PermitTrading by RahelMA · Pull Request #2285 · remindmodel/remind

RahelMA · 2026-02-12T09:57:08Z

Purpose of this PR

This PR tries to reactivate permit trading ;)

With the new realization TradingOnRef in 41_emicapregi, a reference run is used to allocate emission allowances for each region and timestep.

Overall, there are three different types of permit trading:

cm_permittradescen  = 1;         !! def = 1  !! regexp = [1-3]

(1): full permit trade (no restrictions)
(2): no permit trade (only domestic mitigation)
(3): limited trade (certain percentage of regional allowances)
for limited trade use cm_pemittradefinalyr to set the final year until permit trading is allowed
with cm_pemittraderatio set the percentage of allowed trade

In these exemplary runs, I used 20% of permit allocation until 2060 and 2100:

Please note that I increased the surplus tolerance to also allow more aggressive trade patters like full trading or with a very short time frame. Honestly, it's hard for me to judge if it is a reasonable scale:

p80_surplusMaxTolerance("perm") = 2* 300 * 12/44 / 1000; to p80_surplusMaxTolerance("perm") = 3* 300 * 12/44 / 1000;

@LaviniaBaumstark what do you think?

Type of change

Indicate the items relevant for your PR by replacing ◻️ with ☑️.
Do not delete any lines. This makes it easier to understand which areas are affected by your changes and which are not.

Parts concerned

☑️ GAMS Code
◻️ R-scripts
◻️ Documentation (GAMS incode documentation, comments, tutorials)
◻️ Input data / CES parameters
◻️ Tests, CI/CD (continuous integration/deployment)
☑️ Configuration (switches in main.gms, default.cfg, and scenario_config*.csv files)
◻️ Other (please give a description)

Impact

◻️ Bug fix
◻️ Refactoring
◻️ New feature
◻️ Change of parameter values or input data (including CES parameters)
☑️ Minor change (default scenarios show only small differences)
◻️ Fundamental change of results of default scenarios

Checklist

Do not delete any line. Leave unfinished elements unchecked so others know how far along you are.
In the end all checkboxes must be ticked before you can merge.

I executed the automated model tests (make test) after my final commit and all tests pass (FAIL 0)
I adjusted the reporting in remind2 if and where it was needed
I adjusted the madrat packages (mrremind and other packages involved) for input data generation if and where it was needed
My code follows the coding etiquette
I explained my changes within the PR, particularly in hard-to-understand areas
I checked that the in-code documentation is up-to-date
I adjusted forbiddenColumnNames in readCheckScenarioConfig.R in case the PR leads to deprecated switches
I updated the CHANGELOG.md correctly (added, changed, fixed, removed, input data/calibration)

Further information (optional)

Runs with these changes are here:
/p/tmp/rahelma/Committed/Equity/permTrading
Comparison of results (what changes by this PR?):
/p/tmp/rahelma/Committed/Equity/permTrading/compScen-tradingScen-2026-02-10_20.52.00-H12.pdf

lecfab

Thanks for all the dusting and testing that it takes to revive the permit trading!
I left comments here and there, mainly about aesthetics and documentation.

lecfab · 2026-02-12T14:32:49Z

main.gms

+  cm_pemittraderatio        "Percentage of restricted permit trading"
+;
+  cm_pemittraderatio  = 0.2;         !! def = 0.2  
 *'


I find the existing names of "permit trades scenarios" a little confusing, in the sense that we would always need to refer to the main.gms to understand what they mean. The big undertaking of reactivating permit trade is possibly a good opportunity to simplify that. Two suggestions (either/or):

simpler one: rename the "no permit trade" to cm_permittradescen = 0

nicer one: remove cm_permittradescen, because it is redundant with cm_pemittraderatio (0% for no trade, 100% for full trade, and whatever in-between for limited trade)

In general, I agree! The switch cm_permittradescen was already there and is used in other 41 realizations like PerCapitaConvergence and AbilityToPay. Changing this would require some refactoring there, and currently I don't fully understand the other realizations.

For not having to look into the main.gms I copied it also into the realization

Ah understood thanks! Would this still make sense to ignore to ignore cm_permittradescen in your new realisation?

Also the new switch names will probably need to be changed in the other realisations too?

modules/80_optimization/nash/preloop.gms

lecfab · 2026-02-12T14:55:41Z

modules/41_emicapregi/TradingOnRef/realization.gms

+*' *  (2): no permit trade (only domestic mitigation)
+*' *  (3): limited trade (certain percentage of regional allowances)
+*'         for limited trade use cm_pemittradefinalyr   to set the final year until permit trading is allowed
+*'         with cm_pemittraderatio set the percentage of allowed trade


see comment for main.gms
https://github.com/remindmodel/remind/pull/2285/changes#r2799231804

Here the switch names that have been updated in main.gms could be updated as well (and everywhere else where they appear =))

modules/41_emicapregi/TradingOnRef/bounds.gms

modules/41_emicapregi/TradingOnRef/datainput.gms

benjaminpeeters

Hey @RahelMA
Thanks for the PR.

Added just a few comments from my side, notably on the changes for etaSL.
Not sure this is useful. Hope it is.

I just have another (small) question:
why cm_pemittradefinalyr and cm_pemittraderatio instead of cm_permittradefinalyr and cm_permittraderatio (with an 'r' in 'permit')?

benjaminpeeters · 2026-02-13T16:07:23Z

modules/80_optimization/nash/datainput.gms

 p80_etaST(tradePe) = 0.3;
 p80_etaST("good") = 0.25;
-p80_etaST("perm") = 0.3;
+p80_etaST("perm") = 0.8;


As far as I understand these p.._etaST/LT haven't been changed since the codebase was open-sourced in December 2019 with the explicit indication "These parameters are pretty sensitive" :)
The permit market also does not "benefit" from the adaptive convergence boosting mechanism (the 4x/8x/16x escalation after iterations 15/20/25) -- only applies to tradePe and good if I'm not wrong (see https://github.com/remindmodel/remind/blob/develop/modules/80_optimization/nash/postsolve.gms#L139C1-L173C19).

I wonder:

what motivate to such a big shift (from 0.3 to 0.8)?

why p80_etaST("pebiolc") = 0.8; was already fixed to 0.8 back then? @LaviniaBaumstark

have we try the "adaptative boosting"? wouldn't it be more consistent with the rest of the code? Are there good reasons to treat "perm" differently in that regard (e.g., much smaller fraction of the world exchanges wrt "good"? "pebiolc" does seem to have this boost as well)

don't we need to be even more strict on p80_etaSA for "perm" given the fact that the inter iteration adjustment cost parameter is much lower than for other goods (https://github.com/remindmodel/remind/blob/develop/modules/80_optimization/nash/datainput.gms#L45-L48) and therefore has more risk of oscillation? (not sure) Likewise, wouldn't it lead to better convergence (less oscillation while adjustment) to decrease the adjustment cost even further to not be so aggressive about p80_etaST ? In other words, instead of forcing the market with heavy-handed price corrections (high etaST), why not make the planners more responsive to prices (lower etaAdj) so the market clears more?

In general, I had the issue that the surplus was too high and the permit price did not change enough to motivate adjustments. I did not have the issue of oscillation in my runs.

benjaminpeeters · 2026-02-13T16:13:41Z

modules/41_emicapregi/TradingOnRef/bounds.gms

+*** |  AGPL-3.0, you are granted additional permissions described in the
+*** |  REMIND License Exception, version 1.0 (see LICENSE file).
+*** |  Contact: remind@pik-potsdam.de
+*** SOF ./modules/41_emicapregi/AbilityToPay/bounds.gms


new files reference AbilityToPay instead of TradingOnRef

benjaminpeeters · 2026-02-13T16:16:38Z

modules/41_emicapregi/TradingOnRef/datainput.gms

+p41_co2eq(t, regi) = p41_co2eq_in(t,regi,"co2");
+


Is it used anywhere or come from the copy paste from AbilityToPay?

No, I first load the entire emission as intermediate step p41_co2eq_in = vm_emiAll.l and in a second step only use the CO2 emissions to allocate the permits: p41_co2eq(t, regi) = p41_co2eq_in(t,regi,"co2");

benjaminpeeters · 2026-02-13T16:31:38Z

modules/80_optimization/nash/datainput.gms

  p80_surplusMaxTolerance(tradePe) = 2* 1.5 * sm_EJ_2_TWa;          !! convert EJ/yr into internal unit TWa
  p80_surplusMaxTolerance("good") = 2* 100/1000;                  !! in internal unit, trillion Dollar
-  p80_surplusMaxTolerance("perm") = 2* 300 * 12/44 / 1000;                !! convert MtCO2eq into internal unit GtC
+  p80_surplusMaxTolerance("perm") = 3* 300 * 12/44 / 1000;                !! convert MtCO2eq into internal unit GtC


What is the actual relative residual permit surplus at convergence in the test runs? Could you share the p80_surplusMaxRel values? do the iterations converge below the tolerance, or does it tend to stay blocked close to it?

So an edge case is e.g. if trade is only allowed for a short period in EC650-PC-Trade20-2060 here the surplus goes to 2060 perm 63 -0.24 this was not converging with 2* 300 * 12/44 / 1000= 0.16 now the tolerance is 0.245.

/p/tmp/rahelma/Committed/Equity/permTrading/output/EC650-PC-Trade20-2060_2026-02-06_15.10.31 (trading)$ dumpgdx fulldata.gdx p80_surplusMaxRel perm,63, perm 63 2030 0.388459318122543 perm 63 2035 0.388459318122543 perm 63 2040 0.388459318122543 perm 63 2045 0.388459318122543 perm 63 2050 0.388459318122543 perm 63 2055 0.388459318122543 perm 63 2060 1.94757151310855 perm 63 2070 1.94757151310855 perm 63 2080 1.94757151310855 perm 63 2090 1.94757151310855 perm 63 2100 1.94757151310855 perm 63 2110 1.94757151310855 perm 63 2130 1.94757151310855 perm 63 2150 1.94757151310855

modules/80_optimization/nash/preloop.gms

lecfab

Looks good!
Please just ensure that all the instances of the changed switch name are updated (also in other realisations), for instance the

-  cm_pemittraderatio  
+  cm_permitTradeRatio

lecfab · 2026-02-26T09:10:59Z

main.gms

+  cm_pemittraderatio        "Percentage of restricted permit trading"
+;
+  cm_pemittraderatio  = 0.2;         !! def = 0.2  
 *'


Ah understood thanks! Would this still make sense to ignore to ignore cm_permittradescen in your new realisation?

Also the new switch names will probably need to be changed in the other realisations too?

lecfab · 2026-02-26T09:15:16Z

modules/41_emicapregi/TradingOnRef/realization.gms

+*' *  (2): no permit trade (only domestic mitigation)
+*' *  (3): limited trade (certain percentage of regional allowances)
+*'         for limited trade use cm_pemittradefinalyr   to set the final year until permit trading is allowed
+*'         with cm_pemittraderatio set the percentage of allowed trade


Here the switch names that have been updated in main.gms could be updated as well (and everywhere else where they appear =))

rahelMA and others added 3 commits February 6, 2026 08:48

new realization + elasticity adj

97a0b63

Merge branch 'remindmodel:develop' into trading

fefe984

switches for restricted permit trading

ba18b2b

RahelMA requested review from LaviniaBaumstark and tabeado February 12, 2026 09:57

cleaning not used

f4af591

RahelMA marked this pull request as ready for review February 12, 2026 13:22

lecfab reviewed Feb 12, 2026

View reviewed changes

benjaminpeeters reviewed Feb 13, 2026

View reviewed changes

rahelMA and others added 2 commits February 16, 2026 15:52

code cleaning

3b0ad2a

Merge branch 'remindmodel:develop' into trading

da2b1a6

RahelMA requested a review from lecfab February 16, 2026 14:55

lecfab requested changes Feb 26, 2026

View reviewed changes

This was referenced Mar 2, 2026

Trading suggestions RahelMA/remind#5

Closed

Implementing suggestions for trading RahelMA/remind#6

Open

RahelMA and others added 2 commits March 3, 2026 08:16

Merge branch 'remindmodel:develop' into trading

850ba8e

correct parameters

39514eb

RahelMA requested a review from lecfab March 3, 2026 07:44

lecfab approved these changes Mar 3, 2026

View reviewed changes

RahelMA and others added 2 commits March 3, 2026 11:46

Merge branch 'remindmodel:develop' into trading

cbe2936

renv

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RahelMA commented Feb 12, 2026 •

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