Aligning Carbon Abatement Costs in Asian Emissions’ Trading Scheme”.Asian Emissions’ Trading Scheme (AETS) for CO2 capturing is one of the major components of Asian Climate Strategy for achieving Asian Kyoto Targets under UNFCCC. The scheme covers electricity generation, energy intensive activities in mineral industry, and production & consumption of fossil fuels at large, as these activities generate more than 45% CO2 emissions among Asian Nations. Besides trading emission allowances within the trading scheme, a linking between AETS and two flexible project mechanisms, viz. “Clean Development Mechanism” (CDM) and “Joint Implementation” (JI) has been established that opens scope for bridging emissions’ trading alliances with Annex I and non Annex I countries through CDM and to convert the credits earned into emissions allowances under AETS.The objective of this paper is to derive cost effective Asian Emissions’ Trading Scheme through a Dynamically Stimulated Emissions’ Trading Model to deduce the effects of current emissions’ regulations and trading policies in the year 2012, when the Kyoto targets need to be met. Further the estimates of marginal abatement costs for reducing carbon emissions lead to derive
policy and procedural approaches in identifying emissions' reduction opportunities and its impact on CDM implementation at energy intensive industries, specifically at production and consumption of Carbon Energy. Paper is basically organized on a three dimensional frame work in a specific context of carbon energy business, as identified below:1. Projection of
base emissions’ level that determines quantity of abatement required to meet fixed Kyoto targets;2. Structural characteristics of Climate Policy Regime, including sectoral and technological details, covering degree of flexibility allowed in meeting the emissions’ constraints with global linkages and optimization techniques.3. Consideration of averted climatic changes or ancillary benefits in conjunction with reduction in conventional pollutants associated with carbon mitigation.Paper is emphatically focused to analyze the effects of different climate policy initiatives among Asian nations, and the contributions of Asian Emissions’ Trading Scheme in stabilizing anthropogenic CO2 concentrations in the atmosphere through wider implementation of CDM and furthermore optimizing credit allocations in meeting Kyoto targets in its 1st commitment period till 2012. The statistical modeling used in the analysis predicts that CDM and JI projects help in reducing cost of meeting Kyoto targets. Paper empirically derives that the best strategy to reduce the cost of carbon credits and Asian Climate Strategies is to include more sectors and other greenhouse gases, and to allow for an unrestricted use of CDM and JI across a variety of energy intensive industries.Paper concludes in an understanding of key trading assumptions, based on economic and CDM models that are used under Joint Implementation to estimate carbon abatement costs helping in guiding the continual improvements and assessment of CDM procedures and its wider applications. Paper finally derives that carbon
price is an imperfect indicator of the economic impact of the climate policies. Despite the limited data available for such an exercise in Asian context, the paper further concludes in identifying significant opportunities of emissions’ reductions, particularly at carbon energy business, that can be aligned to formulate economic reforms and legal directives for CDM implementation under United Nations Framework Convention on Climate Change.
Author: Dr. Jagdish P. N. Giri,
Founder and Eexecutive Director, Aaditya Energy Foundation, Chennai, India,
www.aadityaenergyfoundation.org,
E-mail: jpngiri@aadityaenergyfoundation.com
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