Analyses of Cost Effectiveness and Trading Price under Different Alliances of Countries with Carbon Emission Trading Scheme

Concern about global warming and climate change has led to the Kyoto Protocol commitment in 1997, which enforces the mandatory greenhouse gas, with as the major gas, emission reduction to the average of 5.2％ below 1990 level for industrialized in 2008 to 2012. Emission trading scheme is an abatement mechanism listed in the Kyoto Protocol. This instrument has been applied to the management of air pollutions, water resources, and many other natural resources. So as it is applied to the management of the emission. he purpose of this study is by applying the shadow pricing model to estimate the marginal abatement cost of with the measurement of the gain and loss of gross national product, and then to construct emission trading scenarios for three time points. The emission trading scenario is then applied to the countries of EU and Annex B countries of Kyoto Protocol in 2010. While move further to the year of 2020, emission trading among alliance of EU, ASEAN, USAN, APEC, or OECD is simulated. Emission trading of all countries for all the countries in the world is a scenario designed for the year of 2030. The total costs to achieve certain emission reduction target arranged by the international agreement via various alliance scenarios described above are then estimated and computed. Data for 107 countries for the year of 1990 to 2005 are collected for such purpose.he results have demonstrated that countries with higher level of economic development lead to have higher marginal abatement cost of , and these countries are the buyers in the trading market. According to the analysis of different trading scenarios, alliances of countries with high level of economic development will result in high trading prices. Moreover, the total costs with employing the emission trading scheme is lower than that without the emission trading scheme in any emission trading scenarios. Cost effectiveness does reveal from all scenarios designed above while the comparison is made between the emission trading scheme and direct reduction mechanism. The saving of the total emission reduction costs from the emission trading mechanisms is significant while the marginal abatement costs among the countries are essential.