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Quantifying uncertainties for emission targets

Frank Jotzo ()

Economics and Environment Network Working Papers from Australian National University, Economics and Environment Network

Abstract: What is the magnitude of uncertainties about future greenhouse gas emissions, GDP and emissions intensity of economies? Is there a link between fluctuations in economic activity and fluctuations in emissions? These questions are crucial to understand the extent and composition of cost uncertainty under emissions trading schemes, the degree to which it can be reduced by mechanism design options such asintensity targets, and for calibrating models of emissions trading under uncertainty.This paper provides empirical analyses, using historical emissions data in forecast models and in country-level analysis over time. The results indicate that uncertainty about future energy sector CO2 emissions and emissions intensity is greater than uncertainty about future GDP; that uncertainties are greater in non-OECD than in OECD countries; and that there is a strong positive correlation between fluctuations in GDP and fluctuations in CO2 emissions, but not in all cases and not outside the energy sector.

Keywords: Uncertainty; greenhouse gas emissions; GDP; emissions intensity; intensity targets; forecasting.; Uncertainty; greenhouse gas emissions; GDP; emissions intensity; intensity (search for similar items in EconPapers)
JEL-codes: Q00 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2006-07
New Economics Papers: this item is included in nep-ene, nep-env and nep-for
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