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LINKING EMISSIONS TRADING SCHEMES: AN ECONOMIC IMPACT ASSESSMENT FOR EUROPE AND BRAZIL USING EPPA6 MODEL

Thais Diniz Oliveira[footnoteRef:1] [1: Centre for Environmental Research Innovation and Sustainability (CERIS), Institute of Technology Sligo, Ash Lane, Sligo.]

Angelo Costa Gurgel[footnoteRef:2] [2: Professor at São Paulo School of Economics, Fundação Getúlio Vargas - São Paulo (EESP/FGV), Brazil. Corresponding author email address: [email protected].]

Steve Tonry1

ABSTRACT:

Emissions Trading Schemes (ETS) are usually considered as a cost-effective method of achieving emissions abatement. Moreover, in order to provide a global signal for climate mitigation, linking of ETS has emerged as an important area for consideration. In practice, there are a limited number of operational ETS systems in the world, with the European Union Emissions Trading Scheme (EUETS) being the most established. This paper considers different scenarios for simulating a proposed Brazilian ETS (BRA ETS) and the establishment of a link with the EUETS by using a computable general equilibrium model, the EPPA6 as developed by MIT. We assume that some main design elements of the proposed BRA ETS are harmonised with the EUETS, such as emissions and sectoral coverage, as well as the cap nature. We also differentiate the level of stringency for the BRA ETS. The macroeconomic impacts of the national and linking scenarios are analysed in terms of GDP, welfare, sectoral emissions, total emissions and related carbon prices. Results indicate that linking the system would be preferable when Brazil adopts the Nationally Determined Contributions (NDC) targets. However, the potential benefits from linking the proposed BRA ETS are rather modest when one considers the complexity of implementation. It is suggested that this is as a consequence of the limited coverage of the proposed BRA ETS which represents a small relative share of total emissions in Brazil. As a result, the expected gains from linking are reduced. For the EUETS, linking to the proposed BRA ETS is not considered particularly advantageous. We finally conclude that further investigation of the proposed BRA ETS is required, particularly in the context of sectoral coverage and with respect to the NDC targets for Brazil and climate policies in other countries.

KEY WORDS: Linking, ETS, EPPA6, BRA ETS, EUETS

1. INTRODUCTION

In the climate policy arena, Emissions Trading Schemes (ETS)[footnoteRef:3] have become a prominent alternative for mitigating emissions associated with economic production. Mostly implemented by developed countries, this mechanism is now also being considered by developing countries[footnoteRef:4]. [3: This paper uses the terminology emissions trading schemes or cap-and-trade systems to designate systems of transferable emission allowances. These instruments are a combination of regulatory and economic approaches that put a price on emissions. It works by setting a binding cap (absolute or relative) on total emission and enabling allowances, i.e. the right to emit, to be traded among participants (countries or companies). ] [4: Currently, there is not any ongoing ETS implemented in developing countries. However, some of them are planning or at least investigating the potential for its adoption. China's ETS, for example, is expected to be launched in 2017. Mexico, Egypt and Vietnam have announced their plans to implement a national ETS that could be linked to others in the mid-term to long-term. ]

In the context of the Paris Agreement, provisions for carbon pricing are likely to become even more common in the post-2020 world. This is due to the fact that Article 6 allows for the use of international mechanisms to comply with Nationally Determined Contributions (NDCs). As a consequence, the more interest in implementing carbon trading mechanisms the more linkages are expected to emerge among participants. Under a bottom-up policy architecture, this mechanism will be a fundamental element of the global climate change policy framework in the future (DODA; TASCHINI, 2016; EUROPEAN COMMISSION, 2015).

There are few examples of active linkages to date. One example is the recent California-Quebec link (the Western Climate Initiative, WCI). The Regional Greenhouse Gas Initiative (RGGI) in the northeast of the USA is also a combination of Emissions Trading Schemes from different jurisdictions that are linked together. Another effective linkage is the European Emissions Trading Scheme (EU ETS) since it is formed by a group of nations that has agreed to recognise emissions permits mutually for common compliance. In addition to that, the EU ETS has just finished negotiating with Switzerland on linkage to the Swiss cap-and-trade scheme but the treaty has not entered into force yet.

Theoretical foundation for these empirical experiences are evidenced in the published literature. In general, it has highlighted opportunities and benefits from the use of market instruments for addressing climate change problems, particularly in relation to the linkage of carbon trading schemes.

Linkage is described as a multi-faceted policy decision that is envisaged to play an important role in future international climate policy architecture. The main argument for linking ETS systems is the overall emissions reductions across participating jurisdictions at a lower cost via interaction of regional carbon regulations. This ultimately may presumably lead to increased mitigation ambition and sustainable development.

This research provides an investigation into the economic impacts of linking the European Emissions Trading Scheme (EU ETS) - the largest and most consolidated scheme in the world - with an emerging non-EU scheme, a proposed Brazilian Emissions Trading Scheme (BRA ETS).

Several studies have been carried out in order to evaluate linking with the EU ETS, including the possibility of linking with non-EU schemes such as South Korea, China, Australia and California. This paper is conducted along the same lines but focuses on the Brazilian case. Among developing countries, Brazil has taken on a pioneering position when it comes to commitments to mitigate climate change. However, the movement towards the adoption of carbon pricing mechanisms is still at an incipient stage in Brazil. Discussions in this regard have increased significantly since the enactment of the National Plan for Climate Change Mitigation in 2009, which has considered economic instruments also as a means of achieving national targets by 2020.

In light of the Paris Agreement arrangements, Brazil should be encouraged to design a carbon trading scheme. Linking it to other systems would thereafter be an option. Under this perspective, we propose an economic evaluation of the feasibility and effectiveness of a linkage between the EU ETS and BRA ETS using the MIT CGE (Computational General Equilibrium) model, the EPPA6.

The study compares the impact from a national and linked perspective, highlighting differences with regard to relevant factors such as carbon price, stringency of targets, level of emissions, GDP and welfare. Simulations using the EPPA6 model show how the linkage would operate so that we can understand if a linkage policy would be the appropriate strategy for helping both jurisdictions to achieve a low carbon economy. For that purpose, section 2 discusses the literature on potential advantages and challenges of linking. Section 3 describes the modelling methodology and policy assumptions for the simulations. Section 4 exhibits the results and discusses the results. Finally, conclusions are highlighted in Section 5.

2. LITERATURE

The literature on the linkage of ETS schemes provides important insights associated with the regulatory, economic and environmental aspects of linking Emissions Trading Schemes. Mostly, the literature explores the advantages and disadvantages of linking cap-and-trade schemes, as referred to in publications by Flachsland et al. (2009), Jaffe and Stavins (2007), Tuerk et al.(2009), Haites et al. (2001), Metcalf and Weisbach (2010), Stavins (2015), Bodansky et al. (2015), PMR and ICAP (2016), Ranson and Stavins (2013), among others. In this section we briefly highlight some of the significant discussions on the theory of linking ETS systems.

2.1. Potential advantages and challenges

Linking ETS systems is considered to be a multifaceted political decision agreed by participants in order to achieve environmental, economic and political goals. It emerges in the form of agreements by separate policy systems in different political jurisdictions with the aim of maximising emission reduction efforts cost-effectively. For direct[footnoteRef:5] linkage to occur, there must be recognition of emission allowances for the purposes of compliance with the local cap. A bilateral link enables full alignment of one or more ETS systems so that allowances are mutually recognised. [5: Direct linkages may take place as a one-way, bilateral or multilateral connection (such as the EU ETS). In one-way linkage, trade is allowed in only one direction. Thus, one ETS can buy emissions allowances issued by the other but not vice versa. Indirect linkages involve the connection with third party credit systems such as the Clean Development Mechanism (CDM). We focus on direct bilateral linkages in this paper. ]

One of the expected outcomes from linkage is the reallocation of abatement effort between regulated entities which consider a wider range of available mitigation options. Kachi et al. (2015) highlight that efficiency gains from linking two ETS systems can be limited if abatement costs are similar since gain in efficiency depends on the heterogeneity of abatement alternatives. Therefore, the more diverse the market is, the more options for emissions abatement with different associated costs.

For a greater economic efficiency gain from allowance trading, the difference between the pre-link allowance price and the linked one plays an important role. Literature points out that the larger the difference in equilibrium allowance prices, the greater the potential gain in economic efficiency (TUERK et al., 2009; PMR; ICAP, 2016).

An ETS where the emission price is higher before the linkage, benefits from the agreement once it tends to buy emission allowances from the other jurisdiction, reducing its price of compliance. As a consequence of linking up markets, there is a full convergence of allowance prices through trade. Linking ETS schemes potentially increases market liquidity[footnoteRef:6] as it enlarges the market (RANSON; STAVINS, 2013). According to Jaffe et al. (2009) and Jotzo and Betz (2009), the largest economic benefit of a cap-and-trade scheme stems from the integration to other schemes. [6: More liquidity means that the linkage system has a reduced potential for affecting market prices through allowances trade. ]

In theory, to the extent to which liquidity increases, price stability in the systems also increases due to a reduction in price volatility caused by unexpected shocks. It ultimately contributes to the avoidance of market power and price manipulation from larger entities. Nevertheless, price volatility can be imported from other systems with the linkage (FLASCHSLAND; MARSCHINSKI; EDENHOFER, 2009).

An additional advantage of linkage is the potential for reducing the risk of emissions leakage, that is, incentives for polluting activities to move to jurisdictions where regulation of the climate is less stringent, especially if the linking jurisdictions are also trade partners. In this sense, competitiveness concerns that might exist between the covered industries before the agreement may be alleviated with the linkage.

Linkage can result in reduced emission abatement effort in installations or jurisdictions which are then required to purchase allowances, whereas those installations or jurisdictions selling allowances see a reduction in emissions. Therefore, mitigation can be achieved in a cost-effective way to the extent that emissions are reduced where they are least expensive (ANGER, 2008).

However, there are some critics in the literature such as Bodanski et al. (2014) and Stavins (2015) who point out that instead of achieving environmental effectiveness, linkage can undermine the environmental integrity of the combined system. For instance, if emissions flowing from one country to another and vice-versa are not properly accounted for, the linkage may result in double counting. Furthermore, some authors suggest that if jurisdictions design their own emission reduction targets in the linkage, allowance trading may even have a negative impact on the environment (e.g. if the cap is set too high) (HELM, 2003; CARBONE et al., 2009).

Aside from the aforementioned motives, there is also a strong political dimension associated with the linkage approach. The decision of linking up is itself a demonstration of commitment to global action on climate change. The European Union through the EU ETS offers a good example of leadership on the climate change policy arena. Based on the lessons from the EU ETS, many systems have been planned worldwide. The strategy of linking to existing or emerging systems also demonstrates Europe's ability to support global cooperation on climate change.

2.2. ETS Design Considerations for Linking

Harmonising the main features of both ETS signal a move towards a greater level of cooperation which is fundamental to achieve the goals across jurisdictions. However, it involves a significant effort from the systems to be linked for negotiating how to align the existing features. For example, the EU ETS and the Swiss ETS have now agreed to link up their systems after a long negotiation on the scope and coverage of the linkage, particularly regarding the inclusion of the aviation sector which was not previously included in the Swiss ETS.

There can also be administrative benefits from linking resulting from the sharing of knowledge regarding the design and operation of the system (STAVINS, 2015). For example, the Brazilian system here proposed would benefit from the linkage with the EUETS through the sharing of their practices in program administration especially because the Brazilian ETS has not been developed yet. Indeed, in this linkage it would be very likely that an alignment of features would simplify compliance and offer a reduced administrative cost for both jurisdictions.

Several factors determine the decision to link schemes such as geographic proximity, legal compatibility, potential distributional impacts and the respective ETS design elements. Rather than enhance environmental efficiency and effectiveness, differences in the design may impair the objectives of the scheme (STERK et al., 2006). Burtraw et al. (2013) and Kachi et al. (2015) discuss the differences in the design of schemes and which elements must be reconciled in order to link.

In relation to the scope[footnoteRef:7] and coverage, differences do not seem to pose a technical barrier to linking nor does it affect the environmental effectiveness of the linkage. Diversifying and amplifying the scope and coverage may lead to a greater cost-efficiency of overall mitigation effort because the availability and also diversity of abatement options is enhanced (BURTRAW et al., 2013; STERK et al., 2006). [7: The scope of the regulation also includes thresholds for coverage in the compliance program.]

In fact, a completely equivalent sector in two independently-designed schemes is rather unlikely because countries have differing emissions profiles and have to choose accordingly which sources to include (BARON; BYGRAVE, 2002; METCALF; WEISBACH, 2010). Under such circumstances, even though the link generally is viewed as a facilitator for the economic sectors and general public to accept the climate policy, competitiveness and political support concerns would emerge.

Issues can be avoided or at least diminished if the alignment of the aforementioned elements are negotiated ex ante as usually supported by the literature on linkage (BURTRAW et al., 2013; LAZARUS et al., 2015). For Pizer and Yates (2015) the greatest obstacle regarding harmonisation in advance of the linking is to overcome the design differentials reflecting domestic preferences and reconcile both schemes.

Despite not necessarily implicating a negative environmental effect, differentials of scope and coverage may generate distributional impacts if the linkage occurs among heterogeneous systems (METCALF; WEISBACH, 2010). For instance, if the linkage is negotiated between a broader base ETS and a narrower one, the former may not be willing to link since the latter tends to present higher abatement costs and hence gains more from the linkage. In other words, linking systems that differ in the sectors or gases included may create winners and losers. This presumably might lead to a setback of the linkage process. For developing countries aiming to design an ETS and link it to existing developed-world programs, this aspect has to be carefully negotiated.

Conversely to the scope and coverage, the cap and its stringency present another potential barrier to linkage according to the literature. These design features reflect the environmental ambitions and aggregate goals for any linked ETS system. Cap and stringency requirements will vary according to an economy's size, nature and level of development which are difficult to coordinate when linking schemes from different jurisdictions. Green et al. (2014) and Burtraw et al. (2013) consider this to be the most prominent barrier to linkage which is relevant to the functioning of the markets and the political economy of the ETS.

Firstly, the methodology on which the cap is based on plays an important role in the environmental effectiveness of the agreement. If one cap is based on absolute emissions whereas the other is based on intensity, the policy objectives may be undermined. Hence, although it is not technically impossible it is complex and likely to generate adverse economic, distributional and environmental effects (KACHI et al., 2015). As a result, harmonising before the effective linkage is rather fundamental (DEHSt 2013, BURTRAW et al. 2013, TUERK et al. 2009).

In terms of stringency, the literature observes a relationship between trade of emissions allowances and cap stringency. In general, along with environmental goals, an ETS is designed to obtain economic benefits. A country may choose its cap strategically in order to maximise potential gains from future trading (HELM, 2003).

This may occur because, as Zetterberg (2012) points out, allowances tend to flow from the less stringent (with lower marginal abatement cost) to the more stringent system, particularly if the pre-price gap is sufficiently large to begin with. Accordingly, with the lack of stringency harmonisation, linking may raise equity concerns and even prevent the linkage from materialising (GREEN et al., 2014). Therefore, to overcome those concerns Haites (2013) and Edenhofer et al. (2007) suggest linkage among schemes with comparable ambitions, climate policies and vision of medium and long-term emissions trends.

Others design features are regarded as critical for linking up ETS systems. Literature usually mentions price management (or cost-containment) and the recognition of offsets[footnoteRef:8] as the most problematic for the agreement (ZETTERBERG, 2012; KACHI et al. 2015; BURTRAW et al. 2013, STERK et al., 2009). These elements are designed to control the range of allowance prices. In addition to them, temporal flexibility through borrowing can also limit linking due to potential low environmental effectiveness when emissions allowances imports are unrestricted. [8: Offsets are international credits generated through two mechanisms: the implementation of Clean Development Mechanism (CDM) and Joint Implementation (JI) emission reduction projects outside the domestic economy. ]

Price support and price containment measures (price ceiling and price floor) have also been discussed in the literature due to their implications on both schemes. The price floor restricts the auction volume below a fixed price and the price ceiling sets a maximum allowance price. Once those measures exist in one ETS it propagates to the other. If before the linkage, price management measures differ among the schemes prices when the schemes are linked are also affected. In both cases, some issues may arise from the supply side of the allowances, essentially regarding allowance prices which can be difficult to align as they reflect the political objectives and priorities of the ETS programs (BURTRAW et al., 2013).

Offset provisions may also be critical to linkage and demand a degree of harmonisation (STERK et al., 2009; BURTRAW et al., 2013; ZETTERBERG, 2012). Linkage allows the existing offset credits in one ETS to be available in the linking partner ETS (at least indirectly). In this sense, the amount of offsets allowable for compliance purposes, the type of offset which is eligible, the stringency of standards and the potential for double counting summarises the main concerns outlined by Kachi et al. (2015). The EU ETS has so far permitted the use of offsets but it does not envisage the continuous use of this mechanism post 2020.

Conversely, there are design elements which do not represent a barrier to linkage such as the point of regulation and opt-in and opt-out provisions. Furthermore, some features can help facilitate the linkage if there is alignment, for example in Measurement, Reporting and Verification (MRV) systems, compliance periods, banking provisions and enforcement provisions (KACHI et al., 2015; BURTRAW et al., 2013).

Finally, the allocation method defined separately in the ETS prior to linkage is not technically an obstacle (TUERK et al., 2009; METCALF; WEISBACH, 2010). Competitiveness problems may arise from price changes as a result of linking and how it impacts on the ETS for example through the free distribution of allowances in one ETS compared to the auctioning of allowances in another (DEHSt 2013). However, the environmental effectiveness of the linkage should not be affected, even reducing the risk of leakage from the combined ETS.

Through this discussion regarding the advantages and potential challenges of linking ETS scheme we base our analysis on the linkage of a proposed Brazilian ETS and the EU ETS. Whilst on the one hand there is significant motivation to link domestic schemes, on the other hand some concerns have to be addressed before moving forward with such a proposal. Brazil and other developing countries have just recently committed to climate change mitigation with mandatory reduction pledges under the Paris Agreement.

For those countries, evaluating the appropriate design of the scheme's main features and deciding strategically the elements to be harmonised in the link is essential. This approach will help lead to political acceptability whilst avoiding negative distributional effects and ultimately, helping to achieve expected environmental and economic benefits.

2.3. Linking the EU ETS and a proposed Brazilian ETS

In addition to the growing academic debate on linkage, some studies have been carried out to measure the effects of integrating existing and under consideration ETS systems. The studies mostly focus on evaluating macroeconomic impacts - GDP, welfare and international trade - in order to provide directions for policymakers to consider the climate policy. Here we briefly summarise empirical studies where the linkage proposed involves the EU ETS.

EU ETS legislation allows for the integration of the scheme with compatible schemes at national or regional level subject to the following conditions[footnoteRef:9]: i) system compatibility which means the same basic environmental integrity and a tonne of CO2 in one system is a tonne in the other system, ii) the mandatory nature of the system, iii) the existence of an absolute cap on emissions. Other design elements need to be technically negotiated as was the case with the Swiss link to the EU ETS. These requirements can make negotiations with potential partners more difficult. [9: See EU official online documents available at: https://ec.europa.eu/clima/policies/ets_en. ]

To date, the EU ETS has only agreed to fully integrate to the Swiss ETS, which has not been launched yet. In fact, in 2012 there had been a plan to bilaterally integrate the proposed Australian ETS with the EU ETS. However, with the new government coming into power, the linkage was afterwards aborted. Jotzo e Betz (2009) evaluated the potential opportunities of this linkage proposal and concluded that it would face a number of obstacles ,in particular due to differences in environmental ambitions and the use of offsets.

The impacts of linking the EU ETS to the US system was evaluated in Chapman (2009)[footnoteRef:10], Zetterberg (2012)[footnoteRef:11] and Marschinski et al. (2012). The first two studies focused on qualitative analysis whereas the latter is based on a quantitative assessment of carbon leakage, competitiveness and welfare effects of linking the EU ETS to the US. Authors found that linking slightly influences the level of emissions abatement and competitiveness concerns are only partly addressed due to potential market distortions. [10: Chapman (2009) focused on the harmonisation aspects of the linkage. The author indicates that integrating the EU ETS to the US ETS require little or no harmonisation with respect to cost containment, allocation method, coverage, cap and price levels and offset use. In this context, there would be potential benefits from the linkage. ] [11: Zetterberg (2012) investigates the potential of linking the EU ETS to the California system in terms of relevant design features such as the cap and allocation method. ]

Marschinski et al. (2012) also modelled a proposed Chinese ETS system. The study revealed negative effects of sectoral linkage to China. In this case, linking across asymmetric sectors, i.e. when the respective output goods are imperfect substitutes (transport, heating, etc.) could reduce global emissions and be more acceptable for the EU. According to the analysis, both proposed linkage involve ambiguous welfare implications[footnoteRef:12]. The leakage effect from the modelled linkages depends on the industries covered in the scheme. [12: Changes in welfare can stem from positive gains from trade or terms of trade effects (depends on domestic trade specialisation). In Marschinski et al. (2012), potential gains of trade are ambiguous due to terms of trade effects. Flachsland et al. (2009) point out that integrating ETS may not be welfare-enhancing for all systems due to market distortions. ]

Another study modelling the impacts of linking the EU ETS to a proposed Chinese system is developed by Hübler et al.(2014). Results show there are small GDP and welfare benefits for China when linking to the EU ETS. Yet, it also slightly attenuates potential losses and enhance economic efficiency[footnoteRef:13]. [13: Welfare effects present the same ambiguity as in Marschinski et al.(2012). ]

There has also been an investigation on the linkage between South Korea and the EU ETS. Hawkings and Jegou (2014) explore the design of both systems which have some important similarities to facilitate linkage. According to the study, South Korea tend to gain with the linkage due to price convergence that would reduce its high carbon price. As a consequence, compliance costs for covered entities would drop. The EU ETS also would benefit with this linkage proposal since it would turn out to be a net seller of allowances to South Korea.

Some empirical evidences also consider multi-region integrated ETS in which the EU ETS takes part (XU et al., 2017; Anger; Böhringer, 2006, DELINK et al., 2010). Together, all the aforementioned investigations provide some common outcomes with interesting insights on linking to the EU ETS, for instance in relation to key features alignment. In this context, literature demonstrates that complete harmonisation is not fundamental for linkage to the EU ETS to succeed. However, evidences indicate that linking is not always beneficial for all participants.

To date, economic and environmental opportunities for linking the EU ETS to a Brazilian ETS or a Brazilian ETS to other existing and emerging schemes has not been explored yet. This is predominately due to the fact that, despite the growing debate on the relevance of introducing market-based instruments for climate mitigation, Brazil has not defined or even decided whether or not to implement a domestic ETS.

The Brazilian literature has so far mainly evaluated the stringency and achievability of pledges under international commitments on climate policy along with some modelling exercises of a Brazilian ETS based on the country’s own economic and environmental situation which is essential for an effective ETS policy (GURGEL, 2012; GURGEL; PALTSEV, 2014; DOMINGUES et al., 2014; HENRIQUES, 2010; LUCENA et al., 2015; RATHMANN, 2012; SILVA; GURGEL, 2012; WILLS; LEFVRE, 2012; FEIJÓ; PORTO JR, 2009; FRANÇA, 2012).

Summing up, results suggest a negative impact for the domestic ETS on GDP and welfare, particularly when all sectors are included in the policy. Domingues et al. (2014) found that when only energy intensive sectors join in the scheme the same decreasing trend on GDP is observed. This study concludes that a cap-and-trade mechanism in Brazil would reduce the costs of emissions mitigation in terms of GDP versus a command-and-control regulation due to economic efficiency gains.

In terms of emissions and carbon prices, simulations in Domingues et al. (2014) show a relatively similar level of emissions reductions with both policies and a corresponding carbon price of R$ 338 per tonne of CO2-eq in 2030. In Wills and Lefevre (2012), the related carbon price is slightly lower for the Brazilian ETS, a tonne of CO2 in this simulation costs R$200. In general, although resulting in some significant implications for the economy and income distribution, emissions reductions can be achieved with a domestic BRA ETS (GURGEL, 2012; GURGEL; SILVA, 2012; MAGALHÃES et al., 2011). From those studies, there seems also to be a consensus about the advantages of participating into a global or at least a wider scheme in order to pursue greater cost savings. Ultimately, those empirical evidences corroborate with theoretical literature on cap-and-trade schemes indicating the cost effectiveness of an ETS in Brazil.

Among existing shortcomings, we can mention the lack of studies investigating and estimating the feasibility and costs of linking a possible Brazilian ETS with other schemes, at both a national and sectoral level. This modelling exercise will contribute to the literature and provide recommendations that could facilitate a future linkage of a Brazilian scheme with the EU ETS.

3. MODEL DESCRIPTION: USING EPPA6 MODEL

For modelling the proposed bilateral link between the EU ETS and a proposed Brazilian ETS (BRA ETS) we use the Economic Projection and Policy Analysis (EPPA) model in its most recent version - EPPA6[footnoteRef:14] (CHEN et al., 2015). This is a computable general equilibrium model (CGE) developed by the MIT Joint Program on the Science and Policy of Global Change. EPPA6 was developed as a nonlinear complementarity problem in the General Algebraic Modelling System (GAMS) programming language (BROOKE et al., 1998), using the syntax of the MPSGE (Mathematical Programming System for General Equilibrium) algorithm developed by Rutherford (1999). [14: Free public version is available at: https://globalchange.mit.edu/research/research-tools/human-system-model/download .]

In this analysis, the use of EPPA 6 is appropriate since it can offer an economic response to our policy assumptions regarding the BRA ETS and its integration to the EU ETS. As a CGE model, it can represent the global production and consumption of various sectors of the national economy and the associated greenhouse gases emissions (GHG) being interconnected to other regions through international trade. EPPA6 is a dynamic recursive model, i.e. it is solved for a sequence of global market equilibrium considering "myopic" expectations of economic actors[footnoteRef:15], that provides a representation of the global economy (CHEN et al., 2015), which includes the regions here investigated (European Union and Brazil). [15: The assumption of myopic expectation in EPPA means that current period investment, savings, and consumption decisions are made on the basis of current period prices (PALTSEV et al., 2007). ]

This version is based on the social accounting matrixes from the Global Trade Analysis Project Version 8 (GTAP 8) database, with a benchmark year of 2007 (NARAYANAN et al., 2012). The level of aggregation is presented in Table 1. The data is aggregated into 18 regions, 14 sectors and 14 technologies[footnoteRef:16] for generating sustainable energy. It also incorporates additional data sources on energy use (IEA, 2012a), energy consumption (IEA, 2012b), CO2 emissions[footnoteRef:17] related to cement production (BODEN et al., 2010) and CO2 emissions related to land use change (RIAHI et al., 2007). [16: These backstop technologies consist of new or alternative technologies. ] [17: Others non-CO2 GHG emissions and urban pollutant emissions are accounted for in EPPA6 from EDGAR database Version 4.2 ((EUROPEAN COMMISSION, 2011), including: methane (CH4), perfluorocarbon (PFC), sulfur hexafluoride (SF6), and hydrofluorocarbon (HFC). ]

This model is able to project long run scenarios of world economic development and emissions along with the evaluation of the economic impact of proposed mitigation and energy policies, welfare and equity measures. EPPA6 is solved at 5 yearly intervals from 2010 to 2100.

Table 1: Regions, sectors and backstop technologies in EPPA6

REGIONS

SECTORS

TECHNOLOGIES

United States (USA)

Agriculture

First generation biofuels (bio-fg)

Canada (CAN)

Crops (CROP)

Second generation biofuels (bio-oil)

Mexico (MEX)

Livestock (LIVE)

Oil shale (synf-oil)

Japan (JPN)

Forestry (FORS)

Synthetic gas from coal (synf-gas)

Australia and New Zealand (ANZ)

Hydrogen (h2)

Europe (EUR)[footnoteRef:18] [18: The European Union (EU-27) plus Croatia, Norway, Switzerland, Iceland and Liechtenstein. ]

Non - Agriculture

Advanced nuclear (adv-nucl)

Eastern Europe (ROE)

Food production (FOOD)

IGCC w/ CCS (igcap)

Russia (RUS)

Services (SERV)

NGCC (ngcc)

East Asia (ASI)

Energy-intensive (EINT)

NGCC w/ CCS (ngcap)

South Korea (KOR)

Other industry (OTHR)

Wind (wind)

Indonesia (IDZ)

Industrial transportation (TRAN)

Bio-electricity (bioelec)

China (CHN)

Ownership of Dwellings (DWE)

Wind power combined with bio-electricity (windbio)

India (IND)

Energy supply

Wind power combined with gas-fired power (windgas)

Brazil (BRA)

Coal (COAL)

Solar generation (solar)

Africa (AFR)

Crude oil (OIL)

Middle East (MES)

Refined oil (ROIL)

Latin America (LAM)

Gas (GAS)

Rest of Asia (REA)

Electricity (ELEC)

Source: Based on Chen et al. ( 2015).

There are production functions for all sectors describing primary factors (capital, labour, natural resources), energy and intermediate inputs for producing goods and services in each of these periods. The level of consumption is modelled through the representative agent[footnoteRef:19] that seeks to maximise utility by choosing how to allocate its income with respect to the utilisation of goods and services (GURGEL; PALTSEV, 2014). The level of production of each economic sector results from the choice among primary factors and intermediate inputs in order to maximise profits, given the available technology and market prices. Statically, all markets reach a simultaneous equilibrium when zero-profit, market-clearing and income balance conditions are satisfied. Dynamically, EPPA6 is exogenously specified[footnoteRef:20] and endogenously determined. [19: EPPA6 accounts for three economic agents: consumers (households), producers and government. ] [20: Referred to Chen et al. (2015), exogenous factors are GDP projections for BAU growth, labor endowment growth, factor-augmented productivity growth, autonomous energy efficiency improvement (AEEI), and natural resource assets.]

EPPA6 emphasises demand and supply of energy, resources use and alternative technologies to fossil fuel consumption. As other CGE models, EPPA6 uses nested Constant Elasticity of Substitution (CES)[footnoteRef:21] functions or Leontieff and Cobb-Douglas functions[footnoteRef:22] with many inputs that enable specifying the preferences and production technologies in the model through elasticity of substitution, especially energy inputs[footnoteRef:23] (CHEN et al., 2015). [21: CES functions are constant return to scale (CRTS) indicating that doubled inputs result in a doubled output as well. ] [22: Leontief and Cobb-Douglas functions are CES particularities. ] [23: Elasticity of substitution indicates the level of substitutability between inputs under a given level of output when there are changes in the relative prices. ]

We use as example the CES production structures of electricity - fossil based generation - (ELEC) and energy-intensive sector (EINT), represented in Figure 1 and 2, respectively. In the proposed link of the BRA ETS and the EU ETS it is assumed that only ELEC and EINT will participate. The ELEC and EINT production structures demonstrate the aggregation of inputs in a nested fashion in order to capture technological generation and its changes.

Figure 1: Production structure of ELEC in EPPA6

Source: Based on Chen et al. ( 2015).

Figure 2: Production structure for EINT in EPPA6

Source: CHEN et al. (2015).

3.1. Climate policy scenarios and assumptions

The EPPA model has a variety of options for specifying climate and energy policies. Restrictions on emissions introduced by an ETS system can be solved by the model, which has the flexibility to represent these limitations according to regions, sectors and GHG selected.

In order to enhance climate coordination with the EU ETS, we assumed that the design features of BRA ETS take into account some elements from the EU ETS. For example, the model has been programmed to implement the BRA ETS on ELEC and EINT (electricity generation and energy intensive industries) sectors with absolute caps, to align as closely as possible with the EU ETS. To simplify, we opted for an absolute restriction only on CO2 emissions. For other regions, there is a domestic ETS mitigation policy[footnoteRef:24] in all policy scenarios which regulates all sectors in their domestic economy. [24: The national limits of CO2 for other regions are in line with their pledges under the Paris Agreement. ]

In this paper we simulate three policy scenarios for the 2020-2050 period as well as a reference scenario where no climate policy takes place: the NATIONAL scenario, the LINKING scenario and the LINKING SAME scenario. The main design features of the ETS in each scenario are outlined in Table 2 below.

Scenarios

Sectoral coverage

Emissions coverage

Cap

Emissions reductions Brazil

Emissions reductions Europe

I

National

ELEC and EINT

CO2 emissions

Absolute

based on Brazil's NDC

based on the EU ETS targets

III

Linking

ELEC and EINT

CO2 emissions

Absolute

based on Brazil's NDC


III

Linking same

ELEC and EINT

CO2 emissions

Absolute



Table 2: Description of modelled scenarios

Source: developed by the author.

The first policy scenario (NATIONAL) is based only on a domestic ETS climate policy, without any integration of carbon markets among regions. The second (LINKING) and third (LINKING SAME) policy scenarios represent an international tradable CO2 permit system for limited sectors, that is, it is imposed on the electricity generating sector and industrial energy intensive sector in both Europe and Brazil. This is with the view to mimic as closely as possible the sectors covered by the EUETS.

We opted for differentiating the level of Brazil's ambition when linking to the EU ETS. In the NATIONAL and LINKING scenarios, emissions reductions are modelled in accordance with Brazil's mitigation pledges (NDC) in the Paris Agreement, which consider all the sectors in the economy. This means that the sectoral emissions reductions assumed in the NATIONAL and LINKING scenarios are in line with the NDC for Brazil[footnoteRef:25]. In order to make BRA ETS more compatible, the LINKING SAME scenario also simulates the harmonisation of its cap stringency with the EU ETS emissions reduction targets. [25: It is worth noting that half of Brazilian total emissions come from deforestation so that most of abatement efforts is expected to come from that sector. Current policies for deforestations are based on command and control mechanisms. ]

In all policy scenarios we apply the EU ETS mitigation commitments by 2030 and estimate potential reductions by 2050 for Europe. However, given data availability in the model, the proposed emissions reduction was calculated according to 2010 levels rather than 2005 for both regions. The emissions allowances for ELEC and EINT sectors in each period of the EU ETS and BRA ETS are listed in Table 3 and 4 respectively.

Table 3: Emissions allowances for the EU ETS in the policy scenarios

NATIONAL, LINKING AND LINKING SAME

Period

Baseline emissions (mt)

Emissions allowances (mt)

Emissions reduced (mt)

Reduction (%)

2020

1245.53

875.82

369.71

21

2025

1259.20

776.77

482.43

32

2030

1299.13

709.95

589.18

43

2035

1322.88

654.78

668.09

48

2040

1353.44

610.59

742.85

53

2045

1372.42

423.32

949.10

68

2050

1396.67

365.43

1031.24

73

Source: Baseline emissions from EPPA6.

Table 4: Emissions allowances for BRA ETS in the policy scenarios

Period

Baseline emissions (mt)

NATIONAL and LINKING

LINKING SAME



Reduction (%)



Reduction (%)

2020

46.67

35.69

10.99

18

34.38

12.29

21

2025

53.46

27.37

26.10

37

29.54

23.92

32

2030

68.72

26.60

42.12

43

26.60

42.12

43

2035

77.77

29.41

48.36

45

27.80

49.97

48

2040

87.17

36.42

50.75

47

32.30

54.87

53

2045

97.01

39.66

57.35

49

24.89

72.13

68

2050

108.10

43.59

64.51

50

23.54

84.56

73

Source: Baseline emissions from EPPA6.

When discussing future linkages of ETS schemes, it is important to be clear about assumptions regarding the policy scenario in which these occur. In summary, the proposed link is designed based on absolute emissions cuts in the ELEC and EINT sectors, which are mandatory in nature. We will not include allocation method, price management and regulatory aspects for evaluating the prospects of linking BRA ETS and the EU ETS in the current discussion, which will be considered for further studies.

Among economic variables reported in EPPA6, this study analyses changes in GDP, welfare[footnoteRef:26], total and sectoral emissions as well as ex ante and ex post carbon price. The aim is to verify how the Brazilian and European economies are affected when sharing the same emissions trading market, as well as understanding the feasibility and effectiveness of this potential integration. [26: The welfare is denominated by the level of consumption of a region. ]

4. RESULTS AND DISCUSSIONS

EPPA6 baseline projections indicate an overall upward trend of CO2 emissions from ELEC and EINT in Brazil and Europe by 2050. Results from the policy simulations have shown that introducing a mechanism of pricing the carbon content associated with energy and industrial production in Brazil changes the level of emissions from those sectors at different levels depending on the emissions constraints being imposed. In comparison to the NATIONAL scenario, BRA ETS emits less in both linking scenarios only in 2020. From 2025 onwards, the level of emissions is lower in the NATIONAL scenario than in the LINKING and LINKING SAME scenarios, as depicted in Figure 3. The opposite trend is observed for the EU ETS where the ETS emissions are greater in the NATIONAL scenario than if participating in a bilateral linkage with Brazil. In terms of emissions, the LINKING SAME scenario provides the highest level of abatement for the covered sectors in the EU ETS.

Figure 3: BRA ETS and EU ETS CO2 emissions (million tonnes) in the NATIONAL, LINKING and LINKING SAME scenarios

Source: Results from EPPA6 model.

Emission mitigation in the ELEC and EINT sectors of the BRA ETS and the EU ETS are presented in Figure 4 and Figure 5, respectively. The results indicate that linking the BRA ETS to the EU ETS scheme provokes significant reductions in the ELEC sector while simultaneously EINT continue to increase emissions in Brazil. This occurs as a consequence of higher mitigation costs from energy-intensive industries that face less abatement options or technological alternatives available.

Figure 4: CO2 emissions (million tonnes) from ELEC sector in BRA ETS and EU ETS in the NATIONAL, LINKING and LINKING SAME scenarios


Figure 5: CO2 emissions (million tonnes) from the EINT sector in BRA ETS and EU ETS in the NATIONAL, LINKING and LINKING SAME scenarios


In other words, practically all the emissions mitigation efforts of setting up an ETS in Brazil at national level or in a linked system fall on the ELEC sector, which has more alternatives for substituting fossil fuel-based energy sources with renewable energy. It must be stated however that the Brazilian electricity mix generates significantly from hydroelectricity, which is considered to be a "clean" source of energy. Thus, limiting emissions from electricity generation and energy-intensive industries in Brazil via ETS makes the EINT sector a buyer of emissions allowances and the ELEC sector a seller.

Likewise, the effect of the modelled EU ETS in ELEC and EINT sectors is a decline in emissions from the ELEC and an increase in EINT sector emissions. Increasing the stringency of the BRA ETS only slightly affects the EU ETS, generating additional emissions reductions in the ELEC sector when both systems share the same level of abatement (LINKING SAME scenario). It is interesting to note that regardless of the policy scenario, in both regions there are only effective reductions from the linkage in the ELEC sector. These findings suggest a reallocation of emissions between the two regulated sectors.

Overall abatement costs of the climate policy for regulated sectors are affected by the carbon price, which is described in Figure 6 for the period analysed. The ex ante BRA ETS carbon price is cheaper than the EU ETS only in 2020, when it reaches US$8.4 per ton of CO2. After that, emissions allowances are more expensive in Brazil than in Europe in the NATIONAL scenario. Domestic ETS carbon prices range from US$8.4 to US$356 per ton CO2 in the BRA ETS whereas the EU ETS carbon price varies from US$10.6 to US$339 per ton CO2.

Figure 6: Carbon prices (US$ per ton CO2) in the NATIONAL, LINKING and LINKING SAME scenarios


As stated by the literature, one of the implications of linking BRA ETS and EU ETS is a total equalisation of carbon prices. In both LINKING scenarios this represents a greater cost per tonne of CO2 emitted by the ELEC and EINT sectors in the EU ETS and a reduction in allowance costs in the BRA ETS. Yet, the carbon price in Brazil at the NATIONAL scenario is particularly cheaper than the LINKING and LINKING SAME scenarios in 2020.

In this context, regulated sectors in BRA ETS export emission allowances in 2020 but import them from the EU ETS for compliance purpose from 2025 to 2050. As a result, trading of emissions allowances flow from the EU ETS to BRA ETS. If the emissions allowances were exported via auctioning, Europe would also benefit from the linkage by obtaining additional income. These findings demonstrate a reallocation of emissions among participants of the linked system - from the EU ETS to BRA ETS.

For measuring direct macroeconomic impacts and other general equilibrium effects of setting up a market for trading emissions allowances we use GDP and welfare as indicators. In the short run, results at Table 5 indicate that the climate policy induces higher GDP losses in Brazil relative to the baseline projections when a domestic ETS policy is implemented (NATIONAL scenario). However, there are small positive GDP effects of a national policy in the long term, approximately US$2 billion. On the other hand, negative welfare impacts on Brazil are the lowest in the NATIONAL scenario but the effects in the LINKING scenario is very similar. The LINKING scenario represents a decline in GDP by US$3.3 billion in 2030 for the BRA ETS but it converges to gains from 2040, adding approximately US$8.5 billion in 2050 for the Brazilian economy. The LINKING SAME scenario shows better results in some years but worse in others in terms of GDP and welfare. In short, GDP and welfare results are better under LINKING most of the years.

For Europe, a domestic ETS generates progressively higher GDP gains, accounting for U$188 billion and U$575 billion in 2025 and 2050, respectively. Although in the short term the NATIONAL system leads to welfare gains in the EU ETS, in the long run welfare reduces by approximately 0.1%. The same GDP and welfare trend is observed if the EU ETS participates in a linked system with BRA ETS with different levels of ambition. Under the LINKING scenario, GDP savings and welfare impacts on the EU ETS are very similar to the NATIONAL scenario. This suggest the adverse effects of the ETS on the European economy are slightly compensated, even though in the LINKING SAME scenario, GDP gains are instead lower and welfare losses greater than the other policy scenarios.

Table 5: Changes in GDP and Welfare (%) from the baseline scenario in the NATIONAL, LINKING and LINKING SAME scenarios

NATIONAL

Period

GDP BRA ETS

welfare BRA ETS

GDP EU ETS

welfare EU ETS

2020

0.01

0.01

0.27

0.07

2025

-0.19

-0.13

0.46

0.02

2030

-0.20

-0.08

0.78

-0.01

2035

-0.16

-0.05

0.94

-0.10

2040

-0.04

-0.09

1.27

-0.06

2045

0.05

-0.16

1.60

-0.08

2050

0.19

-0.19

1.72

-0.25

LINKING

LINKING SAME

Period

GDP BRA ETS

welfare BRA ETS

GDP EU ETS

welfare EU ETS

GDP BRA ETS

welfare BRA ETS

GDP EU ETS

welfare EU ETS

2020

0.01

0.00

0.27

0.07

-0.04

-0.01

0.15

0.00

2025

-0.07

-0.05

0.46

0.02

-0.11

-0.06

0.36

-0.03

2030

-0.13

-0.08

0.78

-0.01

-0.17

-0.09

0.66

-0.09

2035

-0.11

-0.06

0.94

-0.10

-0.11

-0.06

0.91

-0.11

2040

0.04

-0.08

1.27

-0.07

0.02

-0.12

1.23

-0.11

2045

0.17

-0.17

1.59

-0.08

-0.07

-0.48

1.30

-0.28

2050

0.17

-0.29

1.72

-0.25

0.00

-0.58

1.63

-0.26


These very modest negative impacts on GDP and welfare in either region is associated with the fact that only Brazil and Europe are restricting emissions in the ELEC and EINT sectors while the other regions of the model are reducing emissions in all economic sectors. There is, therefore, a positive competitiveness effect in the other sectors of Europe and Brazil vis-à-vis the rest of the world since these sectors are not subject to the same carbon price being imposed on the ELEC and EINT sectors. As outlined in Figure 7, this creates an overall upward trend in total emissions in Brazil and downward trend in Europe, suggesting a leakage effect from this sectoral ETS and the related linkage. Perhaps there would be negative impacts on Europe's GDP and also more pronounced negative effects on Brazil if the other regions did not commit to domestically reduce aggregate emissions or to cut emissions from ELEC and EINT sectors. This is something that will be considered for further studies.

To some extent, the ETS design modelled here is very limited in terms of contributions to total emissions, especially in Brazil. In relation to baseline projections, ELEC and EINT emissions are responsible for just 11% of total emissions in 2020. In the NATIONAL, LINKING and LINKING SAME scenarios, the representativeness of these sectors reduces to about 7.5% all over the period.

The scenarios modelled promote small reductions in aggregate emissions from Europe. The ELEC and EINT sectors in Europe are more fossil fuel-intensive than in Brazil. Together, ELEC and EINT accounted for approximately 34.5% of total emissions in the baseline scenario. In the NATIONAL, LINKING and LINKING SAME, they contribute to 32.3%, 32.4% and 28.3% of Europe's emissions respectively in 2020 but this proportion reduces to under 10% in the NATIONAL and LINKING scenarios and 7% in the LINKING SAME scenario by 2050.

Figure 7: Total CO2 emissions (million tonnes)* from BRA ETS and EU ETS in the NATIONAL, LINKING and LINKING SAME scenarios


* Discounted emissions from land use change.

In fact, these findings present some relevant contribution to the linkage discussions. It firstly indicates that a limited scope ETS system is not sufficient to solve the climate problem since countries pursuing this strategy continued to emit as much or even more than the baseline scenario. It also suggests that a bilateral link (LINKING scenario) between Brazil and Europe would be more economically favourable for both participants in terms of GDP but not so much in relation to welfare. The results point out that there are no significant advantages or disadvantages for Europe integrating a common ETS system with Brazil. Yet, the linkage brings some modest benefits to Brazil, which requires cost benefit analysis due to the complexity involved with the ETS implementation. In light of the limited coverage of the designed ETS, carbon emissions from the covered sectors do not represent a significant share of total emissions reductions in Brazil.

5. CONCLUSIONS

In theory, linking ETS systems is a cost-effective alternative to mitigate abatement costs which has been increasingly discussed in the international climate policy arena, including among developing countries. This empirical exercise investigated the potential of linking the EU ETS to a proposed BRA ETS. In order to facilitate harmonisation of the main design elements, the features of the proposed BRA ETS are in line with the EU ETS conditions. We modelled the same coverage for both ETS in the NATIONAL and LINKING scenarios but with different cap stringency for BRA ETS to aid discussion from an economic, political and distributional impact perspective.

Evidence from the EPPA6 simulations bring some conclusions on the linkage of ETS systems among regions with different characteristics. The first is related to the ETS coverage. Setting up an ETS system with a limited number of sectors for harmonisation purposes can produce limited absolute total emissions reductions in the regulated countries, especially if other regions implement more comprehensive domestic climate policy actions. In fact, the linkage involving sectoral emissions cap can provoke leakage by increasing CO2 emissions in the non-capped sectors in Brazil and Europe.

In this particular ETS design case in which ELEC and EINT sectors are regulated, linking the BRA ETS to the EU ETS would be more beneficial to Brazil than to Europe, albeit in a very modest form, due to higher use of renewable energy in the Brazilian energy matrix compared to Europe.

Linking of ETS systems is very institutional and political challenging and may not be accepted by economic sectors and general public, generating competitiveness and political support concerns. One potential form of overcoming these issues is by choosing comparable partners with similar ambitions and emissions trends, as suggested by Edenhofer et al. (2007) or including more sectors into the system to add market liquidity. It is worth noting that participants need to clarify the role of the linkage and make a balance in deciding the ETS strategy in order to achieve environmental, economic and political goals without compromising economic development. Ultimately, the linkage modelled with EPPA6 in this paper shows that integrating a proposed BRA ETS with the EU ETS might be an appropriate strategy for helping both jurisdictions achieve a low carbon economy but that further investigation of the proposed BRA ETS is required, particularly in the context of sectoral coverage. Future studies will also investigate the impact of the proposed BRA ETS in meeting Brazilian NDC targets as well as a determining the impact with respect to climate policies in other countries.

ACKNOWLEDGMENT

The authors acknowledge the financial support of the National Council for Scientific and Technological Development (CNPq - Brazil).

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EU ETS

Baseline201520202025203020352040204520501142.30839603572081245.53252376520621259.20047653310641299.13209756846981322.87873255166961353.4405198930361372.41840558734881396.6698382269437NATIONAL201520202025203020352040204520501142.30649186172921170.8005732708129994.76837606596621883.4098282889006754.04087778927294703.78907165898352645.0366525641715449.72217111933895LINKING201520202025203020352040204520501142.30649186172921171.1622122158494989.68021708274728878.33656160261148748.07498925302491696.24802990017702635.17809430324121442.34769586412932LINKING SAME201520202025203020352040204520501142.3064918617292986.22576507601582856.59675935105554738.76000794756817681.26033513192021624.54381127657575418.0183124527689350.28012439851722

BRA ETS


EU ETS


BRA ETS


EU ETS


BRA ETS


BRA ETS 2015202020252030203520402045205008.4056666584867212147.59134546498407144.83335789988632179.0650974568297230.55542461394242347.59942773858643356.03611008446495EU ETS20152020202520302035204020452050010.61188847938028754.69773788818035697.624338543396988134.8025526296953135.42641285692292154.50675761209737338.88135401895067LINKING20152020202520302035204020452050010.56849768528462355.83531270570568298.68895212708388134.86246515698807135.36808724640042157.87610340311838347.93958378473241LINKING SAME20152020202520302035204020452050041.69153520753681680.413561420377761128.01484308585498132.37578203269268139.21173626056378333.73448085456363375.01657207672127

EU ETS

Baseline201520202025203020352040204520503331.09100237193893612.64124069618453865.18014108695124121.60130623242284347.58324380820164572.21429333624754783.30956643087574993.8564811582228NATIONAL201520202025203020352040204520503331.09407534116423619.46545918159933789.28563318187344016.98598608029624204.76303336425464447.90549692968034712.45739952134324929.1883148285488LINKING 201520202025203020352040204520503331.09407534116423619.75849350448653785.58475987618164013.26626601712094199.496783172944441.08662015045234706.04505538820294935.3677611032754LINKING SAME201520202025203020352040204520503331.09407534116423481.41796122725283689.02367271342563914.70484368014474143.407055621224384.69004333835354591.29806273150464873.3211929564723

BRA ETS

Baseline20152020202520302035204020452050401.88616263154074419.43895657486235456.39667893847928519.35291555928279564.13297385615579606.83001912113559647.67932014592793690.80894420313462NATIONAL20152020202520302035204020452050401.88657407521214423.32446042644426449.79681571576776513.52975965218582566.17090808272542624.05634631960424681.14471217985511753.20615240764232LINKING 20152020202520302035204020452050401.88657407521214422.81699729543766458.52157023565195519.88057507524195572.87375062291551634.13823044943388697.14422231678361756.28501713191451LINKING SAME20152020202520302035204020452050401.88657407521214418.45948310379163455.11002916190574516.20227910601125572.16235519058489633.40536040539234683.6821692447844752.65149353034644

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