EconPapers    
Economics at your fingertips  
 

Potential trading partners of a brazilian emissions trading scheme: The effects of linking with a developed region (Europe) and two developing regions (Latin America and China)

Thais Diniz Oliveira, Angelo Gurgel () and Steve Tonry

Technological Forecasting and Social Change, 2021, vol. 171, issue C

Abstract: The Paris Agreement has recently underlined the relevance of international cooperation via carbon pricing to tackle climate change. With Emissions Trading Schemes (ETS) emerging in developed and developing regions worldwide, linking ETS systems is likely to be necessary in the future. This raises the question as to the appropriateness of linking ETS systems from the perspective of each trading partner. This paper analyses the impact of a hypothetical ETS, covering the electricity and energy-intensive sectors of Brazil, using a global economy-wide model - the EPPA6. We simulate links for Brazil with a developed region (Europe) and two developing regions (Latin America and China). Linking Brazil with a heterogeneous partner such as Europe results in more substantial emissions reductions, a movement towards low carbon energy and losses in GDP and welfare, as both regions assume ambitious targets. Linking with China is less costly due to less stringent targets. A link with Latin America, a region of similar energy and economic profile to Brazil, produces moderate reductions. Accordingly, there are advantages and disadvantages associated with each proposed trading situation. An ETS with a less stringent cap, or one that encompasses additional sectors, might allow for mitigation opportunities at lower costs for Brazil.

Keywords: Sectoral ETS linkage; Brazil; EPPA6; Developing country; Developed country (search for similar items in EconPapers)
JEL-codes: D58 Q48 Q58 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0040162521003796
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:tefoso:v:171:y:2021:i:c:s0040162521003796

DOI: 10.1016/j.techfore.2021.120947

Access Statistics for this article

Technological Forecasting and Social Change is currently edited by Fred Phillips

More articles in Technological Forecasting and Social Change from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2022-09-03
Handle: RePEc:eee:tefoso:v:171:y:2021:i:c:s0040162521003796