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Marginal abatement costs of greenhouse gas emissions from European agriculture, cost effectiveness, and the EU non-ETS burden sharing agreement

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  • De Cara, Stéphane
  • Jayet, Pierre-Alain

Abstract

We propose a quantitative assessment of the marginal abatement costs (MAC) of greenhouse gas emissions from European agriculture and analyze the implications of the non-ETS burden-sharing agreement (BSA) for this sector. This assessment is based on MAC reduced forms, the generic specification of which enables simple parameterization and numerical computations. Such MAC curves are parameterized for each Member State using the outputs of a detailed model of the European agricultural supply. They are then used to compute total and marginal abatement costs involved by the BSA targets, as well as the cost-effective effort sharing, the corresponding emission price and abatement costs. The main findings are: (i) flexibility mechanisms such as a cap-and-trade system for agricultural emissions could reduce the total costs of meeting the 10% EU abatement target by a factor two to three relative to the strict implementation of each country's target, (ii) the corresponding equilibrium emission price is found to be 32-42Â [euro]/tCO2eq depending on the assumption regarding business-as-usual emissions, and (iii) a cap-and-trade system with allowances based on the BSA targets would involve substantial transfers from EU-15 countries to New Member States, an important share of which being made of 'hot air'.

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Bibliographic Info

Article provided by Elsevier in its journal Ecological Economics.

Volume (Year): 70 (2011)
Issue (Month): 9 (July)
Pages: 1680-1690

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Handle: RePEc:eee:ecolec:v:70:y:2011:i:9:p:1680-1690

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Keywords: Greenhouse gas emissions Agriculture Marginal abatement costs Cap-and-trade system Methane Nitrous oxide European Union;

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  1. Golub, Alla & Hertel, Thomas & Lee, Huey-Lin & Rose, Steven & Sohngen, Brent, 2009. "The opportunity cost of land use and the global potential for greenhouse gas mitigation in agriculture and forestry," Resource and Energy Economics, Elsevier, vol. 31(4), pages 299-319, November.
  2. Vermont, Bruno & De Cara, Stéphane, 2010. "How costly is mitigation of non-CO2 greenhouse gas emissions from agriculture?: A meta-analysis," Ecological Economics, Elsevier, vol. 69(7), pages 1373-1386, May.
  3. Ignacio Pérez Domínguez & Wolfgang Britz & Karin Holm-Müller, 2009. "Trading schemes for greenhouse gas emissions from European agriculture: A comparative analysis based on different implementation options," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 90(3), pages 287-308.
  4. Stavins, Robert & Newell, Richard, 2000. "Cost Heterogeneity and the Potential Savings from Market-Based Policies," Discussion Papers dp-00-10-rev, Resources For the Future.
  5. Robert H. Beach & Benjamin J. DeAngelo & Steven Rose & Changsheng Li & William Salas & Stephen J. DelGrosso, 2008. "Mitigation potential and costs for global agricultural greenhouse gas emissions-super-1," Agricultural Economics, International Association of Agricultural Economists, vol. 38(2), pages 109-115, 03.
  6. Uwe A. Schneider & Bruce A. McCarl, 2006. "Appraising agricultural greenhouse gas mitigation potentials: effects of alternative assumptions," Agricultural Economics, International Association of Agricultural Economists, vol. 35(3), pages 277-287, November.
  7. Stephane De Cara & Martin Houzé & Pierre-Alain Jayet, 2005. "Methane and nitrous oxide emissions from agriculture in the EU : a spatial assessment of sources and abatement costs," Working Papers 156815, Institut National de la Recherche Agronomique, France.
  8. A. Ellerman & Barbara Buchner, 2008. "Over-Allocation or Abatement? A Preliminary Analysis of the EU ETS Based on the 2005–06 Emissions Data," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 41(2), pages 267-287, October.
  9. Capros, Pantelis & Mantzos, Leonidas & Parousos, Leonidas & Tasios, Nikolaos & Klaassen, Ger & Van Ierland, Tom, 2011. "Analysis of the EU policy package on climate change and renewables," Energy Policy, Elsevier, vol. 39(3), pages 1476-1485, March.
  10. Tol, Richard S. J., 2008. "Intra-Union Flexibility of Non-ETS Emission Reduction Obligations in the European Union," Papers WP256, Economic and Social Research Institute (ESRI).
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  13. Pushpam Kumar & Uwe A. Schneider, 2008. "Greenhouse gas emission mitigation through agriculture," Working Papers FNU-155, Research unit Sustainability and Global Change, Hamburg University, revised Feb 2008.
  14. Frank Convery, 2009. "Origins and Development of the EU ETS," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 43(3), pages 391-412, July.
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Citations

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Cited by:
  1. Carlo Orecchia & Ramiro Parrado, 2013. "A Quantitative Assessment of the Implications of Including non-CO2 Emissions in the European ETS," Working Papers 2013.100, Fondazione Eni Enrico Mattei.
  2. Raja Chakir & Stephane De Cara & Bruno Vermont, 2011. "Émissions de gaz à effet de serre dues à l’agriculture et aux usages des sols en France : une analyse spatiale," Working Papers 42417, Institut National de la Recherche Agronomique, France.
  3. Bruno Vermont & Stéphane De Cara & Raja Chakir, 2011. "Émissions de gaz à effet de serre dues à l’agriculture et aux usages des sols en France : une analyse spatiale," Économie et Statistique, Programme National Persée, vol. 444(1), pages 201-221.
  4. Aghajanzadeh-Darzi, Parisa & Jayet, Pierre-Alain & Domingues, M.J.P, 2012. "Improvement of a bio-economic mathematical programming model in the case of on-farm source inputs and outputs," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126768, International Association of Agricultural Economists.
  5. Anderson, Blake & M'Gonigle, Michael, 2012. "Does ecological economics have a future?," Ecological Economics, Elsevier, vol. 84(C), pages 37-48.
  6. Benjamin Dequiedt & Dominic Moran, 2014. "The cost of emissions mitigation by legume crops in French agriculture," Working Papers 1410, Chaire Economie du Climat.
  7. Breen, James P. & Donnellan, Trevor & Westhoff, Patrick C., 2012. "Reducing Greenhouse Gas Emissions from Irish Agriculture: A market-based approach," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 130555, International Association of Agricultural Economists.
  8. Lee, Myunghun & Zhang, Ning, 2012. "Technical efficiency, shadow price of carbon dioxide emissions, and substitutability for energy in the Chinese manufacturing industries," Energy Economics, Elsevier, vol. 34(5), pages 1492-1497.

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