Abstract for: Assignment of Carbon Budgets at a Regional Level: The Pledges Model

PLEDGES (Pledge Limits Evaluation for Decarbonization: Goals of the EU27 Strategy) is a new simulation-based tool that attempts to distribute carbon budget across all Member States (MS) of the European Union (EU27). The model is based on system dynamics and features a radial structure that links the EU27 carbon budget to the budgets of individual MS. MS linking allows for the evaluation of carbon offset strategies in terms of commitment quotas allocated to each country in the event of a deviation from a defined cap policy. If a deviation occurs, each MS will have a new carbon quota to meet. Setting an initial exogenous price (P) for emissions quotas at EU27, a supply and demand dynamics of quotas determines the evolution of the quotas’ P. The supply and demand of quotas arise from the possibility for MSs to sell or purchase quotas, according to the cost of available abatement technologies/solutions implemented in the model by means the MS’ Abatement Cost (AC) curve designed in a look-up table. The PLEDGES tool is focused on EU27 level, but due to its relatively simple structures, can be easily adapted to simulate national carbon trading in other regions. Extended abstract on Researchgate.