Abatement Strategies and the Cost of Environmental Regulation: Emission Standards on the European Car Market

This article studies the introduction of an EU-wide emission standard on the automobile market. Using panel data from 1998 to 2011, I find that firms decreased emission ratings by 14%. Firms use technology adoption and gaming of emission tests to decrease emissions, rather than shifting the sales mix or downsizing. I find that the standard missed its emission target, and from estimating a structural model, I find that the standard was not welfare improving. The political environment in the EU shaped the design and weak enforcement and resulted in firms’ choices for abatement by technology adoption and gaming.

Controlling CO2 emissions for each area in a region: the case of Japan

Background Global warming is the most serious problem we face today. Each country is expected to ensure international cooperation toward minimizing risk. To evaluate the countermeasures, many researchers have developed integrated assessment models (IAMs). Then, how can each country achieve its emission quota? This study proposes models that analyze the economic impact of global warming in a region based on the results obtained by the global model. By using these suggested models, we perform a comparative analysis on three policy cases: a different regulations case, a unified regulation case, and an output redistribution case. Results We analyzed Japan as one of the case studies and found that more developed areas should implement stricter regulations in all scenarios. In addition, the case of applying different regulations by area (in a region) is not always preferable to using unified regulations in the region. Alternatively, the output gap between the output redistribution case and the different regulations case is much higher than the gap between the unified regulation case and the different regulations case. In all scenarios, the present values of the output of the output redistribution case are also higher than the other cases. Conclusions The different regulations case and the unified regulation case are based on the model without capital transfer between areas, whereas the output redistribution case is based on the model with free capital transfer between areas. Although both models are extreme situations, the regions close to the without capital transfer situation possibly have an incentive to use the different regulations policy, depending on the emission target. The regions close to the situation with free capital transfer would probably prefer unified regulation.

Demographic change and climate change

This paper uses a continuous-time overlapping-generations model with endogenous growth and pollution accumulation over time to study the link between longevity and global warming. It is seen that increasing longevity accelerates climate change in a business-as-usual scenario without climate policy. If a binding emission target is set exogenously and implemented via a cap-and-trade system, the price of emission permits is increasing in longevity. Longevity has no effect on the optimal solution of the climate problem if perfect intergenerational transfers are feasible. If these transfers are absent, the impact of longevity is ambiguous.