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An Integrated Assessment of Climate Change, Air Pollution, and Energy Security Policy

  • Bob van der Zwaan

    (ECN, Energy research Centre of the Netherlands)

  • Johannes Bollen

    (PBL, Netherlands Environmental Assessment Agency)

  • Sebastiaan Hers

    (ECN, Energy research Centre of the Netherland)

This article presents an integrated assessment of climate change, air pollution, and energy security policy. Basis of our analysis is the MERGE model, designed to study the interaction between the global economy, energy use, and the impacts of climate change. For our purposes we expanded MERGE with expressions that quantify damages incurred to regional economies as a result of air pollution and lack of energy security. One of the main findings of our cost-benefit analysis is that energy security policy alone does not decrease the use of oil: global oil consumption is only delayed by several decades and oil reserves are still practically depleted before the end of the 21st century. If, on the other hand, energy security policy is integrated with optimal climate change and air pollution policy, the world’s oil reserves will not be depleted, at least not before our modeling horizon well into the 22nd century: total cumulative demand for oil then decreases by about 20%. More generally, we demonstrate that there are multiple other benefits of combining climate change, air pollution, and energy security policies and exploiting the possible synergies between them. These benefits can be large: for Europe the achievable CO2 emission abatement and oil consumption reduction levels are significantly deeper for integrated policy than when a strategy is adopted in which one of the three policies is omitted. Integrated optimal energy policy can reduce the number of premature deaths from air pollution by about 14,000 annually in Europe and over 3 million per year globally, by lowering the chronic exposure to ambient particulate matter. Only the optimal strategy combining the three types of energy policy can constrain the global average atmospheric temperature increase to a limit of 3ºC with respect to the pre-industrial level.

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Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2009.105.

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Date of creation: Nov 2009
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Handle: RePEc:fem:femwpa:2009.105
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  1. Manne, Alan & Mendelsohn, Robert & Richels, Richard, 1995. "MERGE : A model for evaluating regional and global effects of GHG reduction policies," Energy Policy, Elsevier, vol. 23(1), pages 17-34, January.
  2. Martin L. Weitzman, 2001. "Gamma Discounting," American Economic Review, American Economic Association, vol. 91(1), pages 260-271, March.
  3. Alan Manne & Richard Richels, 1995. "The Greenhouse Debate: Econonmic Efficiency, Burden Sharing and Hedging Strategies," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 1-38.
  4. William D. Nordhaus, 1992. "Rolling the 'Dice': An Optimal Transition Path for Controlling Greenhouse Gases," Cowles Foundation Discussion Papers 1019, Cowles Foundation for Research in Economics, Yale University.
  5. Bollen, Johannes & van der Zwaan, Bob & Brink, Corjan & Eerens, Hans, 2009. "Local air pollution and global climate change: A combined cost-benefit analysis," Resource and Energy Economics, Elsevier, vol. 31(3), pages 161-181, August.
  6. W. Kip Viscusi & Joseph E. Aldy, 2003. "The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World," NBER Working Papers 9487, National Bureau of Economic Research, Inc.
  7. Gerlagh, Reyer & van der Zwaan, B. C. C., 2002. "Long-Term Substitutability between Environmental and Man-Made Goods," Journal of Environmental Economics and Management, Elsevier, vol. 44(2), pages 329-345, September.
  8. Jansen, Jaap C. & Seebregts, Ad J., 2010. "Long-term energy services security: What is it and how can it be measured and valued?," Energy Policy, Elsevier, vol. 38(4), pages 1654-1664, April.
  9. repec:reg:rpubli:282 is not listed on IDEAS
  10. van der Zwaan, B. C. C. & Gerlagh, R. & G. & Klaassen & Schrattenholzer, L., 2002. "Endogenous technological change in climate change modelling," Energy Economics, Elsevier, vol. 24(1), pages 1-19, January.
  11. Bosetti, Valentina & Carraro, Carlo & Massetti, Emanuele & Sgobbi, Alessandra & Tavoni, Massimo, 2009. "Optimal energy investment and R&D strategies to stabilize atmospheric greenhouse gas concentrations," Resource and Energy Economics, Elsevier, vol. 31(2), pages 123-137, May.
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