1. Technology Change and US Participation in the Kyoto Protocol Jeffrey Binggeli and Joachim Schleich

2. Research design based on GTAP-E Scenario 1: US participates in Kyoto Protocol (KP); no technological change (TC) in the electricity generation from coal quota for USA, full trading among all Annex 1; afall ("Coal, "Electricity", "USA") = 0; Scenario 2: US does not participate in KP; no TC no quota for USA, full trading among other Annex 1, afall ("Coal, "Electricity", "USA") = 0; Scenario 3:US does not participate in KP; TC no quota for USA, full trading among other Annex 1, afall ("Coal, "Electricity", "USA") = 10; Scenario 4: US participates in KP; TC quota for USA, full trading among all Annex 1, afall ("Coal, "Electricity", "USA") = 10;

3. Selected results

4. Conclusions TC in electricity generation from coal in the US results in: -a decrease in coal output (dominating technology effect) -a decrease in electricity generation in the US under Kyoto only -substitution of gas by coal -higher welfare gains to US, if US participates in KP (b/c of lower MAC) -TC in US is more beneficial to other countries, if US participates in KP -TC of 10% is not enough to make US participation in KP beneficial (from US perspective!) because of „Hot Air“ from Russia -Would need TC >> 50% to make US benefit from participation

5. Backup: Coal demand (qf) Equation INTDEMAND # industry demands for intermediate inputs, including cgds # (all,i,TRAD_COMM)(all,j,PROD_COMM)(all,r,REG) ! qf(i,j,r) = (D_NEGY(i,j,r)*D_VFA(i,j,r)* [ - af(i,j,r) + qo(j,r) - ao(j,r) - ESUBT(j) * [pf(i,j,r) - af(i,j,r) - ps(j,r) !HL debug: added! - ao(j,r)] ]) ! level 3 : electricity ! + (D_ELY(i,j,r)*D_VFA(i,j,r)* [- af(i,j,r) + qen(j,r) - ELELY(j,r) * [pf(i,j,r) - af(i,j,r) - pen(j,r)] ]) ! fourth level : coal ! + (D_COAL(i,j,r)*D_VFA(i,j,r)* [- af(i,j,r) + qnel(j,r) - ELCO(j,r) * [pf(i,j,r) - af(i,j,r) - pnel(j,r)] ]) ! fifth level : remainding fossil fuels ! + (D_OFF(i,j,r)*D_VFA(i,j,r)* [- af(i,j,r) + qncoal(j,r) - ELFU(j,r) * [pf(i,j,r) - af(i,j,r) - pncoal(j,r)] ]);