Abatement Cost Uncertainty and Policy Instrument Selection under a Stringent Climate Policy. A Dynamic Analysis

Valentina Bosetti, Alexander Golub, Emanuele Massetti and Massimo Tavoni ()

No 2008.15, Working Papers from Fondazione Eni Enrico Mattei

Abstract: This paper investigates the relative economic and environmental outcomes of price versus quantity mechanisms to control GHG emissions when abatement costs are uncertain. In particular, we evaluate the impacts on policy costs, CO2 emissions and energy R&D for a stringent mitigation target of 550 ppmv CO2 equivalent (i.e. 450 for CO2 only) concentrations. The analysis is performed in an optimal growth framework via Monte Carlo simulations of the integrated assessment model WITCH (World Induced Technical Change Hybrid). Results indicate that the price instrument stochastically dominates the quantity instrument when a stringent stabilization policy is in place.

Keywords: Abatement Costs; Climate Policy (search for similar items in EconPapers)
JEL-codes: C6 H2 Q5 (search for similar items in EconPapers)
Date: 2008-02
New Economics Papers: this item is included in nep-ene and nep-env
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Working Paper: Abatement Cost Uncertainty and Policy Instrument Selection under a Stringent Climate Policy. A Dynamic Analysis
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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2008.15

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