The Effectiveness of the International Emissions Trading under the Paris Agreement

Under the Paris Agreement, parties would set and implement their own emissions targets as nationally determined contributions (NDCs) to tackle climate change risk. The international carbon emissions trading (ET) is expected to reduce global mitigation costs. Here we show the benefit of ET under both NDCs. The results show that the global welfare loss, which was measured based on estimated household consumption change in 2030, decreased by 80% (from 0.5 to 0.1%), as a consequence of achieving the NDCs through ET. These results indicate that ET is a valuable option for the international system, enabling the NDCs to be cost-effectively achieved and more ambitious targets