Climate Policy
Climate Policy 5 (2006) 487–501
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Research Article
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A decision aid tool for equity issues analysis in emission permit allocations
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Kathleen Vaillancourt and Jean-Philippe Waaub
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Received December 2003
; received in revised form September 2005
; accepted December 2005
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Abstract
In the long term, the Kyoto Protocol will be insufficient to stabilize the greenhouse gas (GHG) concentrations in the atmosphere; quantified commitments will also be essential for major developing countries (and the US). International cooperation mechanisms, such as permit trading systems, can help achieve global economic efficiency. However, the initial allocation of emission permits raises many debates on equity. The main objective is to propose a decision aid tool for decision makers, which is capable of providing relevant information on various equitable permit allocation schemes and burden sharing. A dynamic multicriteria model is proposed to share the global quantity of permits among 15 regions, taking into account multiple definitions of equity and regional interests. The World-MARKAL energy model is used to compute the gross reduction cost (before permit exchanges) for each region. Afterward, it is possible to calculate their net reduction costs (after permit exchanges) according to different allocation schemes. A realistic simulation of the tool provides examples of results, i.e. ranges of permit allocations and net costs for each region. Finally, some recommendations are proposed to policy makers to design a decision process adapted to the global context of negotiations.
Keywords: Equity; Permit trading; Multicriteria decision aid; World-MARKAL; Energy model; Burden sharing
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