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Impact of Technological Change on US Participation in the Kyoto Protocol

This research by Jeffrey Binggeli and Joachim Schleich explores the implications of U.S. participation in the Kyoto Protocol under varying scenarios of technological change in electricity generation from coal. The study utilizes the GTAP-E model to analyze four scenarios, highlighting the benefits of cleaner energy technologies and their influence on coal output, electricity generation, and welfare gains. Key findings reveal that significant technological advancements are essential for the U.S. to benefit from participating in the Kyoto Protocol, especially when considering the impact of "hot air" from Russia.

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Impact of Technological Change on US Participation in the Kyoto Protocol

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  1. Technology Change and US Participation in the Kyoto Protocol Jeffrey Binggeli and Joachim Schleich

  2. Research design based on GTAP-E Scenario 1: US participates in Kyoto Protocol (KP); no technological change (TC) in the electricity generation from coal quota for USA, full trading among all Annex 1; afall ("Coal, "Electricity", "USA") = 0; Scenario 2: US does not participate in KP; no TC no quota for USA, full trading among other Annex 1, afall ("Coal, "Electricity", "USA") = 0; Scenario 3: US does not participate in KP; TC no quota for USA, full trading among other Annex 1, afall ("Coal, "Electricity", "USA") = 10; Scenario 4: US participates in KP; TC quota for USA, full trading among all Annex 1, afall ("Coal, "Electricity", "USA") = 10;

  3. Selected results

  4. Conclusions • TC in electricity generation from coal in the US results in: • - a decrease in coal output (dominating technology effect) • a decrease in electricity generation in the US under Kyoto only • substitution of gas by coal • higher welfare gains to US, if US participates in KP (b/c of lower MAC) • TC in US is more beneficial to other countries, if US participates in KP • TC of 10% is not enough to make US participation in KP beneficial (from US perspective!) because of „Hot Air“ from Russia • Would need TC >> 50% to make US benefit from participation

  5. Backup: Coal demand (qf) • Equation INTDEMAND • # industry demands for intermediate inputs, including cgds # • (all,i,TRAD_COMM)(all,j,PROD_COMM)(all,r,REG) • !< Top level : demand for non-energy intermediate inputs >! • qf(i,j,r) = (D_NEGY(i,j,r)*D_VFA(i,j,r)* [ - af(i,j,r) + qo(j,r) - ao(j,r) • - ESUBT(j) * [pf(i,j,r) - af(i,j,r) - ps(j,r) • !HL debug: added! - ao(j,r)] ]) • ! level 3 : electricity ! • + (D_ELY(i,j,r)*D_VFA(i,j,r)* [- af(i,j,r) + qen(j,r) • - ELELY(j,r) * [pf(i,j,r) - af(i,j,r) - pen(j,r)] ]) • ! fourth level : coal ! • + (D_COAL(i,j,r)*D_VFA(i,j,r)* [- af(i,j,r) + qnel(j,r) • - ELCO(j,r) * [pf(i,j,r) - af(i,j,r) - pnel(j,r)] ]) • ! fifth level : remainding fossil fuels ! • + (D_OFF(i,j,r)*D_VFA(i,j,r)* [- af(i,j,r) + qncoal(j,r) • - ELFU(j,r) * [pf(i,j,r) - af(i,j,r) - pncoal(j,r)] ]);

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