Documents Gavard, Claire 2 results

"The Paris Agreement established a new mechanism by which a country can offset some of its emissions reductions in other countries. Its design is still under negotiation. While taking advantage of cheaper abatement opportunities enables efficiency gains, the impact on the price volatility in the emission trading schemes is unclear. We conduct an empirical analysis of the short-term impacts of these credits on the standard carbon markets, using the European Union experience with accepting credits for compliance in the second phase of its scheme. With vector-autoregressive models allowing regime changes at a priori unknown dates, we analyze the structural relationship between the prices of allowances and credits. Although one might expect that the allowance and credit markets influence one another, we find that, before November 2011, knowing the credit price variations helps to better predict the allowance price variations while, after November 2011, it is the opposite. We explain this by expectations and restrictions regarding credits. For the transmission of shocks and the impact on volatility, the influence is mainly from allowances to credits. The allowance price volatility explains between 56% and 72% of the credit volatility whereas the latter explains less than 2% of the former."

"In the framework of the Paris Agreement implementation, financial transfers remain a major point of negotiation for addressing equity concerns raised by the ambitious climate objectives. In complement to the theoretical, experimental and numerical studies that have examined the role of transfers in facilitating coalitions, we conduct the first empirical analysis of their impact on national carbon emission reductions. We build on the existing literature to develop a conceptual framework which models continuous national emission choices in the presence of financial transfers. We infer an equation of the impact of mitigation and adaptation finance on national emissions of recipient countries. We test the derived hypothesis using carbon emissions data of non-OECD countries in the last 20 years. We find that public adaptation and mitigation finance tend to increase emissions. Private mitigation finance seems to reduce them only after five years following the transfers."