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

Barry Quinn; Ronan Gallagher; Timo Kuosmanen

doi:10.1016/j.eneco.2022.106338

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

Barry Quinn, Ronan Gallagher, Timo Kuosmanen

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19 Citations (Scopus)

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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.

Original language	English
Article number	106338
Journal	Energy Economics
Volume	118
Early online date	01 Nov 2022
DOIs	https://doi.org/10.1016/j.eneco.2022.106338
Publication status	Published - Feb 2023

Bibliographical note

Publisher Copyright:
© 2022

Keywords

Carbon emissions target setting
Climate finance
Convex quantile regression
Development economics
Environmental efficiency
Kyoto protocol
Marginal abatement costs
Sustainable finance

ASJC Scopus subject areas

Economics and Econometrics
General Energy

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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Lurking in the shadows: The impact of CO2 emissions target setting on carbon pricing in the Kyoto agreement period.
Copyright 2022 Elsevier. This manuscript is distributed under a Creative Commons Attribution-NonCommercial-NoDerivs License (https://creativecommons.org/licenses/by-nc-nd/4.0/), which permits distribution and reproduction for non-commercial purposes, provided the author and source are cited.
Accepted author manuscript, 1.22 MBLicence: CC BY-NC-ND

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Cite this

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title = "Lurking in the shadows: The impact of CO2 emissions target setting on carbon pricing in the Kyoto agreement period.",

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.",

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AB - 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.

KW - Carbon emissions target setting

KW - Climate finance

KW - Convex quantile regression

KW - Development economics

KW - Environmental efficiency

KW - Kyoto protocol

KW - Marginal abatement costs

KW - Sustainable finance

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

Abstract

Bibliographical note

Keywords

ASJC Scopus subject areas

UN SDGs

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