A Case-Study on Project-Level CO2 Mitigation Costs in Industrialised Countries - The Climate Cent Foundation in Switzerland

Laura Kunz () and Adrian Muller ()
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Laura Kunz: Socioeconomic Institute, University of Zurich, Postal: Blümlisalpstrasse 10, , 8006 Zürich,, Switzerland

No 342, Working Papers in Economics from University of Gothenburg, Department of Economics

Abstract: We analyse CO2 emissions reduction costs based on project data from the Climate Cent Foundation (CCF), a climate policy instrument in Switzerland. We draw four conclusions. First, for the projects investigated, the CCF on average pays € 63/t. Due to the Kyoto Protocol, the CCF buys reductions until 2012 only. This cutoff increases reported per ton reduction costs, as the additional lifetime project costs are set in relation to reductions until 2012 only, rather than to reductions realised over the whole lifetime. Lifetime reduction costs are € 45/t. Second, correlation between CCF’s payments and lifetime reduction costs per ton is low. Projects with low per ton reduction costs should thus be identified based on lifetime per ton reduction costs. Third, the wide range of project costs per ton observed casts doubts on the widely used identification of the merit order of reduction measures based on average per ton costs for technology types. Finally, the CCF covers only a fraction of additional reduction costs. Decisions to take reduction efforts thus depend on additional, non-observable and/or non-economic motives. Any generalisation of results has to consider that this analysis is based on prospective costs of a sub-sample of projects in Switzerland.

Keywords: abatement cost curve; Climate Cent Foundation; climate policy; emissions reduction; mitigation costs (search for similar items in EconPapers)
JEL-codes: D24 Q40 Q52 Q54 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2009-01-20, Revised 2009-02-01
New Economics Papers: this item is included in nep-ene, nep-env and nep-ppm
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http://hdl.handle.net/2077/19128 (text/html)

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Journal Article: A case study on project-level CO2 mitigation costs in industrialised countries: the Climate Cent Foundation in Switzerland (2010)
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