Multi-fueled electric utilities are commonly seen as offering relatively greater opportunities for reasonably priced carbon abatement through changes in the dispatch of generating units from capacity using high emission fuels, coal or oil, to capacity using lower emitting fuels, natural gas (LNG) or nuclear. This paper examines the potential for such abatement using Japanese electric utilities as an example. We show that the potential for abatement through re-dispatch is determined chiefly by the amount of unused capacity combining low emissions and low operating cost, which is typically not great. Considerably more abatement potential lies in changing planned, base load, fossil-fuel fired capacity additions to nuclear capacity. Our results are at odds with the common view that the demand for natural gas or LNG would increase, or at least not fall, as the result of a carbon constraint; and our analysis suggests that this result may not be limited to Japan. / Abstract in HTML and technical report in PDF available on the Massachusetts Institute of Technology Joint Program on the Science and Policy of Global Change website (http://mit.edu/globalchange/www/) / Includes bibliographical references (p. 31).

Abstract in HTML and technical report in PDF available on the Massachusetts Institute of Technology Joint Program on the Science and Policy of Global Change website (http://mit.edu/globalchange/www/) / Includes bibliographical references (p. 31). / Supported in part by the Univ. of Washington's Joint Institute for the Study of the Atmosphere and Ocean (JISAO) under NOAA Cooperative Agreement (NA67RJ0155 841). Also supported in part by MIT's Joint Program on the Science and Policy of Global Change, with support from the U.S. Dept. of Energy's Office of Biological and Environmental Research to (DE-FG02-93ER61677).

To what extent do the welfare costs associated with the implementation of the Burden Sharing Agreement in the European Union depend on sectoral allocation of emissions rights? What are the prospects for strategic climate policy to favor domestic production? This paper attempts to answer those questions using a CGE model featuring a detailed representation of the European economies. First, numerical simulations show that equalizing marginal abatement costs across domestic sectors greatly reduces the burden of the emissions constraint but also that other allocations may be preferable for some countries because of pre-existing tax distortions. Second, we show that the effect of a single country's attempt to undertake a strategic policy to limit impacts on its domestic energy-intensive industries has mixed effects. Exempting energy-intensive industries from the reduction program is a costly solution to maintain the international competitiveness of these industries; a tax-cum-subsidy approach is shown to be better than exemption policy to sustain exports. The welfare impact either policy -- exemption or subsidy -- on other European countries is likely to be small because of general equilibrium effects. / Abstract in HTML and technical report in PDF available on the Massachusetts Institute of Technology Joint Program on the Science and Policy of Global Change website (http://mit.edu/globalchange/www/) / Includes bibliographical references (p. 17-18).

We extend an analytical general equilibrium model of environmental policy with pre-existing labor tax distortions to include pre-existing monopoly power as well. We show that the existence of monopoly power has two offsetting effects on welfare. First, the environmental policy reduces monopoly profits, and the negative effect on income increases labor supply in a way that partially offsets the pre-existing labor supply distortion. Second, environmental policy raises prices, so interaction with the pre-existing monopoly distortion further exacerbates the labor supply distortion. This second effect is larger, for reasonable parameter values, so the existence of monopoly reduces the welfare gain (or increases the loss) from environmental restrictions. / Abstract in HTML and technical report in PDF available on the Massachusetts Institute of Technology Joint Program on the Science and Policy of Global Change Website. (http://mit.edu/globalchange/www/) / Includes bibliographical references (p. 17-19). / Supported in part by the Joint Program on the Science and Policy of Global Change at MIT and the National Science Foundation (NFS SBR-9811324).

The Emissions Prediction and Policy Analysis (EPPA) model is a component of the MIT Integrated Earth Systems Model (IGSM). Here, we provide an overview of the model accessible to a broad audience and present the detailed structure, data, and parameterization of the model for specialists in economic modeling. EPPA projects emissions of most of the climatically important substances emitted as a result of human activities including carbon dioxide (CO₂), carbon monoxide (CO), methane (CH4), nitrous oxide (N₂O), nitrogen oxides (NOx), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6), sulfate aerosols (SOx), non-methane volatile organic compounds (NMVOCs), black carbon, organic carbon, and ammonia (NH3). We present an updated and consistent inventory for 1995 of all of these emissions disaggregated to the regional and sectoral levels we use in EPPA. This more complete inventory of climatically important substances shows non-energy sources (e.g. agriculture, biomass burning) and developing countries to be important current sources of many of these emissions. A major use of EPPA, a computable general equilibrium model of the world economy with regional and sectoral detail, is to estimate the cost of greenhouse gas emissions control over the 100-year horizon of the model. Reference projections show rates of improvement in energy use per unit of output (Gross Domestic Product) consistent with historical rates although in EPPA we do not attempt to model short-term business cycle behavior so that our projections do not show the same variability as the historical data. Emissions of climatically important substances mostly grow over time in our reference projection (although rates differ substantially among them) despite considerable improvements in energy efficiency and reductions in emissions coefficients for other substances. Developing countries as group become larger sources of all greenhouse gas emissions than developed or transition economies by the middle of the century as their economies and populations are projected to grow more rapidly. There remain many uncertainties in projections of this type. The projections presented in this report are a starting point (i.e. reference) for evaluating alternative scenarios and climate policies. / Includes bibliographical references (p. 84-90). / Abstract in HTML and technical report in PDF available on the Massachusetts Institute of Technology Joint Program on the Science and Policy of Global Change website (http://mit.edu/globalchange/www/)

We estimate reference CO₂ emission projections in the European Union, and quantify the economic impacts of the Kyoto commitment on Member States. We consider the case where each EU member individually meets a CO₂ emissions target, applying a country-wide cap and trade system to meet the target but without trade among countries. We use a version of the MIT Emissions Prediction and Policy Analysis (EPPA) model, here disaggregated to separately include 9 European Community countries and commercial and household transportation sectors. We compare our results with that of four energy-economic models that have provided detailed analyses of European climate change policy. In the absence of specific additional climate policy measures, the EPPA reference projections of carbon emissions increase by 14% from 1990 levels. The EU-wide target under the Kyoto Protocol to the Framework Convention on Climate Change is a reduction in emissions to 8% below 1990 levels. EPPA emissions projections are similar to other recent modeling results but there are underlying differences in energy and carbon intensities among the projections. If EU countries were to individually meet the EU allocation of the Community-wide carbon cap specified in the Kyoto Protocol, we find using EPPA that carbon prices vary from $91 in the United Kingdom to $385 in Denmark; welfare costs range from 0.6 to 5%. / Includes bibliographical references (p. 30-32). / Abstract in HTML and technical report in PDF available on the Massachusetts Institute of Technology Joint Program on the Science and Policy of Global Change website (http://mit.edu/globalchange/www/) / Supported in part by the Institut Français de l'Energie

We present a pedagogical paper on the detection of climate change and its attribution to anthropogenic influences. We attempt to separate the key thought processes and tools that are used when making qualitative statements about the level of human influence on climate. / Includes bibliographical references (p. 9). / Abstract in HTML and technical report in PDF available on the Massachusetts Institute of Technology Joint Program on the Science and Policy of Global Change website (http://mit.edu/globalchange/www/)

Given the large uncertainties regarding potential damages from climate change and the significant but also uncertain costs of reducing greenhouse emissions, the debate over a policy response is often framed as a choice of either acting now or waiting until the uncertainty is reduced. Implicit behind the "wait to learn" argument is the notion that the ability to learn in the future necessarily implies that less restrictive policies should be chosen in the near-term. I demonstrate in the general case that the ability to learn in the future can lead to either less restrictive or more restrictive policies today. I also show that the initial decision made under uncertainty will be affected by future learning only if the actions taken today change the marginal costs or marginal damages in the future. Without this interaction, learning has no effect on what we do today, regardless of what we learn in the future. Results from an intermediate-scale integrated model of climate and economics indicate that the choice of current emissions restrictions is independent of whether or not uncertainty is resolved before future decisions, because the cross-period interactions in the model are minimal. Indeed, most climate and economic models fail to capture potentially important cross-period interaction effects. I construct a simple example to show that with stronger interactions, the effect of learning on initial period decisions can be more important. / Includes bibliographical references (p. 21). / Abstract in HTML and technical report in PDF available on the Massachusetts Institute of Technology Joint Program on the Science and Policy of Global Change website (http://mit.edu/globalchange/www/) / Sponsored in part by the U.S. Dept. of Energy (901214-HAR DE-FG02-94ER61937, DE-FG02-93ER61713)

In March 2000, the European Commission presented a Green Paper on greenhouse gas emissions trading within Europe, supporting implementation of a Community-wide scheme in which the design and regulation of all essential elements would be harmonized at the Community level. The present paper analyzes economic arguments used to justify such a coordinated scenario, showing these arguments to be based on misleading rhetoric about fair trade and harmonization. Diverse allocations of emissions allowances across Member States are justified in theory. In practice, too, no empirical evidence or model-based results demonstrate that an uncoordinated European trading scheme would adversely affect competitiveness to any significant extent or substantially increase industrial relocations. / Includes bibliographical references (p. 9-11). / Abstract in HTML and technical report in PDF available on the Massachusetts Institute of Technology Joint Program on the Science and Policy of Global Change website (http://mit.edu/globalchange/www/) / Supported in part by the Institut Français de l'Energie.

Includes bibliographical references (p. 16). / Abstract in HTML and technical report in PDF available on the Massachusetts Institute of Technology Joint Program on the Science and Policy of Global Change website (http://mit.edu/globalchange/www/)