Groupe d’études et de recherche en analyse des décisions

G-98-42

The Kyoto Protocol, Inter-Provincial Cooperation, and Energy Trading:

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In this article, we examine least-cost for reaching the greenhouse gas emission reductions specified by ghe Kyoto protocol for three Canadian provinces, Ontatio, Quebec, and Alberta. We analyze four scenarios, each specifying a certain level of cooperation (i.e. of trading of emission permits and of electricity) between the provinces. To effect these analyzes, four MARKAL models (one for each province and one for the US) are used in a multi-regional framework that endogenizes energy and permit exchange levels and prices. The US model is included in the analysis in order to correctly simulate the important natural gas market between Canada and the USA. The results indicate that both permit trading and electricity exchanges are capable of significantly reducing the direct costs of abiding by the Kyoto protocol. The paper also includes an analysis of the main policy issues faced by the three provinces while planning for a concerted effort to abate GHG emissions.

, 29 pages