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Does Unilateral Decarbonization Pay for Itself?

Author

Listed:
  • Adrien Bilal
  • Diego R. Känzig

Abstract

This paper shows that unilateral decarbonization pays for itself in large economies. We estimate economic damages based on global temperature shocks and combine them with a climate-economy model to construct domestic costs of carbon: $226 per ton for the United States and $216 per ton for the European Union. When compared to marginal abatement costs, these values imply over 80 percent unilateral decarbonization for both economies, an order of magnitude more than under conventional damages estimated with local temperature shocks.

Suggested Citation

  • Adrien Bilal & Diego R. Känzig, 2025. "Does Unilateral Decarbonization Pay for Itself?," AEA Papers and Proceedings, American Economic Association, vol. 115, pages 369-373, May.
    • Handle: RePEc:aea:apandp:v:115:y:2025:p:369-73
    DOI: 10.1257/pandp.20251035
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    More about this item

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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