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A Case-Study on Project-Level CO2 Mitigation Costs in Industrialised Countries - The Climate Cent Foundation in Switzerland

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  • Kunz, Laura

    ()
    (Socioeconomic Institute, University of Zurich)

  • Muller, Adrian

    ()
    (Socioeconomic Institute, University of Zurich)

Abstract

We analyse CO2 emissions reduction costs based on project data from the Climate Cent Foundation (CCF), a climate policy instrument in Switzerland. We draw four conclusions. First, for the projects investigated, the CCF on average pays € 63/t. Due to the Kyoto Protocol, the CCF buys reductions until 2012 only. This cutoff increases reported per ton reduction costs, as the additional lifetime project costs are set in relation to reductions until 2012 only, rather than to reductions realised over the whole lifetime. Lifetime reduction costs are € 45/t. Second, correlation between CCF’s payments and lifetime reduction costs per ton is low. Projects with low per ton reduction costs should thus be identified based on lifetime per ton reduction costs. Third, the wide range of project costs per ton observed casts doubts on the widely used identification of the merit order of reduction measures based on average per ton costs for technology types. Finally, the CCF covers only a fraction of additional reduction costs. Decisions to take reduction efforts thus depend on additional, non-observable and/or non-economic motives. Any generalisation of results has to consider that this analysis is based on prospective costs of a sub-sample of projects in Switzerland.

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File URL: http://hdl.handle.net/2077/19128
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Bibliographic Info

Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 342.

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Length: 36 pages
Date of creation: 20 Jan 2009
Date of revision: 01 Feb 2009
Handle: RePEc:hhs:gunwpe:0342

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Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
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Keywords: abatement cost curve; Climate Cent Foundation; climate policy; emissions reduction; mitigation costs;

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  1. Jakob, Martin, 2006. "Marginal costs and co-benefits of energy efficiency investments: The case of the Swiss residential sector," Energy Policy, Elsevier, vol. 34(2), pages 172-187, January.
  2. Niederberger, Anne Arquit, 2005. "The Swiss Climate Penny: An innovative approach to transport sector emissions," Transport Policy, Elsevier, vol. 12(4), pages 303-313, July.
  3. Urge-Vorsatz, Diana & Novikova, Aleksandra, 2008. "Potentials and costs of carbon dioxide mitigation in the world's buildings," Energy Policy, Elsevier, vol. 36(2), pages 642-661, February.
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