Lurking in the shadows: The impact of CO2 emissions target setting on carbon pricing in the Kyoto agreement period

Barry Quinn, Ronan Gallagher and Timo Kuosmanen

Energy Economics, 2023, vol. 118, issue C

Abstract: This paper is a case study of the impact of CO2 emissions target setting. We empirically investigate the targets set during the Kyoto Protocol period using a convex nonparametric least squares system, quantile regressions, and a comprehensive data set of 125 countries. Our findings reveal CO2 marginal abatement costs, which: (1) are significantly higher for target setting countries; (2) increase over the sample period; (3) and are an order of magnitude greater than the prevailing emissions pricing mechanisms. The results provide insights into the consequences of policies to curb unwanted by-products in a regulated system and shed light on the price efficiency of carbon markets. Furthermore, we contribute to the debate on emission reduction standard-setting and highlight the importance of shadow price estimates when regulating market instabilities in an emission trading scheme.

Keywords: Marginal abatement costs; Climate finance; Environmental efficiency; Convex quantile regression; Carbon emissions target setting; Kyoto protocol; Development economics; Sustainable finance (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:118:y:2023:i:c:s0140988322004674

DOI: 10.1016/j.eneco.2022.106338

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