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GTAP Resource #4128

"Analyses on impacts of ETS on industries of Japan"
by Lu, Xiangchun, Jusen Asuka, Monjon Stephanie and Quirion Philippe

Analyses on impacts of ETS on industries of Japan and alternative allocation of emission permits with consideration of potential leakage and international trade

From 2013, EU-ETS entered its third phase, free allocation of emission permits for energy intensive industries will continue, and Border Adjustment will be adapted to mitigate carbon leakage and risk of losing competitive edge. Following with EU, Japan is planning to introduce Emission Trade Schemes. With a multi-region model, we analyzed the possible impacts of ETS on industries, especially energy intensive industries in Japan. Comparing with full auction scenario, grandfathering (GF), output-based (OB) and border adjustment (BD) scenarios are also considered for their effects of “anti-leakage” and mitigating risk of losing competitive edge. We found that the carbon leakage ratio in the case of full auctioning in the ETS of Japan is not very much different from the GF and OB scenarios. Moreover, in our model, the leakage ratio depends crucially on Armington elasticity, the estimates of which vary considerably across all available studies. Differences in the emission intensities between the regions also play a crucial role when BA is considered. As the "anti-leakage" policy, the border adjustment scenario (BA) was found to be successful. In OB scenario, the CO2 price is much higher than under auctioning because the incentive to decrease domestic consumptions. As a consequence of this higher CO2 price, public revenues are almost equal to those of the scenario with full auctioning, in spite of the fact that a part of the allowances are allocated for free....

Resource Details (Export Citation) GTAP Keywords
Category: 2013 Conference Paper
Status: Published
By/In: Presented at the 16th Annual Conference on Global Economic Analysis, Shanghai, China
Date: 2013
Version: 1
Created: Lu, X. (4/14/2013)
Updated: Lu, X. (8/29/2013)
Visits: 2,222
- Climate change policy
- Trade and the environment

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