Incentives and Effects of No-Lose Targets to Include Non-Annex I Countries in Global Emission Reductions

Vicki Duscha () and Karl-Martin Ehrhart
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Vicki Duscha: Fraunhofer Institute for Systems and Innovation Research
Karl-Martin Ehrhart: Karlsruhe Institute of Technology, Institute ETS

Environmental & Resource Economics, 2016, vol. 65, issue 1, No 6, 107 pages

Abstract: Abstract We analyze the potential of no-lose targets used as an instrument to integrate non-Annex I countries in global emission reduction efforts. We set up a game-theoretical model to derive the participation conditions for a non-Annex I country and evaluate the effect of a no-lose target on the reduction of global emissions. Our analyses show that meaningful contributions from non-Annex I countries are possible, but their contribution to global emission reductions is limited and depends on several factors. Ambitious targets for the Annex I countries are a precondition. Further determining factors are differences in the abatement potentials between Annex I and non-Annex I countries, and market power on the certificate market. Nonetheless, in contrast to other funding mechanisms, no-lose targets, rather than requiring additional funding, can actually reduce costs for the Annex I countries.

Keywords: No-lose targets; Profitability; Non-Annex I countries; Post-Kyoto; Emissions trading (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s10640-016-0015-5

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