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CO2 Emission Reduction Costs in the Residential Sector: Behavioral Parameters in a Bottom-Up Simulation Model

Mark Jaccard, Alison Bailie and John Nyboer

Year: 1996
Volume: Volume17
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol17-No4-5
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Abstract:
Cost estimates for reducing energy-related CO2 emissions vary with modeling assumptions and methods. Much debate has centered on the tendency for top-down models to suggest high costs and for bottom-up models to suggest low costs. This study incorporates behavioral parameters, derived from end-use equipment acquisition surveys, in a bottom-up simulation model ofthe residential sector in order to probe the basis for differing cost estimates and to test various policy suggestions. Simulating the effect of carbon taxes on a business as usual forecast, the results suggest that a CO2 tax will lead to significant net costs of adjustment if the factors leading to higher private discount rates reflect in part real costs and risks. The results also suggest that it may be in society's interest to pursue fuel switching policies with equal or greater vigour than energy efficiency improvements for the goal of reducing CO2emissions in the residential sector. As further research helps to distinguish the significance of these perceived costs and risks, and to refine projections of technology costs, the inputs to the model can be adjusted in order to refine the estimates for policy makers of CO2 reduction costs and of appropriate strategies for achieving reduction goals.



Carbon Abatement Costs: Why the Wide Range of Estimates?

Carolyn Fischer and Richard D. Morgenstern

Year: 2006
Volume: Volume 27
Number: Number 2
DOI: 10.5547/ISSN0195-6574-EJ-Vol27-No2-5
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Abstract:
Estimates of marginal abatement costs for reducing carbon emissions derived from major economic-energy models vary widely. Controlling for policy regimes we use meta-analysis to examine the importance of structural modeling choices in explaining differences in estimates. The analysis indicates that particular assumptions about perfectly foresighted consumers and Armington trade elasticities generate lower estimates of marginal abatement costs. Other choices are associated with higher cost estimates, including perfectly mobile capital, inclusion of a backstop technology, and greater disaggregation among regions and sectors. Some features, such as greater technological detail, seem less significant. Understanding the importance of key modeling assumptions, as well as the way the models are used to estimate abatement costs, can help guide the development of consistent modeling practices for policy evaluation.





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