Is Kyoto Fatally Flawed? An Analysis with Macgem

45 Pages Posted: 23 Jul 2002

See all articles by Johan Eyckmans

Johan Eyckmans

Catholic University of Leuven (KUL) - Center for Economic Studies

Denise Van Regemorter

KU Leuven - Center for Economic Studies

Vincent van Steenberghe

Belgian Federal Ministry for the Environment

Date Written: June 2002

Abstract

In this paper we present some numerical simulations with the MacGEM model to evaluate the consequences of the recent Marrakesh agreements and the defection of the USA for the Kyoto Protocol. MacGEM is a global marginal abatement cost model for carbon emissions from fossil fuel use based on the GEM-E3-World general equilibrium. Nonparticipation of the USA causes the equilibrium carbon price in Annex B countries to fall by approximately 50% since an important share of permit demand falls out. Carbon sinks enhancement activities enable Parties to fulfil their reduction commitment at lower compliance costs and cause the equilibrium permit price to decrease by 40%. Finally, it is shown that the former Soviet Union and central European countries have substantial monopoly power in the Kyoto carbon permit market. We conclude that the recent accords have eroded completely the Kyoto Protocol's emission targets but that they have the merit to have saved the international climate change negotiation framework.

Keywords: Environmental Economics, Climate Change, Permit Trade, Kyoto Protocol, Carbon Sinks

JEL Classification: H0, H2, H3

Suggested Citation

Eyckmans, Johan and Van Regemorter, Denise and van Steenberghe, Vincent, Is Kyoto Fatally Flawed? An Analysis with Macgem (June 2002). Available at SSRN: https://ssrn.com/abstract=317927 or http://dx.doi.org/10.2139/ssrn.317927

Johan Eyckmans (Contact Author)

Catholic University of Leuven (KUL) - Center for Economic Studies ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Denise Van Regemorter

KU Leuven - Center for Economic Studies ( email )

Naamsestraat 69
Leuven, B-3000
Belgium
+32 16 32 68 12 (Phone)
+32 16 32 67 96 (Fax)

Vincent Van Steenberghe

Belgian Federal Ministry for the Environment

Brussels
Belgium

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