In this paper we discuss long-term least cost CO2 stabilization scenarios based on the SRES AIM A1B scenario in the context of an international burden-sharing regime. Starting from a stabilization target, regional emission caps are formulated dynamically on the basis of past emissions. With these regional caps, the cost-optimal supply fuel mix in the energy sector in the four SRES world regions is calculated, and lower bounds on the volume of traded carbon are estimated. The allocation scheme provides incentives for early mitigation action. We estimate additional regional costs incurred by the allocation scheme, and assess the sensitivity of results to changes in the concentration ceiling, discount rates, and start date for burden sharing. (c) 2005 Elsevier Ltd. All rights reserved.