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Ancillary benefits of climate policy in a small open economy: The case of Sweden

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  • Krook Riekkola, Anna
  • Ahlgren, Erik O.
  • Söderholm, Patrik

Abstract

It is increasingly recognised that GHG reduction policies can have important ancillary benefits in the form of positive local and regional environmental impacts. The purpose of this paper is to estimate the domestic ancillary pollution benefits of climate policy in Sweden, and investigate how these are affected by different climate policy designs. The latter differ primarily in terms of how the country chooses to meet a specific target and where the necessary emission reductions take place. The analysis relies on simulations within the energy system optimisation model TIMES-Sweden, and focuses on four non-GHG pollutants: Nitrogen Oxides (NOX), Non Methane Volatile Organic Compounds (NMVOC), inhalable particles (PM2.5), and Sulphur dioxide (SO2). The simulations permit detailed assessments of the respective technology and fuel choices that underlie any net changes in the estimated ancillary effects. The results indicate that the ancillary benefits constitute a far from insignificant share of total system costs, and this share appears to be highest in the scenarios that entail the largest emission reductions domestically. This result reflects the fact that carbon dioxide emission reductions abroad also implies a lost opportunity of achieving substantial domestic welfare gain from the reductions of regional and local environmental pollutants.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 39 (2011)
Issue (Month): 9 (September)
Pages: 4985-4998

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Handle: RePEc:eee:enepol:v:39:y:2011:i:9:p:4985-4998

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Web page: http://www.elsevier.com/locate/enpol

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Keywords: Ancillary benefits Climate policy Swedish energy system;

References

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  1. Östblom, Göran & Samakovlis, Eva, 2004. "Costs of Climate Policy when Pollution Affects Health and Labour Productivity. A general Equilibrium Analysis Applied to Sweden," Working Paper 93, National Institute of Economic Research.
  2. Ekin, Paul, 1996. "The secondary benefits of CO2 abatement: How much emission reduction do they justify?," Ecological Economics, Elsevier, vol. 16(1), pages 13-24, January.
  3. Kuosmanen, Timo & Bijsterbosch, Neil & Dellink, Rob, 2009. "Environmental cost-benefit analysis of alternative timing strategies in greenhouse gas abatement: A data envelopment analysis approach," Ecological Economics, Elsevier, vol. 68(6), pages 1633-1642, April.
  4. 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.
  5. Pettersson, Fredrik & Söderholm, Patrik, 2009. "The diffusion of renewable electricity in the presence of climate policy and technology learning: The case of Sweden," Renewable and Sustainable Energy Reviews, Elsevier, vol. 13(8), pages 2031-2040, October.
  6. Das, Anjana & Rossetti di Valdalbero, Domenico & Virdis, Maria R., 2007. "ACROPOLIS: An example of international collaboration in the field of energy modelling to support greenhouse gases mitigation policies," Energy Policy, Elsevier, vol. 35(2), pages 763-771, February.
  7. Söderholm, Patrik & Pettersson, Fredrik, 2008. "Climate policy and the social cost of power generation: Impacts of the Swedish national emissions target," Energy Policy, Elsevier, vol. 36(11), pages 4154-4158, November.
  8. Boyd Roy & Krutilla Kerry & Viscusi W. Kip, 1995. "Energy Taxation as a Policy Instrument to Reduce CO2 Emissions: A Net Benefit Analysis," Journal of Environmental Economics and Management, Elsevier, vol. 29(1), pages 1-24, July.
  9. Azar, Christian & Sterner, Thomas, 1996. "Discounting and distributional considerations in the context of global warming," Ecological Economics, Elsevier, vol. 19(2), pages 169-184, November.
  10. Klaassen, Ger & Riahi, Keywan, 2007. "Internalizing externalities of electricity generation: An analysis with MESSAGE-MACRO," Energy Policy, Elsevier, vol. 35(2), pages 815-827, February.
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Cited by:
  1. Riekkola, Anna Krook & Berg, Charlotte & Ahlgren, Erik O. & Söderholm, Patrik, 2013. "Challenges in Soft-Linking: The Case of EMEC and TIMES-Sweden," Working Paper 133, National Institute of Economic Research.

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