Assessing the Economic Implications of Global Mitigation Efforts and International Market Mechanism Based on a Global Computable General Equilibrium Analysis

doi:10.15266/KEREA.2024.33.4.439

All Issue

2024 Vol.33, Issue 4 Preview Page Next Page

Research Paper

Assessing the Economic Implications of Global Mitigation Efforts and International Market Mechanism Based on a Global Computable General Equilibrium Analysis 글로벌 CGE 모형을 활용한 글로벌 감축 노력하 국제시장메커니즘의 경제적 영향 분석: 문종우*‧김용건**‧김재완***
Jongwoo Moon*, Yong-Gun Kim**, and Jaewan Kim***; *한국환경연구원 탄소중립연구실 부연구위원, 제1저자(e-mail: jwmoon@kei.re.kr)
**연세대학교 국제학대학원 교수, 공저자(e-mail: ygkim@yonsei.ac.kr)
***연세대학교 언더우드국제대학 교수, 교신저자(e-mail: jaewankim@yonsei.ac.kr)

*Research Fellow, Climate and Air Quality Research Group, Korea Environment Institute, First Author (e-mail: jwmoon@kei.re.kr)
**Associate Professor, Graduate School of International Studies, Yonsei University, Coauthor (e-mail: ygkim@yonsei.ac.kr)
***Assistant Professor, Underwood International College, Yonsei University, Corresponding Author (e-mail: jaewankim@yonsei.ac.kr)

31 December 2024. pp. 439-470

PDF

Abstract

It is crucial to decouple economic growth from greenhouse gas emissions in economies to limit the global warming below 2-degree and achieve the Net Zero. Accordingly, there is an urgent call for assessing the economic impacts of the global mitigation efforts, especially for developing economies. This study applies a recursive dynamic computable general equilibrium model and assesses the economic impacts of the global mitigation efforts and the potential of the International Market Mechanism (IMM). Findings suggest that the economic impacts of the global mitigation efforts could be limited compared to their impacts on CO₂ emissions reductions. The changes in the real GDP relative to the BAU level differ by region and scenario. The changes in the real GDI are generally more favorable than those in real GDP across most regions, and the IMM brings some benefits in real GDI in all regions. This study acknowledges the potential of the IMM in achieving the global mitigation targets, with a particular emphasis on the likelihood of more substantial benefits for developed regions. This implies the need for financial supports, technology transfer, and capacity building for developing region to incentivize their participation in the IMM, with a more equitable sharing of the gains from carbon trading.

Keywords

Computable general equilibrium

Net Zero

International Market Mechanism

글로벌 온도 상승을 2도 이하로 제한하고 탄소중립을 달성하기 위해서는 국가의 경제성장 및 온실가스 배출 간 디커플링이 중요하다. 이에 전 세계적으로 감축 노력의 경제적 영향에 대한 분석 중요성이 커지고 있으며, 특히 가파르게 경제가 성장하고, 온실가스 배출량도 증가하고 있는 개발도상국에 대한 관심이 높아지고 있다. 본 연구는 축차동태 글로벌 CGE 모형을 활용하여 글로벌 감축 노력하 국제 탄소시장의 경제적 영향에 대해 살펴본다. 연구 결과에 따르면 글로벌 감축 노력에 따라 경제적인 부담이 발생할 수 있으나, 이산화탄소 배출량 감축 정도에 비해 제한적임을 나타낸다. BAU 대비 실질 GDP, GDI 변화는 지역과 시나리오에 따라 다르게 나타나며, 국제 탄소시장의 도입은 모든 지역의 실질 GDI에 어느정도 긍정적인 효과를 가져온다. 다만, 개발도상국 지역에 비해 선진국 지역에서 국제탄소시장 도입에 따른 경제적 혜택이 더 크게 나타날 수 있다. 보다 공평한 탄소 거래의 이익을 공유할 필요성과 함께 개발도상국의 국제탄소시장 참여를 높이기 위해 재정 지원, 기술 이전, 역량 강화 등이 필요함을 제시하고 있다.

키워드

연산가능일반균형

시장메커니즘

탄소중립

References

ADB, Developing Asia economies set to grow 5.2% this year amid global uncertainty, 6 April 2022. https://www.adb.org/news/developing-asia-economies-set-grow-5-2-year-amid-global-uncertainty 10.21642/JGEA.070201AF
Aguiar, A., M. Chepeliev, E. Corong, and D. van der Mensbrugghe, “The Global Trade Analysis Project (GTAP) Data Base: Version 11,” Journal of Global Economic Analysis, Vol. 7, No. 2, 2022.
Benson, E., J. Majkut, W. A. Reinsch, and F., Steinberg, “Analyzing the European Union’s Carbon Border Adjustment Mechanism,” CSIS Briefs, 2023. https://www.csis.org/analysis/analyzing-european-unions-carbon-border-adjustment-mechanism
Black, S., J. Chateau, F. Jaumotte, I. W. Parry, G. Schwerhoff, S. D. Thube, and K. Zhunussova, “Getting on Track to Net Zero: Accelerating a Global Just Transition in This Decade,” Staff Climate Notes, 2022(010), 2022.10.5089/9798400223877.066
Burfisher, M. E., Introduction to Computable General Equilibrium Models, 2nd ed., Cambridge, Cambridge University Press, 2017.10.1017/9781316450741
Calel, R., Colmer, J., Dechezleprêtre, A., and M.Glachant, “Do Carbon Offsets Offset Carbon?” American Economic Journal: Applied Economics (Forthcoming), 2024.
Cameron, A., and M., Baudry, “The case for carbon leakage and border adjustments: where do economists stand?” Environ Econ Policy Stud, Vol. 25, 2023, pp. 435~469.10.1007/s10018-023-00366-0
Cao, J., H. Dai, S. Li, C. Guo, M. Ho, W. Cai, J. He, H. Huang, J. Li, and Y. Liu, “The General Equilibrium Impacts of Carbon Tax Policy in China: A Multi-model Comparison,” Energy Economics, Vol. 99, 2021, 105284.10.1016/j.eneco.2021.105284
Chateau, J., F. Jaumotte, and G. Schwerhoff, “Economic and Environmental Benefits from International Cooperation on Climate Policies,” International Monetary Fund, 2022.10.5089/9781616358303.087
Château, J., R. Dellink, and E. Lanzi, “An Overview of the OECD ENV-linkages Model: Version 3,” OECD Environment Working Papers, OECD Publishing, 2014.
Climate Watch, Explore nationally determined contributions (NDCs) 2022. https://www.climatewatchdata.org/ndcs-explore
den Elzen, M. G., I. Dafnomilis, N. Forsell, P. Fragkos, K. Fragkiadakis, N. Höhne, T. Kuramochi, L. Nascimento, M. Roelfsema, and H. van Soest, “Updated Nationally Determined Contributions Collectively Raise Ambition Levels but Need Strengthening Further to Keep Paris Goals Within Reach,” Mitigation and Adaptation Strategies for Global Change, Vol. 27, No. 5, 2022.10.1007/s11027-022-10008-7 35755269 PMC9209833
Dissanayake, S., R. Mahadevan, and J. Asafu-Adjaye, “Evaluating the Efficiency of Carbon Emissions Policies in a Large Emitting Developing Country,” Energy Policy, Vol. 136, 2020.10.1016/j.enpol.2019.111080
IEA, Net Zero by 2050, International Energy Agency, 2021.
IPCC, “Global Warming of 1.5°C” An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty, Cambridge, Cambridge University Press, 2018.
Jung, T. Y., Y. G. Kim, and J. Moon, “The Impact of Demographic Changes on CO₂ Emission Profiles: Cases of East Asian Countries,” Sustainability, Vol. 13, No. 2, 2021.10.3390/su13020677
Kim, Y. G., J. Moon, and J. Kim, “Evaluating the Economic Impacts of Korea’s NDC (Nationally Determined Contributions) Implementation via Carbon Pricing: A Global Multiregional Computable General Equilibrium Analysis,” Journal of Climate Change Research, Vol. 14, No. 3, 2023a, pp. 253~275.10.15531/KSCCR.2023.14.3.253
Kim, Y. G., T. Y. Jung, J. Moon, J. Kim, and G. Estrada, “Costs and Benefits of Low Carbon Transition in Asia,” Asian Development Outlook 2023 Thematic Report Background Papers, Asian Development Bank, 2023b.
Lo, A. Y., and R. Cong, “Emission reduction targets and outcomes of the Clean Development Mechanism (2005–2020),” PLOS Climate, Vol. 1, No. 8, e0000046, 2022.10.1371/journal.pclm.0000046
Luderer, G., M. Leimbach, N. Bauer, E. Kriegler, L. Baumstark, C. Bertram, A. Giannousakis, J. Hilaire, D. Klein, A. Levesque, I. Mouratiadou, M. Pehl, R. Pietzcker, F. Piontek, N. Roming, A. Schultes, V. J. Schwanitz, and J. Strefler, Description of the REMIND model (version 1.6), Potsdam Institute for Climate Impact Research, 2015.10.2139/ssrn.2697070
Nachtigall, D., and J., Ellis, “The economic and environmental benefits from international co-ordination on carbon pricing: Insights from economic modelling studies,” OECD Environment Working Paper, No. 173, 2021.
NGFS Homepage, Origin and Purpose, https://www.ngfs.net/en
NGFS, NGFS Climate Scenarios for central banks and supervisors. Network for Greening the Financial System, 2021. https://www.ngfs.net/sites/default/files/media/2021/08/27/ngfs_climate_scenarios_phase2_june2021.pdf
NGFS, NGFS Scenarios for central banks and supervisors. Network for Greening the Financial System (September 2022), 2022. https://www.ngfs.net/sites/default/files/medias/documents/ngfs_climate_scenarios_for_central_banks_and_supervisors_.pdf.pdf
Nong, D., T. H. Nguyen, C. Wang, and Q. Van Khuc, “The Environmental and Economic Impact of the Emissions Trading Scheme (ETS) in Vietnam,” Energy Policy, Vol. 140, 2020.10.1016/j.enpol.2020.111362
Rubin, E. S., I. M. L. Azevedo, P. Jaramillo, and S. Yeh, “A review of learning rates for electricity supply technologies”, Energy Policy, Vol. 86, 2015, pp. 198~218.10.1016/j.enpol.2015.06.011
Silva Herran, D., and S. Fujimori, “Beyond Japanese NDC: Energy and Macroeconomic Transitions Towards 2050 in Emission Pathways with Multiple Ambition Levels,” Sustainability Science, Vol. 16, No. 2, 2021, pp. 489~501.10.1007/s11625-021-00930-1
UNFCCC, Adoption of the Paris Agreement. (Draft decision -/CP.21), Paris, France: UNFCCC, 2015.
UNFCCC, Nationally Determined Contribution Registry, UNFCCC, 2023. https://unfccc.int/NDCREG
Wang, H. L., Y. Y. Weng, and X. Z. Pan, “Comparison and Analysis of Mitigation Ambitions of Parties’ Updated Nationally Determined Contributions,” Advances in Climate Change Research, Vol. 14, No. 1, 2023, pp. 4~12.10.1016/j.accre.2022.10.001
Wang, M., and T., Kuusi, “Trade flows, carbon leakage, and the EU Emissions Trading System,” Energy Economics, Vol. 134, 107556, 2024.10.1016/j.eneco.2024.107556

Information

Publisher :Environmental and Resource Economics Review
Publisher(Ko) :자원 · 환경경제연구
Journal Title :자원·환경경제연구
Journal Title(Ko) :Environmental and Resource Economics Review
Volume : 33
No :4
Pages :439-470
DOI :https://doi.org/10.15266/KEREA.2024.33.4.439

[1] ADB, Developing Asia economies set to grow 5.2% this year amid global uncertainty, 6 April 2022. https://www.adb.org/news/developing-asia-economies-set-grow-5-2-year-amid-global-uncertainty 10.21642/JGEA.070201AF

[2] Aguiar, A., M. Chepeliev, E. Corong, and D. van der Mensbrugghe, “The Global Trade Analysis Project (GTAP) Data Base: Version 11,” Journal of Global Economic Analysis, Vol. 7, No. 2, 2022.

[3] Benson, E., J. Majkut, W. A. Reinsch, and F., Steinberg, “Analyzing the European Union’s Carbon Border Adjustment Mechanism,” CSIS Briefs, 2023. https://www.csis.org/analysis/analyzing-european-unions-carbon-border-adjustment-mechanism

[4] Black, S., J. Chateau, F. Jaumotte, I. W. Parry, G. Schwerhoff, S. D. Thube, and K. Zhunussova, “Getting on Track to Net Zero: Accelerating a Global Just Transition in This Decade,” Staff Climate Notes, 2022(010), 2022.10.5089/9798400223877.066

[5] Burfisher, M. E., Introduction to Computable General Equilibrium Models, 2nd ed., Cambridge, Cambridge University Press, 2017.10.1017/9781316450741

[6] Calel, R., Colmer, J., Dechezleprêtre, A., and M.Glachant, “Do Carbon Offsets Offset Carbon?” American Economic Journal: Applied Economics (Forthcoming), 2024.

[7] Cameron, A., and M., Baudry, “The case for carbon leakage and border adjustments: where do economists stand?” Environ Econ Policy Stud, Vol. 25, 2023, pp. 435~469.10.1007/s10018-023-00366-0

[8] Cao, J., H. Dai, S. Li, C. Guo, M. Ho, W. Cai, J. He, H. Huang, J. Li, and Y. Liu, “The General Equilibrium Impacts of Carbon Tax Policy in China: A Multi-model Comparison,” Energy Economics, Vol. 99, 2021, 105284.10.1016/j.eneco.2021.105284

[9] Chateau, J., F. Jaumotte, and G. Schwerhoff, “Economic and Environmental Benefits from International Cooperation on Climate Policies,” International Monetary Fund, 2022.10.5089/9781616358303.087

[10] Château, J., R. Dellink, and E. Lanzi, “An Overview of the OECD ENV-linkages Model: Version 3,” OECD Environment Working Papers, OECD Publishing, 2014.

[11] Climate Watch, Explore nationally determined contributions (NDCs) 2022. https://www.climatewatchdata.org/ndcs-explore

[12] den Elzen, M. G., I. Dafnomilis, N. Forsell, P. Fragkos, K. Fragkiadakis, N. Höhne, T. Kuramochi, L. Nascimento, M. Roelfsema, and H. van Soest, “Updated Nationally Determined Contributions Collectively Raise Ambition Levels but Need Strengthening Further to Keep Paris Goals Within Reach,” Mitigation and Adaptation Strategies for Global Change, Vol. 27, No. 5, 2022.10.1007/s11027-022-10008-7 35755269 PMC9209833

[13] Dissanayake, S., R. Mahadevan, and J. Asafu-Adjaye, “Evaluating the Efficiency of Carbon Emissions Policies in a Large Emitting Developing Country,” Energy Policy, Vol. 136, 2020.10.1016/j.enpol.2019.111080

[14] IEA, Net Zero by 2050, International Energy Agency, 2021.

[15] IPCC, “Global Warming of 1.5°C” An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty, Cambridge, Cambridge University Press, 2018.

[16] Jung, T. Y., Y. G. Kim, and J. Moon, “The Impact of Demographic Changes on CO₂ Emission Profiles: Cases of East Asian Countries,” Sustainability, Vol. 13, No. 2, 2021.10.3390/su13020677

[17] Kim, Y. G., J. Moon, and J. Kim, “Evaluating the Economic Impacts of Korea’s NDC (Nationally Determined Contributions) Implementation via Carbon Pricing: A Global Multiregional Computable General Equilibrium Analysis,” Journal of Climate Change Research, Vol. 14, No. 3, 2023a, pp. 253~275.10.15531/KSCCR.2023.14.3.253

[18] Kim, Y. G., T. Y. Jung, J. Moon, J. Kim, and G. Estrada, “Costs and Benefits of Low Carbon Transition in Asia,” Asian Development Outlook 2023 Thematic Report Background Papers, Asian Development Bank, 2023b.

[19] Lo, A. Y., and R. Cong, “Emission reduction targets and outcomes of the Clean Development Mechanism (2005–2020),” PLOS Climate, Vol. 1, No. 8, e0000046, 2022.10.1371/journal.pclm.0000046

[20] Luderer, G., M. Leimbach, N. Bauer, E. Kriegler, L. Baumstark, C. Bertram, A. Giannousakis, J. Hilaire, D. Klein, A. Levesque, I. Mouratiadou, M. Pehl, R. Pietzcker, F. Piontek, N. Roming, A. Schultes, V. J. Schwanitz, and J. Strefler, Description of the REMIND model (version 1.6), Potsdam Institute for Climate Impact Research, 2015.10.2139/ssrn.2697070

[21] Nachtigall, D., and J., Ellis, “The economic and environmental benefits from international co-ordination on carbon pricing: Insights from economic modelling studies,” OECD Environment Working Paper, No. 173, 2021.

[22] NGFS Homepage, Origin and Purpose, https://www.ngfs.net/en

[23] NGFS, NGFS Climate Scenarios for central banks and supervisors. Network for Greening the Financial System, 2021. https://www.ngfs.net/sites/default/files/media/2021/08/27/ngfs_climate_scenarios_phase2_june2021.pdf

[24] NGFS, NGFS Scenarios for central banks and supervisors. Network for Greening the Financial System (September 2022), 2022. https://www.ngfs.net/sites/default/files/medias/documents/ngfs_climate_scenarios_for_central_banks_and_supervisors_.pdf.pdf

[25] Nong, D., T. H. Nguyen, C. Wang, and Q. Van Khuc, “The Environmental and Economic Impact of the Emissions Trading Scheme (ETS) in Vietnam,” Energy Policy, Vol. 140, 2020.10.1016/j.enpol.2020.111362

[26] Rubin, E. S., I. M. L. Azevedo, P. Jaramillo, and S. Yeh, “A review of learning rates for electricity supply technologies”, Energy Policy, Vol. 86, 2015, pp. 198~218.10.1016/j.enpol.2015.06.011

[27] Silva Herran, D., and S. Fujimori, “Beyond Japanese NDC: Energy and Macroeconomic Transitions Towards 2050 in Emission Pathways with Multiple Ambition Levels,” Sustainability Science, Vol. 16, No. 2, 2021, pp. 489~501.10.1007/s11625-021-00930-1

[28] UNFCCC, Adoption of the Paris Agreement. (Draft decision -/CP.21), Paris, France: UNFCCC, 2015.

[29] UNFCCC, Nationally Determined Contribution Registry, UNFCCC, 2023. https://unfccc.int/NDCREG

[30] Wang, H. L., Y. Y. Weng, and X. Z. Pan, “Comparison and Analysis of Mitigation Ambitions of Parties’ Updated Nationally Determined Contributions,” Advances in Climate Change Research, Vol. 14, No. 1, 2023, pp. 4~12.10.1016/j.accre.2022.10.001

[31] Wang, M., and T., Kuusi, “Trade flows, carbon leakage, and the EU Emissions Trading System,” Energy Economics, Vol. 134, 107556, 2024.10.1016/j.eneco.2024.107556

자원·환경경제연구 ISSN:1229-9146(Print) Environmental and Resource Economics Review

All Issue