Search

China aims for net-zero carbon emissions by 2060, and an emissions peak before 2030. This will reduce its consumption of coal for power generation and steel making. Simultaneously, China aims for improved energy security, primarily with expanded domestic coal production and transport infrastructure. Here, we analyze effects of both these pressures on seaborne coal imports, with a purpose-built model of China's coal production, transport, and consumption system with installation-level geospatial and technical detail. This represents a 1000-fold increase in granularity versus earlier models, allowing representation of aspects that have previously been obscured. We find that reduced Chinese coal consumption affects seaborne imports much more strongly than domestic supply. Recent expansions of rail and port capacity, which reduce costs of getting domestic coal to Southern coastal provinces, will further reduce demand for seaborne thermal coal and amplify the effect of decarbonisation on coal imports. Seaborne coking coal imports are also likely to fall, because of expanded supply of cheap and high quality coking coal from neighbouring Mongolia.

In recent years, renewable energy technologies have been advocated in Fiji on the basis that they improve energy security and serve as a risk-mitigation measure against oil price volatility. Despite this, there have been few attempts to measure the impact of renewable technologies on energy security. That analysis is important if the benefits of renewable energy technologies in Fiji are to be adequately evaluated. This paper develops and applies a method for assessing the potential contribution of renewable technologies to the security of electricity supply in Fiji. The method is based on an application of portfolio theory, traditionally used in financial markets, to the electricity generation mix in Fiji. The results demonstrate the impact of different renewable technologies on both portfolio generation cost and risk for Fijian electricity grids.

We give empirical welfare results for global greenhouse gas emission control, using the first multiparty model to combine tax-versus-trading under uncertainties with revenue recycling. Including multiple parties greatly reduces the welfare advantage of an emissions tax over emissions (permit) trading in handling abatement-cost uncertainties, from that shown by existing, single-party literature. But a tax has a different, much bigger advantage, from better handling uncertainties in business-as-usual emissions. Either mechanism's free emissions share, from tax thresholds or free permits, which lowers its possible welfare gain from revenue recycling, may however dominate any tax-versus-trading advantage. Moreover, political and practical constraints, such as the political unacceptability of no free emissions, the institutional unavailability of efficient emissions tax thresholds, and the unpopularity of recycling revenue as conventional tax cuts, make ideal welfare maximisation a poor guide for mechanism choice; and at optimal prices, trading currently tends to outperform taxation.

There is demand for qualitative and quantitative economic analysis on the optimum degree of climate change mitigation and adaptation, the optimal timing of such actions, and their optimum distribution between countries and sectors. This paper discusses what is, as well as what is not, possible for economic modelling in this field. Specific reference is made to the paper by Bosello, Carraro and de Cian (2009), as well as Tol (2009). Integrated assessment modelling can provide powerful qualitative insights (for example, about the need for both mitigation and adaptation and the interactions between the two, or the need for both individual and policy-driven adaptation). However, the more detailed quantitative results from such studies are subject are extremely limited. In many cases, they are virtually irrelevant as a policy guide. For these models to be useful representations of reality, economic climate change models need three important features: representation of uncertainty about impacts (in particular, the risk of abrupt climate change); fuller representation of economic impacts from climate change and inclusion of non-market impacts; and finally, modelling of equity dimensions. These features are absent in many models currently used. This leads to a tendency for quantitative results to be biased against mitigation as an option to address climate change and in favour of other adaptation.

We analyse the long-term efficiency of the emissions target and of the provisions to reduce carbon leakage in the Australian Government's Carbon Pollution Reduction Scheme, as proposed in March 2009, and the nature and likely cause of changes to these features in the previous year. The target range of 5-15% cuts in national emission entitlements during 2000-2020 was weak, in that on balance it is too low to minimise Australia's long-term mitigation costs. The free allocation of outputlinked, tradable emission permits to Emissions-Intensive, Trade-Exposed (EITE) sectors was much higher than proposed earlier, or shown to be needed to deal with carbon leakage. It plausibly means that EITE emissions can rise by 13% during 2010-2020, while non-EITE sectors must cut emissions by 34-51% (or make equivalent permit imports) to meet the national targets proposed, far from a cost-effective outcome. The weak targets and excessive EITE assistance illustrate the efficiencydamaging power of collective action by the 'carbon lobby'. Resisting this requires new national or international institutions to assess lobby claims impartially, and more government publicity about the true economic importance of carbon-intensive sectors. Published in the Australian Journal of Agricultural and Resource Economics, volume 54, pages 185-202.

A detailed proposal for an economy-wide emissions trading scheme in Australia was tabled by the government in December 2008 with a proposed start date for mid-2010. The government proposes unilateral linking, with no initial bilateral linkages, through the clean development mechanism and joint implementation. The proposal has resulted in serious concern about significant permit price increases and price capping, leading to a ban on permit sales. This research paper evaluates the proposed Australian scheme in relation to international emissions trading and linkages. Different scenarios for the Australian permit price under unilateral linking are considered. Options for bilateral linking with the European Union and New Zealand schemes are also evaluated, including access to ‘hot air’ units. The research paper argues that Australia needs to dismantle linking obstacles, such as the price cap, and move towards suitable bilateral linking schemes.

The Asia-Pacific region is the major source of global growth in greenhouse gas emissions. Strong action is needed in Asian countries, particularly China and India, to reduce these global emissions. Driven by the desire to limit energy consumption, some Asian countries already have domestic policies to limit greenhouse gas emission. But much more ambitious policies are needed to turn emission trends around. This research report examines the implications of international efforts to mitigate the impacts of human activity on climate in the Asia-Pacific region.

Effective climate policy requires global emissions of greenhouse gases to be cut substantially, which in energy sectors can be achieved by lower emissions supply technologies, greater energy use efficiency, and substitution in demand. For policy to be efficient requires fairly uniform, pervasive emission pricing from taxes, permit trading, or hybrid combinations of the two, as well as significant government support for low-emission technologies. We compare the kind of technology-focused climate policies currently adopted by Australia and the USA, the 'Asia-Pacific Partnership on Clean Development and Climate' (AP6), against this ideal policy yardstick. We find they omit the need for emission pricing to achieve abatement effectively and efficiently; they over-prescribe which abatement actions should be used most; they make unrealistic assumptions about how much progress can be achieved by voluntarism and cooperation, in the absence of either adequate funding or mandatory policies; and they unjustifiably contrast technology-focused policy and the Kyoto Protocol approach as the only two policies worth considering, and thus ignore other important options.

We analyse the impact of the agreement on implementation of the Kyoto Protocol achieved at COP6bis in Bonn in July 2001 on investment in greenhouse gas emission reduction projects in developing countries through the Clean Development Mechanism (CDM). The required actual emission reductions for participating Annex B countries overall will be relatively small, as the United States do not intend to ratify the Protocol and significant amounts of carbon sequestered in domestic sinks will be credited to Annex B countries under Article 3.4 of the Protocol. In addition, there is a large potential supply of surplus emissions quota (hot air) from Russia and other economies in transition. This means that demand for certified emission reductions (CERs) from CDM projects will be relatively small. The magnitude of the CDM as a means for meeting Kyoto Protocol commitments, and individual countries' shares, will be influenced by a host of factors both on the demand and the supply side of the global carbon market. The analysis is based on a quantitative model of the global carbon market, based on marginal abatement cost curves and designed specifically for this type of analysis. We estimate required emission reductions in Annex B countries, the share of the Kyoto mechanisms in meeting this demand, the price for CERs, and the geographical distribution of CDM projects, and discuss distribution of sequestration projects. A ?low demand, low price? carbon market scenario appears likely, with intense competition between developing countries to attract CDM investors. Sensitivity analysis illustrates the likely direction and magnitude of impacts when key supply and demand parameters are changed. We examine the impact of higher or lower implementation and transaction costs, as well as expanding or contracting the supply of CERs through baseline and additionality rules. While the CDM could suffer a loss in competitiveness if transaction costs are too high, changes in CDM supply parameters do not fundamentally change estimates of CDM size and revenue. On the demand side by contrast there are there are a number of factors which could greatly reduce the size of the CDM, or even preclude commercially driven CDM projects altogether. Key factors that could harm the CDM are lower business-as-usual emissions growth in Annex B countries, higher supply of surplus emissions quota (hot air) from EIT countries, and possibly crediting under Article 3.4 of sequestration in agricultural soils. If however the United States participated in implementing the Kyoto Protocol, none of these factors would be a threat to a viable and sizeable CDM. We conclude that although the potential role for the CDM is seriously diminished under the Bonn agreement and without the United States on board, a significant amount of CDM projects in developing countries could still be achieved. Much will depend on international market factors, as well as the design of rules for CDM project implementation. The best strategy is to prepare to be competitive in a low-demand, lowprice market, and at the same time to strive for the United States to still come on board the Kyoto Protocol.