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Free allowance allocation in the EU ETS / Claudio Marcantonini, Jordi Teixido-Figueras, Stefano F. Verde and Xavier Labandeira. Robert Schuman Centre for Advanced Studies ; Florence School of Regulation, March 2017, 8 p. (Energy &#38; climate ; n° 2017/02) http://cadmus.eui.eu//handle/1814/46048In the EU ETS, free allowance allocation is used to safeguard the competitiveness of the regulated industries and to avoid carbon leakage. In Phase I and II, most allowances were given for free. With Phase III, auctioning became the default method for allocation of allowances. However, industrial sectors receive free allowances according to emission efficiency benchmarks and depending on the sectoral risk of carbon leakage. Sectors at risk of carbon leakage are identified based on carbon and trade intensity. We analysed the empirical research on the EU ETS relevant to free allocation. First, no strong evidence has been found that the EU ETS affected the competitiveness of the regulated industries. Second, an overly conservative criterion for identifying the sectors at risk of carbon leakage meant that free allowances were given to installations which most likely were in fact not at risk. Third, evidence of pass-through of carbon costs was found not only for the electricity sector, but also for industrial sectors. The reform for Phase IV proposed by the European Commission introduces some changes relevant to free allocation. Notably, it devises a more efficient criterion for identifying the sectors at risk of carbon leakage and it sets a rule for updating the benchmark values.The Paris Agreement global goals: What does a fair share for G20 countries look like? / Yann Robiou du Pont. Australian-German Climate and Energy College ; Melbourne Sustainable Society Institute, March 2017, 24 p. http://climate-energy-college.org/paris-agreement-global-goals-what-does-fair-share-g20-countries-lookThis report reviews the literature to compare the socio-economic implications and climate impacts of achieving each of the Paris Agreement temperature goals: 1.5 °C and 2 °C. Drawing on a recent publication (Robiou du Pont, Jeffery, Gütschow, et al., Nature Climate Change, 2017) and its related website Paris-equity-check.org, this report then examines the scenarios to reduce greenhouse-gases (GHG) emissions consistent with the Paris global goals.Finally, this report presents greenhouse-gases (GHG) emissions targets for G20 members consistent with the five effort sharing categories contained in the latest report of the Intergovernmental Panel on Climate Change (IPCC), and compares the equity performances of their climate pledges against their own declarations on equity.Evolution of modeling of the economics of global warming: changes in the DICE model, 1992-2017 / William Nordhaus. Cowles Foundation discussion paper ; n° 2084, March 2017, 22 p. http://cowles.yale.edu/sites/default/files/files/pub/d20/d2084.pdfMany areas of the natural and social sciences involve complex systems that link together multiple sectors. Integrated assessment models (IAMs) are approaches that integrate knowledge from two or more domains into a single framework, and these are particularly important for climate change. One of the earliest IAMs for climate change was the DICE/RICE family of models, first published in Nordhaus (1992), with the latest version in Nordhaus (2017, 2017a). A difficulty in assessing IAMs is the inability to use standard statistical tests because of the lack of a probabilistic structure. In the absence of statistical tests, the present study examines the extent of revisions of the DICE model over its quarter-century history. The study find that the major revisions have come primarily from the economic aspects of the model, whereas the environmental changes have been much smaller. Particularly sharp revisions have occurred for global output, damages, and the social cost of carbon. These results indicate that the economic projections are the least precise parts of IAMs and deserve much greater study than has been the case up to now, especially careful studies of long-run economic growth (to 2100 and beyond).Rapport d'information déposé par la commission des affaires européennes sur la réforme du marché des quotas d'émission / Arnaud Leroy. France. Assemblée nationale. Commission des affaires européennes, février 2017, 45 p. http://www.assemblee-nationale.fr/14/europe/rap-info/i4569.aspLe présent rapport d'information se penche sur la révision, actuellement discutée, du Système d'échange de quotas d'émissions de l'Union (SEQE). Présenté comme le principal instrument de lutte contre les émissions de gaz à effet de serre au niveau de l'Union européenne, le marché d'échange des quotas d'émission présente aujourd'hui un bilan en demi-teinte, qui appelle à des améliorations profondes si l'Europe entend atteindre les objectifs ambitieux fixés par l'Accord de Paris ratifié le 4 octobre 2016, constate le rapport.Transitional restricted linkage between Emissions Trading Schemes / Simon Quemin and Christian de Perthuis. Chaire Economie du climat, 10 avril 2017, 50 p. (WP 2017-01) http://www.chaireeconomieduclimat.org/publications/working-papers/wp-2017-01-transitional-restricted-linkage-between-emissions-trading-schemes/Linkages between Emissions Trading Systems are deemed to play an important role in implementing the Paris Agreement. However linkages have been few and far between. This is attributable to their multi-faceted nature and growing heterogeneity in policy designs. This article compares various link restrictions in facilitating linkage negotiations, namely quantitative restrictions, border permit taxes, exchange and discount rates, and unilateral linkage. These restrictions undermine cost-efficiency and generate rents and should thus be used as a transitory mechanism to full linkage. Trial restricted-link periods may allow to test the effects of the link while containing its reach, spur cooperation and provide more time and flexibility in circumventing impediments to full linkage.There is no ideal transitional restricted link as each has its relative merits and weaknesses. While quantitative restrictions seem to be the natural route to a full link, their implications can be misleading. While those of a border tax are more manageable, this policy seems harder to pursue. Exchange rates adjust for programmes’ stringencies and have potential to increase overall ambition, but are challenging to select. As experience corroborates, unilateral linkage may constitute a practical and promising approach.