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The Social Costs of Greenhouse Gas Emissions: An Expected Value Approach

Samuel Fankhauser

Year: 1994
Volume: Volume15
Number: Number 2
DOI: 10.5547/ISSN0195-6574-EJ-Vol15-No2-9
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Abstract:
This paper provides an order-of-rnagnitude assessment of the marginal social costs of greenhouse gas emissions. Re calculations are based on a stochastic greenhouse damage model in which key parameters are random. This allows a closer representation of current scientific understanding and also enables calculation of a damage probability distribution. Thus, we account explicitly for the uncertain nature of the global warming phenomenon. We estimate social costs of CO2 emissions in the order of 20 $/tC for emissions between 1991 and 2000, a value which rises over time to about 28 $/tC in 2021-2030. Similar figures for CH4 and N2O are also provided. As a consequence of the prevailing uncertainty, the standard deviation of the estimates is rather high. The distribution is positively skewed, which implies that the currently predominant method of using best guess values will lead to an underestimation of the expected costs of emissions.



What is the Value of Scientific Knowledge? An Application to Global Warming Using the PRICE Model

William D. Nordhaus and David Popp

Year: 1997
Volume: Volume18
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol18-No1-1
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Abstract:
Governments must cope with the enormous uncertainties about both future climate change as well as the costs and benefits of slowing climate change. This study analyses the value of improved information about a variety of geophysical and economic processes. The value of information is estimated using the "PRICE model" which is a probabilistic extension of earlier models of the economics of global warming. The study uses five different approaches to estimating the value of information about all uncertain parameters and about individual parameters. It is estimated that the value of early information is between $1 and $2 billion for each year that resolution of uncertainty is moved toward the present. We estimate that the most important uncertain variables are the damages of climate change and the costs of reducing greenhouse gas emissions. Resolving the uncertainties about these two parameters would contribute 75 percent of the value of improved knowledge.



The Marginal Costs of Greenhouse Gas Emissions

Richard S. J. Tol

Year: 1999
Volume: Volume20
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol20-No1-4
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Abstract:
Estimates of the marginal costs of greenhouse gas emissions are an important input to the decision how much society would want to spend on greenhouse gas emission reduction. Marginal cost estimates in the literature range between $5 and $25 per tonne of carbon. Using similar assumptions, the FUND model finds marginal costs of $9 23/tC, depending on the discount rate. If the aggregation of impacts over countries accounts for inequalities in income of 3. Marginal costs per region are an order of magnitude smaller than global marginal costs. The ratios between the marginal costs of CO2 and those of CH4 and N2O are roughly equal to the global warming potentials of these gases. The uncertainty about the marginal costs is large and right-skewed. The expected value of the marginal costs lies about 35% above the best guess, the 95-percentile about 250%.



Supplementarity: An Invitation to Monopsony?

A. Denny Ellerman and Ian Sue Wing

Year: 2000
Volume: Volume21
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol21-No4-2
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Abstract:
Article 17 of the Kyoto Protocol allows Annex B parties to meet their greenhouse gas emissions commitments by emissions trading so long as such trading is "supplemental" to domestic abatement actions. Whether and how "supplemental" should be defined is one of the most contentious issues in the post-Kyoto climate negotiations. We demonstrate that implementing supplementarity by imposing concrete ceilings on permit imports in a market for tradable emissions rights gives rise to monopsonistic effects similar to those that characterize a buyers' cartel. We assess the EU proposal on supplementarity in this context. Our results show that, under the most favorable assumptions, the proposal avoids the redistributive effects of an import limit, albeit at added cost. Under less favorable assumptions, namely, that the required demonstrations of verifiable abatement cannot be made, the EU proposal severely limits emissions trading and the associated reductions in the costs of achieving the Kyoto commitments.



Investigating Technology Options for Climate Policies: Differentiated Roles in ADAGE

Martin T. Ross, Patrick T. Sullivan, Allen A. Fawcett, and Brooks M. Depro

Year: 2014
Volume: Volume 35
Number: Special Issue
DOI: 10.5547/01956574.35.SI1.7
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Abstract:
This paper examines a range of technological and regulatory approaches to reducing greenhouse gas (GHG) emissions. Availability of new technologies will control how the economy and energy infrastructure respond to any future climate policies. How such policies interact with other types of environmental regulations will also influence the best options for meeting emissions goals. To investigate these effects, the ADAGE model is used to examine policy impacts for several climate and technology scenarios, focusing on key factors such as emissions, technology deployment, energy prices and macroeconomic indicators. In general, the simulations indicate that reductions in GHG emissions can be accomplished with limited economic adjustments, although the impacts depend on both the regulatory approaches used and the future availability of new low-carbon technologies. Keywords: Climate change, Computable general equilibrium, Electricity, Capand-trade, Renewable energy standards, Clean energy standards, Greenhouse gas emissions



Explaining the Evolution of Passenger Vehicle Miles Traveled in the United States

Benjamin Leard, Joshua Linn, and Clayton Munnings

Year: 2019
Volume: Volume 40
Number: Number 1
DOI: 10.5547/01956574.40.1.blea
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Abstract:
After growing steadily for several decades, passenger vehicle miles traveled (VMT) in the United States unexpectedly leveled off in the 2000s. The growth rate of VMT has since rebounded, and determining the factors that explain these developments has implications for future U.S. oil consumption and vehicle pollution. We show that changes in the demographics and economic characteristics of households in the United States, rather than in driving habits, explain most of the recent dynamics. This suggests that over the next decade, VMT in the United States will continue to grow roughly at historical rates, causing substantially higher oil consumption and pollution than if persistent changes in driving habits explained the recent changes in VMT. The projected VMT growth will raise the cost of meeting energy security, climate, and local air quality objectives.



Renewable and Nonrenewable Energy Consumption, Economic Growth, and Emissions: International Evidence

Thai-Ha Le, Youngho Chang, and Donghyun Park

Year: 2020
Volume: Volume 41
Number: Number 2
DOI: 10.5547/01956574.41.2.thle
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Abstract:
This study aims to reexamine how energy consumption interacts with economic growth and emissions using a panel data of a global sample consisting of 102 countries, from 1996 to 2012. The effects of renewable energy and nonrenewable energy sources are separately examined. The consumption of both renewable and nonrenewable energy appears to have contributed significantly to the level of income across countries, implying that promoting renewable energy benefits economic development. The empirical evidence suggests that the use of non-renewable energy consumption significantly raised the level of emissions across different income groups of countries. On the other hand, our findings suggest that the use of renewable energy sources helped tackle emissions in developed countries but not in developing countries. The success of developed countries in controlling emissions through renewable energy has significant policy implications for developing countries.



How Cost-effective are Electric Vehicle Subsidies in Reducing Tailpipe-CO2 Emissions? An Analysis of Major Electric Vehicle Markets

Tamara L. Sheldon, Rubal Dua, and Omar Abdullah Alharbi

Year: 2023
Volume: Volume 44
Number: Number 3
DOI: 10.5547/01956574.44.2.tshe
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Abstract:
We estimate the cost-effectiveness of plug-in electric vehicle (PEV) subsidies in reducing tailpipe-CO2 emissions in China, the U.S., and nine European countries. We find that the per-tonne cost of tailpipe-CO2 avoided increases linearly with the government-subsidized percentage of the PEV price. Costs are relatively higher in the Netherlands and Denmark, which subsidized high-priced PEVs including plug-in hybrids, and lower in the U.S., where PEVs replaced higher-emissions cars. Chinese PEV subsidies have a short-run static cost of up to $1,600 per tonne, far exceeding the social cost of carbon, suggesting that subsidies are more a part of China's industrial policy than its carbon policy. When subsidy-induced PEV sales and power generation emissions are considered, the ordering of countries based on the cost-effectiveness of subsidies changes. The long-run dynamic subsidy cost is expected to be lower, as current subsidies may drive future innovation and sales, and due to grid decarbonization.





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