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Where in the world is it cheapest to cut carbon emissions?

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

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 emission 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 emission-intensive countries. Using the results of the 22nd Energy Modeling Forum (EMF-22), 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. This analysis provides support for our hypotheses, although its reliability is limited by the shortcomings of the EMF-22 models and the degree to which our econometric model can adequately account for the substantial differences among them.
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Suggested Citation

  • David I. Stern & John C. V. Pezzey & N. Ross Lambie, 2012. "Where in the world is it cheapest to cut carbon emissions?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 56(3), pages 315-331, July.
  • Handle: RePEc:bla:ajarec:v:56:y:2012:i:3:p:315-331
    DOI: j.1467-8489.2011.00576.x
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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.
    2. Bang, Guri, 2010. "Energy security and climate change concerns: Triggers for energy policy change in the United States?," Energy Policy, Elsevier, vol. 38(4), pages 1645-1653, April.
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    4. Garnaut,Ross, 2008. "The Garnaut Climate Change Review," Cambridge Books, Cambridge University Press, number 9780521744447, October.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Stern and Enflo, Energy Economics
      by David Stern in Stochastic Trend on 2013-05-05 13:17:00
    2. Can Negotiating a Uniform Carbon Price Help to Internalize the Global Warming Externality?
      by David Stern in Stochastic Trend on 2013-11-25 09:11:00
    3. Cost Concepts for Climate Mitigation
      by David Stern in Stochastic Trend on 2013-12-27 18:12:00
    4. Substitutability and the Cost of Climate Mitigation Policy
      by noreply@blogger.com (David Stern) in Stochastic Trend on 2014-03-21 02:41:00

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    2. Yingying Lu & David I. Stern, 2016. "Substitutability and the Cost of Climate Mitigation Policy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 64(1), pages 81-107, May.
    3. Ninpanit, Panittra & Malik, Arunima & Wakiyama, Takako & Geschke, Arne & Lenzen, Manfred, 2019. "Thailand’s energy-related carbon dioxide emissions from production-based and consumption-based perspectives," Energy Policy, Elsevier, vol. 133(C).
    4. Massimo Tavoni & Detlef van Vuuren, 2015. "Regional Carbon Budgets: Do They Matter for Climate Policy?," Working Papers 2015.71, Fondazione Eni Enrico Mattei.
    5. Jiang, Hong-Dian & Purohit, Pallav & Liang, Qiao-Mei & Dong, Kangyin & Liu, Li-Jing, 2022. "The cost-benefit comparisons of China's and India's NDCs based on carbon marginal abatement cost curves," Energy Economics, Elsevier, vol. 109(C).
    6. Chang-Jing Ji & Xiao-Yi Li & Yu-Jie Hu & Xiang-Yu Wang & Bao-Jun Tang, 2019. "Research on carbon price in emissions trading scheme: a bibliometric analysis," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 99(3), pages 1381-1396, December.

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