of Berlin and the Vice-Chairman, Dr. Petschel-Held,
for his efforts in organizing the excursion to the Potsdam-Institute for Climate
Impact Research.
We also thank Prof. Peter Bohm of Stockholm University for allowing us to
rerun his Emission Quota Trade Experiment among four Nordic countries with the
participants of the Course despite his doubts of its suitability for this purpose.
Naturally we wish to acknowledge with thanks all of the lecturers not only for
their presentations to the Advanced Study Course and their readiness and engage
ment in discussing their lectures with the participants but also for their contributions
in this book.
We are grateful to Prof. Dr. Dietmar Winje, chairman of the board of the
Berlin Electricity Utility Bewag for sponsoring the farewell dinner in the Spandau
Citadel.
And finally we also thank Astrid Zandee of K1uwer Academic Publishers for her
publication assistance.
Jiirgen Hacker
Dr. Arthur Pelchen
