Modeling Pathways to the Emission Trading System: Policy Recommendations for the UAE

This study leverages a meticulously developed model to explore the profound implications of Emission Trading Systems (ETS) on environmental and economic dimensions in the United Arab Emirates. This model delves into critical parameters, including emission caps and carbon prices, yielding transformative insights into environmental and economic avenues. The results reveal a direct correlation between the stringency of emission caps and emission reduction, particularly impactful in the power generation sector. Conversely, challenges faced by energy-intensive industries prompt discussions on innovative strategies such as alternative fuels and materials. The trading dynamics among participants, portrayed through a randomized auction process, revealed nuanced patterns and highlighted the challenges and opportunities within the emission trading system. This model provides a comprehensive understanding of the complexities inherent in the ETS and can serve as a strategic guide for policymakers and stakeholders, fostering a balanced approach between environmental and economic factors.