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Efficiency Gains from "What"-Flexibility in Climate Policy: An Integrated CGE Assessment

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  • Böhringer, Christoph
  • Löschel, Andreas
  • Rutherford, Thomas F.

Abstract

We investigate the importance of ?what?-flexibility on top of ?where?- and ?when?-flexibility for alternative emission control schemes that prescribe long-term temperature targets and eventually impose additional constraints on the rate of temperature change. We find that ?what?-flexibility substantially reduces the compliance costs under alternative emission control schemes. When comparing policies that simply involve long-term temperature targets against more stringent strategies that include additional constraints on the rate of temperature increase, it turns out that the latter involve huge additional costs. These costs may be interpreted as additional insurance payments if damages should not only dependent on absolute temperature change but also on the rate of temperature change.

Suggested Citation

  • Böhringer, Christoph & Löschel, Andreas & Rutherford, Thomas F., 2004. "Efficiency Gains from "What"-Flexibility in Climate Policy: An Integrated CGE Assessment," ZEW Discussion Papers 04-48, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:2355
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    Cited by:

    1. Springmann, Marco, 2012. "A look inwards: Carbon tariffs versus internal improvements in emissions-trading systems," Energy Economics, Elsevier, vol. 34(S2), pages 228-239.
    2. Haqiqi, Iman & Manzoor, Davood, 2012. "Environmental Impacts of Phasing out Energy Subsidies," MPRA Paper 95688, University Library of Munich, Germany, revised 2016.
    3. Kuik, Onno & Brander, Luke & Tol, Richard S.J., 2009. "Marginal abatement costs of greenhouse gas emissions: A meta-analysis," Energy Policy, Elsevier, vol. 37(4), pages 1395-1403, April.
    4. Doole, Graeme J., 2012. "Cost-effective policies for improving water quality by reducing nitrate emissions from diverse dairy farms: An abatement–cost perspective," Agricultural Water Management, Elsevier, vol. 104(C), pages 10-20.
    5. Richard S.J. Tol, 2013. "Long live the Kyoto Protocol!," Chapters, in: Roger Fouquet (ed.), Handbook on Energy and Climate Change, chapter 14, pages 344-351, Edward Elgar Publishing.
    6. Tol, Richard S.J., 2013. "Targets for global climate policy: An overview," Journal of Economic Dynamics and Control, Elsevier, vol. 37(5), pages 911-928.
    7. Francisco Javier André García & M. Alejandro Cardenete Flores, 2008. "Políticas económicas y ambientales eficientes en un contexto de equilibrio general aplicado," EKONOMIAZ. Revista vasca de Economía, Gobierno Vasco / Eusko Jaurlaritza / Basque Government, vol. 67(01), pages 72-91.
    8. Tol, Richard S.J., 2012. "A cost–benefit analysis of the EU 20/20/2020 package," Energy Policy, Elsevier, vol. 49(C), pages 288-295.
    9. Moslener, Ulf & Requate, Till, 2007. "Optimal abatement in dynamic multi-pollutant problems when pollutants can be complements or substitutes," Journal of Economic Dynamics and Control, Elsevier, vol. 31(7), pages 2293-2316, July.
    10. Kiuila, O. & Rutherford, T.F., 2013. "Piecewise smooth approximation of bottom–up abatement cost curves," Energy Economics, Elsevier, vol. 40(C), pages 734-742.
    11. Peter Michaelis & Heiko Wirths, 2020. "DICE-RD: an implementation of rate-related damages in the DICE model," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 22(4), pages 555-584, October.
    12. Jan Imhof, 2011. "Subsidies, Standards and Energy Efficiency," The Energy Journal, International Association for Energy Economics, vol. 0(Special I).

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    More about this item

    Keywords

    Climate policy; Integrated Assessment; What-flexibility;
    All these keywords.

    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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