1. Presented by Belay Fekadu, Farzad Taheripour, Patrick Georges, David Mayer-Foulkes, Marianne Aasen, Hyun-Sik Chung, Kenatro Katsumata, Christa Clapp GTAP_E

2. 2 Presentation Outline

3. 3 Annex 1 without USA

4. 4 Emissions targets Present Kyoto vs. Post-Kyoto flexible target (E.g. Emission/ GDP (i.e. emission intensity) as a new flexible target variable.) We are pessimistic: Kyoto target not reached Redistribute reduction target such that reduction intensity ratio (=total Annex 1 reduction/Annex 1 GDP) be the same for all Annex 1 regions.

5. 5 Reduction intensity ratio : sum reductions Annex 1 / sum GDP Annex 1 -837.2 / 22544597.25 = -3.714E-05 - Multiply the ratio with GDP of each Annex region to get redistribution of Kyoto reduction Experiment : -Emission trading among Annex 1 countries -2 scenarios: Kyoto and “our” distribution of Kyoto reduction target

6. 6 Redistribution of Kyoto-reductions

7. 7 New shocks in the model

8. 8 The Results and Analysis When emission trading allowed, initial allocation of emission quotas doesn’t matter. Each region has the same percentage reduction in emissions in the two scenarios. Reduction emission (%)

9. 9..but it matters to welfare..?

10. 10 USA becomes exporter of permits in our scenario

11. 11 Summing up and conclusion USA largely gains from permit trading, and minor gains from tot improvement EU loses more in scenario two, since they have to buy more permits EEFSU gain less in scenario two, due to decrease in revenue from permit trading Japan loses more in scenario two, since buy more permits RoA1 lose less in our scenario, buy less permits USA will participate in our regime!

12. 12

13. 13 Summing up and conclusion With our scenario, US gains from staying in Annex 1 group In Kyoto scenario, they don’t, and left

14. 14 Energy Substitution Possibilities

15. 15 Tax Replacement Implications

16. 16 Concluding Comments