The most advantageous partners for Australia to bilaterally link its emissions trading scheme

Author(s)
Nong, Duy
Siriwardana, Mahinda
Publication Date
2018
Abstract
The theory of marginal abatement cost (MAC) indicates that if a country has a high MAC, it should link its domestic emissions trading scheme (ETS) with a foreign country, which has either low MAC or low emissions reduction target. This strategy will maximise its economic benefits from the linkage compared to its domestic ETS. On the other hand, if a country has a low MAC, it would seek a partner, which has either a high MAC or a high emissions reduction target. Using a computable general equilibrium model, namely the extended GTAP-E model, we found that Australia could yield the greatest economic benefits by linking its ETS with India. China is the second best alternative for Australia to link its ETS, while the European Union is the most expensive option for Australia. Overall, the results support the contention that any bilateral linkage is always better for Australia than operating its own domestic ETS alone.
Citation
International Journal of Global Warming, 15(4), p. 371-391
ISSN
1758-2091
1758-2083
Link
Publisher
Inderscience Publishers
Title
The most advantageous partners for Australia to bilaterally link its emissions trading scheme
Type of document
Journal Article
Entity Type
Publication

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