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Where in the World is it Cheapest to Cut Carbon Emissions? Ranking Countries by Total and Marginal Cost of Abatement

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  • Stern, David I.
  • Pezzey, John C. V.
  • Lambie, N. Ross

Abstract

Countries with low marginal costs of abating carbon emissions may have high total costs, and vice versa, for a given climate mitigation policy. This may help to explain different countries' policy stances on climate mitigation. We hypothesize that, under a common percentage cut in emissions intensity relative to business as usual (BAU), countries with higher BAU emissions intensities have lower marginal abatement costs, but total costs relative to output will be similar across countries; and under a common carbon price, relative total costs are higher in emissions-intensive countries. Using the results of the 22nd Energy Modeling Forum, we estimate marginal abatement cost curves for the US, EU, China, and India, which we use to estimate marginal and total costs of abatement under a number of policy options currently under international debate. The results of this analysis provide support for our hypotheses.

Suggested Citation

  • Stern, David I. & Pezzey, John C. V. & Lambie, N. Ross, 2011. "Where in the World is it Cheapest to Cut Carbon Emissions? Ranking Countries by Total and Marginal Cost of Abatement," Working Papers 249534, Australian National University, Centre for Climate Economics & Policy.
  • Handle: RePEc:ags:ancewp:249534
    DOI: 10.22004/ag.econ.249534
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    References listed on IDEAS

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    1. Jotzo, Frank, 2010. "Comparing the Copenhagen emissions targets," Working Papers 249378, Australian National University, Centre for Climate Economics & Policy.
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    4. Tavoni, Massimo & Tol, Richard S. J., 2009. "Counting Only the Hits? The Risk of Underestimating the Costs of Stringent Climate Policy," Papers WP324, Economic and Social Research Institute (ESRI).
    5. Stern, David I. & Jotzo, Frank, 2010. "How ambitious are China and India's emissions intensity targets?," Energy Policy, Elsevier, vol. 38(11), pages 6776-6783, November.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Where is it cheapest to cut carbon emissions?
      by David Stern, Professor at Australian National University in The Conversation on 2012-09-04 01:32:16
    2. Bunch of New CCEP Working Papers
      by David Stern in Stochastic Trend on 2011-08-08 05:45:00
    3. Indian Perspective on Climate Change
      by David Stern in Stochastic Trend on 2011-08-14 06:33:00
    4. Paper Accepted by AJARE
      by David Stern in Stochastic Trend on 2011-11-14 09:22:00
    5. Final Versions of Two Papers Published
      by David Stern in Stochastic Trend on 2012-07-06 06:56:00

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    Cited by:

    1. Pradhan, Basanta K. & Ghosh, Joydeep & Yao, Yun-Fei & Liang, Qiao-Mei, 2017. "Carbon pricing and terms of trade effects for China and India: A general equilibrium analysis," Economic Modelling, Elsevier, vol. 63(C), pages 60-74.

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    More about this item

    Keywords

    Environmental Economics and Policy; International Relations/Trade;

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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