Carmen Bunzl - Universidad Pontificia Comillas

Chapter 2. Options for future climate change architectures 48
The option provides flexibility to newly entering countries, so that high costs
are avoided in case of unexpected developments. No-lose targets make
participation of many countries easier. It would mean a relatively minor
adjustment to the Kyoto system; could be seen as a support mechanism for
developing country action.
The environmental outcome is uncertain, environmental effectiveness would
not be guaranteed. It is unclear how companies of that country could trade
before the country has decided whether to comply or not, in order to avoid
overselling. No-lose targets are difficult to set to balance at the same time the
effort needed and the incentive to participate.
This type of targets would provide a good incentive for developing countries
to start participating with emission targets; economic efficiency would be
increased if they allow an increasing share of countries to participate in the
emission trading system that would not have otherwise. Developed countries
would support them if for some developing countries they are set at a level that
requires some domestic action; the environmental effectiveness depends on the
level of the target.
Some references that compare the approach to other approaches include
OECD/IEA 2002; Philibert et al., 2003; Den Elzen et al., 2003; Höhne et al., 2003;
Höhne et al., 2005.
2.1.1.4 Dual targets
Two targets are defined, a “selling target”, below which emission rights can
be sold, and a “buying target”, above which emission rights have to be bought
(see Philibert and Pershing, 2001; Kim and Baumert, 2002).
They aim to take into account the uncertainty in future emissions, providing
flexibility and avoiding high costs due to unexpected developments. It would
be a first step for newly participating countries.
Escuela Técnica Superior de Ingeniería ICAI Carmen Bunzl Boulet Junio 2008