GTAP-E From GTAP technical paper 16 Jean-Marc Burniaux and Truong Truong

Energy moved from intermediate input to value added tier. Shares a tier with capital. The model has 8 regions and 8 commodities. 8 regions: USA, EU, Eastern Europe and FSU, Japan, other annex 1 countries, net energy exporters, China and India, and Rest of the World. Sectors are agriculture, coal, oil, gas, oil products, electricity, other energy intensive, and other industries and services.

3 scenarios -1 No emission trading -Total emission constraints applied to Annex 1 countries. Targeted reductions: US 36%, EU 22%, Japan 32%, Other annex 1 countries 36% –2 Trade among Annex 1 countries only Emissions trading permitted among annex 1 countries –3 Worldwide emission trading

Closure no trade exogenous RCTAX MARKCTAX dcwfd(NEGYCOM3,PROD_COMM,REG). dcwfi(NEGYCOM3,PROD_COMM,REG). dcwpd(NEGYCOM3,REG) dcwpi(NEGYCOM3,REG) dcwgd(NEGYCOM3,REG) dcwgi(NEGYCOM3,REG) c_CTAXBAS(REG,NEGYCOM3B) ! DTBAL exogenous for all regions except one, ! and cgdslack exogenous for that one region (which can be any one). dtbal("USA") dtbal("EU") dtbal("EEFSU") dtbal("JPN") dtbal("RoA1") dtbal("EEx") dtbal("CHIND") cgdslack("RoW") ; Rest Endogenous ; swap gco2t("USA")=RCTAX("USA"); swap gco2t("EU")=RCTAX("EU"); swap gco2t("JPN")=RCTAX("JPN"); swap gco2t("RoA1")=RCTAX("RoA1");

No trade scenario Carbon taxes in $/ton that were required to achieve the desired reductions were $126 US, $147 EU, $230 Japan, $178 other annex 1 countries The largest reduction in world output: US coal sector, the EU coal sector, Japanese gas sector Net reductions in total output ocurred in all regions. EEFSU, Oil exporters, China-India, and RoW increased production of oil products, electricity, and energy intensive industries Total Changes in output of Annex 1 countries ranged from -126 in the US to + 4 EEFSU Energy exporters’ output declined; Other Annex 1 countries had only very small changes.

Trading among Annex 1 Countries Trading among annex 1 countries targeted carbon emissions in individual countries Emission reduction target 22% overall and same regional targets Emissions EEFSU allowed to increase 13 percent Results: carbon tax $78/ton all trading regions Percent changes: USA -27, EU -14, EEFSU -27, JPN-15, RoA1 -21 EEx2, CHIND -1, RoW 4 Overall changes in output quantities to achieve reductions smaller than in no trading scenario Overall reduction was largest in coal sector. US coal sector declines 38% Energy exporters and China-India registered small increases in oil products, electricity and oil intensive industries, but reductions in total output (Oil exporters, China-India)

Worldwide emission trading Trading worldwide targeted similar carbon emissions as the previous scenario However, now overall emission reduction target 14% Results: carbon tax $30/ton all trading regions Percent changes: USA -13, EU -6, EEFSU -13, JPN -6, RoA1 -9, EEx -7, CHIND -32, RoW -9 Overall changes in output quantities to achieve reductions smallest in this scenario Largest overall % reduction now in Chinese coal sector (-38%). US coal sector declines 21% Total output declined in each region.

Terms of trade effects RegionNo tradeAnnex 1World USA EU EEFSU JPN RoA EEx CHIND RoW

Utility changes RegionNo tradeAnnex 1World USA EU EEFSU JPN RoA EEx CHIND RoW

Worldwide CO 2 Trade without US In scenario 3 all of the world except the US trades (US has no quota) Total emission target remains the same

Technology Change and US Participation in Kyoto Protocol Trading in Annex 1 countries only with and without US participation Coal-saving technological change in electricity production is introduced

Updating GDP and Population Growth Rates In the first (no trade) scenario, updated GDP and population grow rates are incorporated into the model Emission targets are changed to reflect the altered relative importance of countries