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Climate policy in Western Europe and avoided costs of air pollution control

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  • Rive, Nathan
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    Abstract

    Abatement of CO2 emissions will be accompanied by reduced air pollutant emissions such as particulate matter (PM), SO2, and NOx. This, in turn, will reduce the need for end of pipe (EOP) pollution control technologies to meet future air quality targets. This dynamic could put more stringent air quality goals within reach, and increase the political feasibility of climate policy. This paper presents a CGE model that has been modified to include the emissions and EOP abatement of PM, SO2, and NOx from stationary sources in the EU-17. Emissions of pollutants are modeled as fixed-factor complementary inputs to their associated source. Abatement in each sector is modeled as a substitution between the pollutants and discrete abatement technologies, each of which is sector-specific and characterized by a marginal abatement cost and technical capacity constraint. Scenarios are run to 2020, to assess the costs and co-benefits of simultaneous air quality and climate policies. We find that under the Kyoto Protocol in 2010, the welfare cost of pollution control is reduced by 16% compared to the baseline, effectively offsetting the cost of CO2 abatement by 15%. The co-benefit results depend heavily on policy choices, and their magnitude relative to total costs is likely to decline as greenhouse targets become more ambitious. In our scenarios, pollution control cost savings range from 1.3 to 20% in 2020, yielding a climate cost offset range of 0.2 to 3.9%. The CO2 credit imports allowed by the EU via the Clean Development Mechanism (CDM) offer a total savings of $9.7bn in 2020, but only need to be compensated by an additional $0.3-0.4bn in domestic pollution control from stationary sources.

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    Bibliographic Info

    Article provided by Elsevier in its journal Economic Modelling.

    Volume (Year): 27 (2010)
    Issue (Month): 1 (January)
    Pages: 103-115

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    Handle: RePEc:eee:ecmode:v:27:y:2010:i:1:p:103-115

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    Web page: http://www.elsevier.com/locate/inca/30411

    Related research

    Keywords: Computable general equilibrium Climate policy Air quality Integrated environmental analysis End of pipe control Q52 Q54;

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    References

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    1. Nestor, Deborah Vaughn & Pasurka Jr, Carl A, 1995. "CGE model of pollution abatement processes for assessing the economic effects of environmental policy," Economic Modelling, Elsevier, vol. 12(1), pages 53-59, January.
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    3. Dellink, Rob & Hofkes, Marjan & van Ierland, Ekko & Verbruggen, Harmen, 2004. "Dynamic modelling of pollution abatement in a CGE framework," Economic Modelling, Elsevier, vol. 21(6), pages 965-989, December.
    4. David O’Connor & Fan Zhai & Kristin Aunan & Terje Berntsen & Haakon Vennemo, 2003. "Agricultural and Human Health Impacts of Climate Policy in China: A General Equilibrium Analysis with Special Reference to Guangdong," OECD Development Centre Working Papers 206, OECD Publishing.
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    6. van Vuuren, D.P. & Cofala, J. & Eerens, H.E. & Oostenrijk, R. & Heyes, C. & Klimont, Z. & den Elzen, M.G.J. & Amann, M., 2006. "Exploring the ancillary benefits of the Kyoto Protocol for air pollution in Europe," Energy Policy, Elsevier, vol. 34(4), pages 444-460, March.
    7. Lars Bergman, 1991. "General equilibrium effects of environmental policy: A CGE-modeling approach," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 1(1), pages 43-61, March.
    8. Ekins, Paul, 1996. "How large a carbon tax is justified by the secondary benefits of CO2 abatement?," Resource and Energy Economics, Elsevier, vol. 18(2), pages 161-187, June.
    9. Syri, Sanna & Amann, Markus & Capros, Pantelis & Mantzos, Leonidas & Cofala, Janusz & Klimont, Zbigniew, 2001. "Low-CO2 energy pathways and regional air pollution in Europe," Energy Policy, Elsevier, vol. 29(11), pages 871-884, September.
    10. Rutherford, Thomas F., 1995. "Extension of GAMS for complementarity problems arising in applied economic analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 19(8), pages 1299-1324, November.
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    12. Burtraw, Dallas & Toman, Michael, 1997. "The Benefits of Reduced Air Pollutants in the U.S. from Greenhouse Gas Mitigation Policies," Discussion Papers dp-98-01-rev, Resources For the Future.
    13. Aunan, Kristin & Fang, Jinghua & Vennemo, Haakon & Oye, Kenneth & Seip, Hans M., 2004. "Co-benefits of climate policy--lessons learned from a study in Shanxi, China," Energy Policy, Elsevier, vol. 32(4), pages 567-581, March.
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    Cited by:
    1. Johannes Bollen & Corjan Brink (PBL), 2012. "Air Pollution Policy in Europe: Quantifying the Interaction with Greenhouse Gases and Climate Change Policies," CPB Discussion Paper 220, CPB Netherlands Bureau for Economic Policy Analysis.
    2. Solveig Glomsrød & Taoyuan Wei & Knut Alfsen, 2013. "Pledges for climate mitigation: the effects of the Copenhagen accord on CO 2 emissions and mitigation costs," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 18(5), pages 619-636, June.
    3. Chae, Yeora & Park, Jeongim, 2011. "Quantifying costs and benefits of integrated environmental strategies of air quality management and greenhouse gas reduction in the Seoul Metropolitan Area," Energy Policy, Elsevier, vol. 39(9), pages 5296-5308, September.

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