Decision making under uncertainty and inertia constraints: sectoral implications of the when flexibility

Franck Lecocq (), Jean Charles Hourcade () and Minh Ha-Duong
Additional contact information
Jean Charles Hourcade: CIRED - centre international de recherche sur l'environnement et le développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique

Post-Print from HAL

Abstract: Current debates on climate mitigation emphasize the role of the inertia of the economic system. Our aim in this paper is to study more in depth how sectorally differentiated inertia impacts on optimal C02-emission abatement policies. Using the STARTS model, we show that optimal abatement levels and costs differ sensibly among sectors. Differential inertia is the critical determinant of this trade-off, especially in case of a 20-year delay in the action, or in an underestimation of the growth of the transportation sector. In particular, the burden of any additional abatement effort falls on the most flexible sector, i.e. the industry.Debates on mitigation emphasize the role of inertia of the economic system. This paper aims at studying more in depth how sectorally differentiated inertia should influence optimal CO2 emission abatement policies. Using a two-sector version of STARTS, we show that under perfect expectations, optimal abatement profiles and associated costs differ sensibly between a flexible and a rigid sector (transportation). In a second step, we scrutinize the role of the uncertainty by testing the case of a 20-year delay of action and an underestimated growth of the transportation sector. We do this for three concentration ceilings and we point out the magnitude of the burden which falls on the flexible sector. We derive some policy implications for the ranking of public policies and for incentive instruments to be set up at international level.

Keywords: Inertia; Sectoralization; Climate change (search for similar items in EconPapers)
Date: 1998
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00002458v1
References: Add references at CitEc
Citations: View citations in EconPapers (42)

Published in Energy Economics, 1998, 20 (4/5), pp.539-555. ⟨10.1016/S0140-9883(98)00012-7⟩

Downloads: (external link)
https://shs.hal.science/halshs-00002458v1/document (application/pdf)

Related works:
Journal Article: Decision making under uncertainty and inertia constraints: sectoral implications of the when flexibility (1998)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00002458

DOI: 10.1016/S0140-9883(98)00012-7

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().