Marginal abatement costs of greenhouse gas emissions from European agriculture, cost effectiveness, and the EU non-ETS burden sharing agreement

Stéphane De Cara and Pierre-Alain Jayet

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Abstract: We propose a quantitative assessment of the marginal abatement costs (MAC) of greenhouse gas emissions from European agriculture and analyze the implications of the non-ETS burden-sharing agreement (BSA) for this sector. This assessment is based on MAC reduced forms, the generic specification of which enables simple parameterization and numerical computations. Such MAC curves are parameterized for each Member State using the outputs of a detailed model of the European agricultural supply. They are then used to compute total and marginal abatement costs involved by the BSA targets, as well as the cost-effective effort sharing, the corresponding emission price and abatement costs. The main findings are: (i) flexibility mechanisms such as a cap-and-trade system for agricultural emissions could reduce the total costs of meeting the 10% EU abatement target by a factor two to three relative to the strict implementation of each country's target, (ii) the corresponding equilibrium emission price is found to be 32-42€/tCO2eq depending on the assumption regarding business-as-usual emissions, and (iii) a cap-and-trade system with allowances based on the BSA targets would involve substantial transfers from EU-15 countries to New Member States, an important share of which being made of 'hot air'.

Keywords: EMISSION DE GAZ A EFFET DE SERRE; COUTS MARGINAUX D'ABATTEMENT; SYSTEME D'ECHANGE DE QUOTAS; PROTOXYDE D'AZOTE; GREENHOUSE GAS EMISSIONS; AGRICULTURE; MARGINAL ABATEMENT COSTS; CAP-AND-TRADE SYSTEM; METHANE; NITROUS OXIDE; EUROPEAN UNION (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (67)

Published in Ecological Economics, 2011, 70 (9), pp.1680-1690. ⟨10.1016/j.ecolecon.2011.05.007⟩

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Journal Article: Marginal abatement costs of greenhouse gas emissions from European agriculture, cost effectiveness, and the EU non-ETS burden sharing agreement (2011)
Working Paper: Marginal abatement costs of greenhouse gas emissions from European agriculture, cost effectiveness, and the EU non-ETS Burden Sharing Agreement (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00999823

DOI: 10.1016/j.ecolecon.2011.05.007

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