The efficiency of international cooperation in mitigating climate change: analysis of joint implementation, the clean development mechanism and emission trading for the Federal Republic of Germany, the Russian Federation and Indonesia

This paper presents results of an analysis of the flexible instruments joint implementation, clean development mechanism and emission allowance trading with regard to achieving CO2 emission reduction targets economically. The analysis is based on the development and application of energy and material flow models for the considered countries, the Federal Republic of Germany as a host country with quantified emission reduction targets as well as the Russian Federation and Indonesia as potential partners. In this approach, a transparent and credible baseline for the calculation of emission credits is determined by developing consistent national emission reduction strategies for each country. The efficiency of international cooperation is subsequently analysed by linking the national models using a decomposition algorithm. Different assumptions with respect to the economic and political framework as well as regarding the impact of transaction costs associated with cooperation projects are considered. The model results show substantial potentials to limit emission reduction expenditures by multilateral cooperation. The most favourable types of cooperation projects for the considered countries are CO2 sequestration and power plant projects.