The additional contribution of non-CO2 mitigation in climate policy costs and efforts in Europe

The use of CGE models to study the role and costs of mitigation in climate policy has provided a vast literature. However, most of the models used have analyzed mitigation policies considering emission reductions focused only on CO2 emissions. Although CO2 emissions stand for most of greenhouse gases (GHG) emissions, the contribution of mitigation efforts based on non-CO2 emissions is still a field that should be explored. This paper investigates the role of non-CO2 GHG in climate change mitigation in Europe. We develop a specific modelling framework extending the Intertemporal Computable Equilibrium System (ICES) model with non-CO2 GHG as an additional mitigation alternative. To model and evaluate the general equilibrium responses to mitigation policies, we tied emissions to explicit endowment, input and output flows. ICES is a recursive-dynamic CGE model based on the Gtap database with detailed sectoral and regional information: on the supply side, the energy production is differentiated to include renewables and nuclear energy sources which offer more flexibility for mitigation policy analysis; the land endowment in each region is split into agro-ecological zones. These modifications allow us to evaluate the additional contribution for mitigation of multi-gas emissions considering its impact on growth and output sectoral composition. We circumscribe the analysis considering a scenario in which European Union (EU) implements a climate policy until 2020. In particular, two sets of policy scenarios have been developed. In a first scenario, Europe is assumed to reduce only CO2 emissions by 20% and 30% with respect to 1990 levels. In a second scenario, the same targets are imposed but considering a simultaneous mitigation of CO2 and non-CO2 GHG emissions. Results show that multi-gas mitigation options will slightly decrease GDP loss with respect to CO2 only mitigation options for 2020 climate stabilization.