Porporino, Orenzo 
ORCID: https://orcid.org/0009-0005-4320-1448
(2024)
Exploring the Potential Trade-Offs of Canada’s Participation in a Global Emissions Trading System Using A Multi-Sector, Multi-Region CGE Model.
Masters thesis, Concordia University.
![[thumbnail of Porporino_MA_S2025.pdf]](https://spectrum.library.concordia.ca/style/images/fileicons/text.png) |
Text (application/pdf)
4MBPorporino_MA_S2025.pdf - Accepted Version Restricted to Repository staff only until 1 December 2026. Available under License Spectrum Terms of Access. |
Abstract
Like many nations, Canada faces challenges stemming from climate change. Therefore, it aims to reduce overall emissions, measured in megatonnes of CO2 equivalents (MTCO2eq), by 40-45%, relative to 2005 levels by 2030 and achieve net zero emissions by 2050. This paper introduces Environment and Climate Change Canada’s Multi-Sector, Multi-Region (EC-MSMR) recursive dynamic computable general equilibrium (CGE) model, capable of evaluating multiple pathways to reaching emissions-based targets using market-based policies. CGE models capture direct and indirect effects in response to a policy change, making them excellent tools for evaluating economy-wide environmental policies. The EC-MSMR model delivers granular insights into Canada’s emissions and economic activity on the global stage by incorporating data from seventeen aggregated regions and twenty-three commodity-producing sectors, along with three final demand sectors: Consumption, Investment, and Government Spending. With this model, this paper analyzes Canada’s participation in a global Emissions Trading System (ETS) with perfect commitment versus a domestic carbon pricing schedule that adjusts itself to the shadow price that achieves the 2030 target. Results indicate that participating in a global ETS provides slightly greater economic growth and welfare while reducing reliance on fossil fuels to domestic carbon pricing alone. Although both policy experiments meet Canada’s 2030 target, both scenarios experience lower GDP and welfare outcomes than a baseline consisting solely of existing policies and no additional action.
| Divisions: | Concordia University > Faculty of Arts and Science > Economics |
|---|---|
| Item Type: | Thesis (Masters) |
| Authors: | Porporino, Orenzo |
| Institution: | Concordia University |
| Degree Name: | M.A. |
| Program: | Economics |
| Date: | December 2024 |
| Thesis Supervisor(s): | Koreshkova, Tatyana |
| Keywords: | Economics, Computable General Equilibrium, CGE, Modelling, Emissions Trading, ETS, Cap and Trade, Carbon Pricing |
| ID Code: | 994868 |
| Deposited By: | ORENZO PORPORINO |
| Deposited On: | 17 Jun 2025 17:07 |
| Last Modified: | 17 Jun 2025 17:07 |
References:
Acemoglu, Daron, Ufuk Akcigit, Douglas Hanley, and William Kerr. 2016. “Transition to cleantechnology.” Journal of political economy 124 (1): 52–104.
Aguiar, Angel, Maksym Chepeliev, Erwin L Corong, Robert McDougall, and Dominique Van Der
Mensbrugghe. 2019. “The GTAP data base: version 10.” Journal of global economic analysis
4 (1): 1–27.
Ambasta, Anshula, and Jonathan J Buonocore. 2018. “Carbon pricing: a win-win environmental
and public health policy.” Canadian Journal of Public Health 109:779–781.
Barrett, Scott. 1994. “Self-enforcing international environmental agreements.” Oxford economic
papers 46 (Supplement 1): 878–894.
Bayer, P., and M. Aklin. 2020. “The European Union Emissions Trading System reduced CO2
emissions despite low prices.” Proceedings of the National Academy of Sciences of the United
States of America 117:8804 –8812.
Carbone, Jared C, Linda TM Bui, Don Fullerton, Sergey Paltsev, and Ian Sue Wing. 2022. “When
and how to use economy-wide models for environmental policy analysis.” Annual review of
resource economics 14:447–465.
Carbone, Jared C, Carsten Helm, and Thomas F Rutherford. 2009. “The case for international
emission trade in the absence of cooperative climate policy.” Journal of environmental economics and management 58 (3): 266–280.
Dell, M., B. F. Jones, and B. A. Olken. 2012. “Temperature shocks and economic growth: evidence
from the last half century.” American Economic Journal: Macroeconomics 4 (3): 66–95.
Doda, Baran, and Luca Taschini. 2017. “Carbon dating: When is it beneficial to link ETSs?” Journal of the Association of Environmental and Resource Economists 4 (3): 701–730.
Eboli, Fabio, Ramiro Parrado, and Roberto Roson. 2010. “Climate-change feedback on economic
growth: explorations with a dynamic general equilibrium model.” Environment and Development Economics 15 (5): 515–533.
EIA-IEO. 2021. Annual Energy Outlook 2021. Technical report. U.S. Energy Information Administration - EIA - Independent Statistics and Analysis.
Environment and Climate Change Canada. 2023. 2023 Progress Report on the 2030 Emissions
Reduction Plan. Government of Canada Publications.
Environment and Climate Change Canada. 2022a. “2030 Emissions Reduction Plan–Canada’s
Next Steps for Clean Air and a Strong Economy.” Government of Canada.
. 2021. “Canada’s Enhanced Nationally Determined Contribution.” UNFCCC.
. 2022b. “Exploring Approaches for Canada’s Transition to Net-Zero Emissions.” UNFCCC.
Ghosh, Madanmohan, Deming Luo, Muhammad Shahid Siddiqui, and Yunfa Zhu. 2012. “Border tax adjustments in the climate policy context: CO2 versus broad-based GHG emission
targeting.” Energy Economics 34:S154–S167.
Government of Canada. 2023. Bill C-234: An Act to amend the Greenhouse Gas Pollution Pricing
Act.
Hyman, Robert C, John M Reilly, Mustafa H Babiker, Ardoin De Masin, and Henry D Jacoby.
2003. “Modeling non-CO2 greenhouse gas abatement.” Environmental Modeling & Assessment 8:175–186.
Jehle, Geoffrey A., and Philip J. Reny. 2010. Advanced Microeconomic Theory. 3rd ed. Pearson
Prentice Hall.
Kahn, Matthew E, Kamiar Mohaddes, Ryan NC Ng, M Hashem Pesaran, Mehdi Raissi, and JuiChung Yang. 2021. “Long-term macroeconomic effects of climate change: A cross-country
analysis.” Energy Economics 104:105624.
Keith, David W, Geoffrey Holmes, David St Angelo, and Kenton Heidel. 2018. “A process for
capturing CO2 from the atmosphere.” Joule 2 (8): 1573–1594.
Larsen, John. 2010. Emissions Reductions Under Pollution Reduction Proposals in the 111th U.S.
Congress.
Lau, Morten I, Andreas Pahlke, and Thomas F Rutherford. 2002. “Approximating infinite-horizon
models in a complementarity format: A primer in dynamic general equilibrium analysis.”
Journal of Economic Dynamics and Control 26 (4): 577–609.
Mathiesen, Lars. 1985a. “Computation of economic equilibria by a sequence of linear complementarity problems.” Economic equilibrium: model formulation and solution, 144–162.
. 1985b. “Computational experience in solving equilibrium models by a sequence of linear
complementarity problems.” Operations research 33 (6): 1225–1250.
Narassimhan, Easwaran, Kelly S Gallagher, Stefan Koester, and Julio Rivera Alejo. 2018. “Carbon
pricing in practice: A review of existing emissions trading systems.” Climate Policy 18 (8):
967–991.
Okagawa, Azusa, and BAN Kanemi. 2008. Estimation of substitution elasticities for CGE models.
Technical report.
Paris Agreement. 2015. The Paris Agreement.
Perroni, Carlo, and Thomas F Rutherford. 1995. “Regular flexibility of nested CES functions.”
European Economic Review 39 (2): 335–343.
Rutherford, Thomas F. 1999. “Applied general equilibrium modeling with MPSGE as a GAMS
subsystem: An overview of the modeling framework and syntax.” Computational economics
14:1–46.
Rutherford, Thomas F. 2002. “Lecture Notes on Constant Elasticity Functions.” University of Colorado.
Sawyer, Dave, Anna Kanduth, Bradford Griffin, Franziska Forg, Ross Linden-Fraser, and Arthur ¨
Zhang. 2023. “Independent Assessment of Canada’s 2023 Emissions Reduction Plan Progress
Report.”
Stern, N. 2008. “The economics of climate change.” American Economic Review 98 (2): 1–37.
United Nations Framework Convention on Climate Change. 2024. Nationally Determined Contributions (NDCs) Registry.
Vennemo, Haakon. 1997. “A dynamic applied general equilibrium model with environmental feedbacks.” Economic modelling 14 (1): 99–154.
Weitzman, Martin L, and Bjart Holtsmark. 2018. On the effects of linking voluntary cap-and-trade
systems for CO2 emissions. Technical report. National Bureau of Economic Research.
Zhu, Yunfa, Madanmohan Ghosh, Deming Luo, Nick Macaluso, and Jacob Rattray. 2018. “Revenue recycling and cost effective GHG abatement: An exploratory analysis using a global
multi-sector multi-region CGE model.” Climate Change Economics 9 (01): 1840009.
Repository Staff Only: item control page
Download Statistics
Download Statistics