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The EU has established the world's first cross-border emission-trading systems (ETS) for greenhouse gas (GHG) emissions, currently covering aviation, emission-intensive sectors, and electricity (EITE). The EU Commission has offered to apply emissions trading in new sectors where emissions from maritime transport will be incorporated into the current EU ETS, while a separated emissions trading system will cover emissions from road transport and the building sector. This paper employs a multi-regional multi-sectoral computable general equilibrium (CGE) model with two simultaneous international emission permit markets. After examining the abatement costs for the EU regions, various policy scenarios are implemented to study the welfare effects of forming an ETS covering the sectors other than EITE (NEIT) and its linking with the EITE sectors under two different baselines and four emission reduction targets. The results provide several important insights: (i) Marginal abatement costs in Germany and the Eastern European Union region (EEU) are significantly lower than in the rest of the EU regions. (ii) The carbon price in the emission permit market covering NEIT is significantly higher than the carbon price in the emission permit market covering EITE. (iii) Germany and EEU appear as notable suppliers of emission permits in both markets. (iv) There is a significant aggregate welfare gain under the scenario in which the ETS covering NEIT co-exists parallel with the ETS covering EITE. (v) The aggregate welfare in the EU under the full integration of EITE and NEIT may fall below its value under the scenario with two parallel emission permit markets. [ABSTRACT FROM AUTHOR]

Organisations attempt to contribute their share towards fighting the climate crisis by trying to reduce their emission of greenhouse gases effectively towards net zero. An instrument to guide their reduction efforts is internal carbon pricing. Next to choosing the right pricing tool, defining the exact value of an internal carbon price, especially against the background of potential regulatory external carbon prices, and assessing its impact on business units' energy systems poses a challenge for organisations. The academic literature has so far not examined the impact differences of an internal carbon price across different countries, which this paper addresses by using an optimisation model. First, it analyses the energy system cost increase of a real-world facility based on an internal carbon price compared to a potential regulatory carbon price within a country. Second, we evaluate the energy system cost increase based on an internal carbon price across different countries. The results show that with regard to internal carbon prices the additional total system cost compared to potential external carbon prices stays within 9%, 15%, and 59% for Germany, Japan, and the United Kingdom, respectively. The increase in the energy system cost in each country varies between 3% and 93%. For all countries, the cost differences can be reduced by allowing the installation of renewables. The integration of renewables via energy storage and power-to-heat technologies depends on the renewable potentials and the availability of carbon capture and storage. If organisations do not account for these differences, it might raise the disapproval of internal carbon prices within the organisation. [ABSTRACT FROM AUTHOR]