Modelling and assessing inter-regional trade Of CO2 emission reduction units

A cost-efficient way to allocate carbon dioxide (CO2) emission reductions among countries or regions is to harmonise their marginal reduction costs. This could be achieved by a market of emission reduction units (ERUs). To model such a market, we use a multi-regional MARKAL-MACRO model. lt gives insights into the consequences of co-ordinating CO2 abatement on regional energy systems and economics. As a numerical application, we assess the establishment of a market of ERUs among three European countries for curbing their CO2 emissions.