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Climate policy in Western Europe and avoided costs of air pollution control


  • Rive, Nathan


Abatement of CO2 emissions will be accompanied by reduced air pollutant emissions such as particulate matter (PM), SO2, and NOx. This, in turn, will reduce the need for end of pipe (EOP) pollution control technologies to meet future air quality targets. This dynamic could put more stringent air quality goals within reach, and increase the political feasibility of climate policy. This paper presents a CGE model that has been modified to include the emissions and EOP abatement of PM, SO2, and NOx from stationary sources in the EU-17. Emissions of pollutants are modeled as fixed-factor complementary inputs to their associated source. Abatement in each sector is modeled as a substitution between the pollutants and discrete abatement technologies, each of which is sector-specific and characterized by a marginal abatement cost and technical capacity constraint. Scenarios are run to 2020, to assess the costs and co-benefits of simultaneous air quality and climate policies. We find that under the Kyoto Protocol in 2010, the welfare cost of pollution control is reduced by 16% compared to the baseline, effectively offsetting the cost of CO2 abatement by 15%. The co-benefit results depend heavily on policy choices, and their magnitude relative to total costs is likely to decline as greenhouse targets become more ambitious. In our scenarios, pollution control cost savings range from 1.3 to 20% in 2020, yielding a climate cost offset range of 0.2 to 3.9%. The CO2 credit imports allowed by the EU via the Clean Development Mechanism (CDM) offer a total savings of $9.7bn in 2020, but only need to be compensated by an additional $0.3-0.4bn in domestic pollution control from stationary sources.

Suggested Citation

  • Rive, Nathan, 2010. "Climate policy in Western Europe and avoided costs of air pollution control," Economic Modelling, Elsevier, vol. 27(1), pages 103-115, January.
  • Handle: RePEc:eee:ecmode:v:27:y:2010:i:1:p:103-115

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    References listed on IDEAS

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    Cited by:

    1. Bollen, Johannes & Brink, Corjan, 2014. "Air pollution policy in Europe: Quantifying the interaction with greenhouse gases and climate change policies," Energy Economics, Elsevier, vol. 46(C), pages 202-215.
    2. Wang, Lining & Patel, Pralit L. & Yu, Sha & Liu, Bo & McLeod, Jeff & Clarke, Leon E. & Chen, Wenying, 2016. "Win–Win strategies to promote air pollutant control policies and non-fossil energy target regulation in China," Applied Energy, Elsevier, vol. 163(C), pages 244-253.
    3. Bollen, Johannes, 2015. "The value of air pollution co-benefits of climate policies: Analysis with a global sector-trade CGE model called WorldScan," Technological Forecasting and Social Change, Elsevier, vol. 90(PA), pages 178-191.
    4. Takashima, Nobuyuki, 2017. "International environmental agreements with ancillary benefits: Repeated games analysis," Economic Modelling, Elsevier, vol. 61(C), pages 312-320.
    5. repec:eee:appene:v:205:y:2017:i:c:p:1512-1527 is not listed on IDEAS
    6. Zhang, Shaohui & Worrell, Ernst & Crijns-Graus, Wina, 2015. "Synergy of air pollutants and greenhouse gas emissions of Chinese industries: A critical assessment of energy models," Energy, Elsevier, vol. 93(P2), pages 2436-2450.
    7. Eskeland, Gunnar S. & Rive, Nathan A. & Mideksa, Torben K., 2012. "Europe’s climate goals and the electricity sector," Energy Policy, Elsevier, vol. 41(C), pages 200-211.
    8. Mrkajic, Vladimir & Vukelic, Djordje & Mihajlov, Andjelka, 2015. "Reduction of CO2 emission and non-environmental co-benefits of bicycle infrastructure provision: the case of the University of Novi Sad, Serbia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 49(C), pages 232-242.
    9. Li, Wei & Jia, Zhijie, 2016. "The impact of emission trading scheme and the ratio of free quota: A dynamic recursive CGE model in China," Applied Energy, Elsevier, vol. 174(C), pages 1-14.
    10. Solveig Glomsrød & Taoyuan Wei & Knut Alfsen, 2013. "Pledges for climate mitigation: the effects of the Copenhagen accord on CO 2 emissions and mitigation costs," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 18(5), pages 619-636, June.
    11. Chae, Yeora & Park, Jeongim, 2011. "Quantifying costs and benefits of integrated environmental strategies of air quality management and greenhouse gas reduction in the Seoul Metropolitan Area," Energy Policy, Elsevier, vol. 39(9), pages 5296-5308, September.
    12. repec:spr:masfgc:v:22:y:2017:i:6:d:10.1007_s11027-016-9710-3 is not listed on IDEAS

    More about this item


    Computable general equilibrium Climate policy Air quality Integrated environmental analysis End of pipe control Q52 Q54;

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming


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