Climate Policy and the Kyoto Protocol Banking Provision. Does it Really Matter?

Title: Climate Policy and the Kyoto Protocol Banking Provision. Does it Really Matter?
Format: Conference
Publication Date: June 2005
Description: The extensive empirical literature on the costs of climate policy has not yet fully taken into account the possibility that regulators in various countries can optimally decide the amount of permits to be banked in the initial commitment periods for future use. Some studies exogenously assume the quantity of banked permits. And there are some theoretical analyses of banking in a multi-period permit market. However, there seems to be no empirical analysis which views banking as endogenous, considering its optimal dynamic path the result of regulators’ optimisation behaviour. This paper fills this gap by proposing an intertemporal optimisation model in which the amount of permits to be banked is one of the regulator’s decision variables. The goal is to analyse whether optimising the allocation of permits both horizontally and vertically actually changes the impact and costs of climate policy.
Ivan Allen College Contributors:
Related Departments:
  • School of Public Policy