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In this article, we examine least-cost strategies for teaching the greenhouse gas emission reductions specifiedby the Kyoto protocol for three Canadian provinces, Ontario, Quebec, and Alberta. We analyze fourscenarios, each specifying a certain level of cooperation (i.e. of trading of emission permits and of electricity)between the provinces. To effect these analyses, four MARKAL models (one for each province and one forthe US) are used in a multi-regional framework that endogenizes energy and permit exchange levels andprices. The US model is included in the analysis in order to correctly simulate the important natural gasmarket between Canada and the USA. The results indicate that both permit trading and electricity exchangesare capable of significantly reducing the direct costs of abiding by the Kyoto protocol. The paper also includesan analysis of the the main policy issues faced by the three provinces while planning for a concerted effort toabate GHG emissions

The Kyoto Protocol, Inter-Provincial Cooperation, and Energy Trading: A Systems Analysis with integrated MARKAL Models