Where is it Cheapest to Cut Carbon Emissions?

David Stern and Neil Lambie

Environmental Economics Research Hub Research Reports from Environmental Economics Research Hub, Crawford School of Public Policy, The Australian National University

Abstract: The relative cost of carbon emissions reductions across regions depends on whether we measure cost by marginal or total cost, private or economy-wide cost, and using market or purchasing power parity exchange rates. If all countries are on the same marginal carbon abatement cost curve then lower marginal costs of abatement are associated with higher energy intensities and higher total costs of abatement in achieving proportional cuts in emissions, equal emissions per capita, or common global carbon price targets. We test this conjecture using the results of the GTEM computable general equilibrium model as presented in the climate change economics review conducted by the Australian Treasury Department. Rankings of countries by costs do differ depending on whether marginal or total cost is used. But some regions, including OPEC and the former USSR, have high marginal costs and high emissions intensities and, therefore, high total costs and others like the EU relatively low marginal and total costs. Under a global emissions trading regime real economy-wide costs of abatement are higher in developing economies with currencies valued below purchasing power parity and large differences between private and economy-wide costs such as India contributing to the high GDP losses experienced in those countries.

Keywords: Climate change; costs; developing countries; computable general equilibrium (search for similar items in EconPapers)
JEL-codes: Q52 Q54 (search for similar items in EconPapers)
Date: 2010-06
New Economics Papers: this item is included in nep-cmp, nep-ene, nep-env and nep-res
References: View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Working Paper: Where is it Cheapest to Cut Carbon Emissions? (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:een:eenhrr:1063

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