Supply and demand structure for international offset permits under the Copenhagen Pledges

International carbon offsets from developing countries and emerging economies, such as permits from the clean development mechanism, could potentially play an important role for cost containment in domestic greenhouse gas regulation by industrialised countries. Assuming that major emitters such as the EU, the USA, Canada, Japan, Australia and New Zealand implement the “Copenhagen Pledges” and seek cost containment, the potential demand for offset permits is estimated to be 627–667 MtCO₂e per year. To describe the supply structure, marginal abatement cost curves for developing countries and emerging economies are derived. Developing countries and emerging economies could supply 627–667 MtCO₂e p.a. at costs of approximately EUR 10 (in 2004 EUR), neglecting transaction costs and country-specific risks. The highest potentials for the generation of carbon offsets are present in China, India and the rest of Asia.