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On the regional distribution of mitigation costs in a global cap-and-trade regime

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  • Gunnar Luderer

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  • Enrica DeCian
  • Jean-Charles Hourcade
  • Marian Leimbach
  • Henri Waisman
  • Ottmar Edenhofer

Abstract

This paper analyzes the regional distribution of climate change mitigation costs in a global cap-and-trade regime. Four stylized burden-sharing rules are considered, ranging from GDP-based permit allocations to schemes that foresee a long-term convergence of per-capita emission permits. The comparison of results from three structurally different hybrid, integrated energy-economy models allows us to derive robust insights as well as identify sources of uncertainty with respect to the regional distribution of the costs of climate change mitigation. We find that regional costs of climate change mitigation may deviate substantially from the global mean. For all models, the mitigation cost average of the four scenarios is higher for China than for the other macro-regions considered. Furthermore, China suffers above-world-average mitigation costs for most burden-sharing rules in the long-term. A decomposition of mitigation costs into (a) primary (domestic) abatement costs and (b) permit trade effects, reveals that the large uncertainty about the future development of carbon prices results in substantial uncertainties about the financial transfers associated with carbon trade for a given allocation scheme. This variation also implies large uncertainty about the regional distribution of climate policy costs. Copyright Springer Science+Business Media B.V. 2012

Suggested Citation

  • Gunnar Luderer & Enrica DeCian & Jean-Charles Hourcade & Marian Leimbach & Henri Waisman & Ottmar Edenhofer, 2012. "On the regional distribution of mitigation costs in a global cap-and-trade regime," Climatic Change, Springer, vol. 114(1), pages 59-78, September.
  • Handle: RePEc:spr:climat:v:114:y:2012:i:1:p:59-78
    DOI: 10.1007/s10584-012-0408-6
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Matthias Weitzel, 2017. "The role of uncertainty in future costs of key CO2 abatement technologies: a sensitivity analysis with a global computable general equilibrium model," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 22(1), pages 153-173, January.
    2. repec:eee:ecolec:v:144:y:2018:i:c:p:148-159 is not listed on IDEAS
    3. Daniel Johansson & Paul Lucas & Matthias Weitzel & Erik Ahlgren & A. Bazaz & Wenying Chen & Michel Elzen & Joydeep Ghosh & Maria Grahn & Qiao-Mei Liang & Sonja Peterson & Basanta Pradhan & Bas Ruijven, 2015. "Multi-model comparison of the economic and energy implications for China and India in an international climate regime," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 20(8), pages 1335-1359, December.
    4. Calvin, Katherine & Clarke, Leon & Krey, Volker & Blanford, Geoffrey & Jiang, Kejun & Kainuma, Mikiko & Kriegler, Elmar & Luderer, Gunnar & Shukla, P.R., 2012. "The role of Asia in mitigating climate change: Results from the Asia modeling exercise," Energy Economics, Elsevier, vol. 34(S3), pages 251-260.
    5. Miguel Rodríguez & Yolanda Pena-Boquete, 2013. "Mishandling carbon intensities," Working Papers 1302, Universidade de Vigo, Departamento de Economía Aplicada.
    6. Marian Leimbach & Niklas Roming & Gregor Schwerhoff & Anselm Schultes, 2016. "Development perspectives of Sub-Saharan Africa under climate policies," EcoMod2016 9336, EcoMod.
    7. Waisman, Henri & Rozenberg, Julie & Hourcade, Jean Charles, 2013. "Monetary compensations in climate policy through the lens of a general equilibrium assessment: The case of oil-exporting countries," Energy Policy, Elsevier, vol. 63(C), pages 951-961.
    8. Meriem Hamdi-Cherif & Henri Waisman, 2016. "Global carbon pricing and the “Common But Differentiated Responsibilities”: the case of China," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 16(5), pages 671-689, October.
    9. Schwanitz, Valeria Jana & Piontek, Franziska & Bertram, Christoph & Luderer, Gunnar, 2014. "Long-term climate policy implications of phasing out fossil fuel subsidies," Energy Policy, Elsevier, vol. 67(C), pages 882-894.
    10. Delf Neubersch & Hermann Held & Alexander Otto, 2014. "Operationalizing climate targets under learning: An application of cost-risk analysis," Climatic Change, Springer, vol. 126(3), pages 305-318, October.
    11. Volker Krey, 2014. "Global energy-climate scenarios and models: a review," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 3(4), pages 363-383, July.
    12. repec:spr:ieaple:v:17:y:2017:i:6:d:10.1007_s10784-017-9352-2 is not listed on IDEAS
    13. repec:wsi:ccexxx:v:04:y:2013:i:04:n:s2010007813400095 is not listed on IDEAS
    14. Weitzel, Matthias, 2014. "Worse off from reduced cost? The role of policy design under uncertain technological advancement," Kiel Working Papers 1926, Kiel Institute for the World Economy (IfW).
    15. Matthias Weitzel, 2017. "Who gains from technological advancement? The role of policy design when cost development for key abatement technologies is uncertain," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 19(1), pages 151-181, January.

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