Advertisement

Climatic Change

, Volume 114, Issue 1, pp 59–78 | Cite as

On the regional distribution of mitigation costs in a global cap-and-trade regime

  • Gunnar LudererEmail author
  • Enrica DeCian
  • Jean-Charles Hourcade
  • Marian Leimbach
  • Henri Waisman
  • Ottmar Edenhofer
Article

Abstract

This paper analyzes the regional distribution of climate change mitigation costs in a global cap-and-trade regime. Four stylized burden-sharing rules are considered, ranging from GDP-based permit allocations to schemes that foresee a long-term convergence of per-capita emission permits. The comparison of results from three structurally different hybrid, integrated energy-economy models allows us to derive robust insights as well as identify sources of uncertainty with respect to the regional distribution of the costs of climate change mitigation. We find that regional costs of climate change mitigation may deviate substantially from the global mean. For all models, the mitigation cost average of the four scenarios is higher for China than for the other macro-regions considered. Furthermore, China suffers above-world-average mitigation costs for most burden-sharing rules in the long-term. A decomposition of mitigation costs into (a) primary (domestic) abatement costs and (b) permit trade effects, reveals that the large uncertainty about the future development of carbon prices results in substantial uncertainties about the financial transfers associated with carbon trade for a given allocation scheme. This variation also implies large uncertainty about the regional distribution of climate policy costs.

Keywords

Climate Policy Abatement Cost Carbon Price Emission Permit Mitigation Cost 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Abbreviations

IPCC

Intergovernmental panel on climate change

SAR

Second assessment report of the IPCC

TAR

Third assessment report of the IPCC

RECIPE

Report on energy and climate policy in Europe

Notes

Acknowledgments

The authors would like to thank Christian Flachsland as well as the anonymous reviewers for their valuable comments on earlier versions of this manuscript. The RECIPE project was funded by Allianz and WWF Europe.

References

  1. Bauer N, Baumstark L, Leimbach M (2011) The REMIND-R model: the role of renewables in the low-carbon transformation. Clim Change, this issueGoogle Scholar
  2. Bosetti V, Carraro C, Galeotti M, Massetti E, Tavoni M (2006) WITCH: a world induced technical change hybrid model. Energ J 27(Special Issue 2):13–38Google Scholar
  3. Bosetti V, Carraro C, Galeotti, Massetti E, Tavoni M (2007) The WITCH model: structure, baseline and solution. FEEM Working Paper N. 10.2007, MilanGoogle Scholar
  4. Clarke L, Edmonds J, Krey V, Richels R, Rose S, Tavoni M (2009) International climate policy architectures: overview of the EMF22 international scenarios. Energ Econ 31:S64–S81CrossRefGoogle Scholar
  5. Coase R (1960) The problem of social cost. J Law Econ 3:1–44CrossRefGoogle Scholar
  6. Crassous R, Hourcarde JC, Sassi O (2006) Endogenous structural change and climate targets modeling experiments with IMACLIM-R. Energ J 27:259–276Google Scholar
  7. De Cian E, Bosetti V, Tavoni M (2011) Technology innovation and diffusion in ‘less than ideal’ climate policies: an assessment with the WITCH model. Clim Chang. doi: 10.1007/s10584-011-0320-5
  8. den Elzen M, Höhne N (2008) Reductions of greenhouse gas emissions in Annex I and non-Annex I countries for meeting concentration stabilisation targets. Clim Chang 91(3–4):249–274. doi: 10.1007/s10584-008-9484-z CrossRefGoogle Scholar
  9. den Elzen MGJ, Lucas PL, van Vuuren DP (2008) Regional abatement action and costs under allocation schemes for emission allowances for achieving low CO2-equivalent concentrations. Clim Chang 90(3):243–268. doi: 10.1007/s10584-008-9466-1 CrossRefGoogle Scholar
  10. Fisher BS, Barrett S, Bohm P, Kuroda M, Mubazi JKE, Shah A, Stavins RN (1996) An economic assessment of policy instruments for combatting climate change. In: Bruce PJ, Lee H, Haites EF (eds) Climate change 1995. Economic and social dimensions of climate change. Contribution of working group III to the second assessment report of the intergovernmental panel on climate change. Cambridge University Press, CambridgeGoogle Scholar
  11. Fisher BS, Nakicenovic N et al (2007) Issues related to mitigation in the long term context. In: Metz B, Davidson OR, Bosch PR, Dave R, Meyer LA (eds) Climate change 2007: mitigation. Contribution of working group III to the fourth assessment report of the inter-governmental panel on climate change. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USAGoogle Scholar
  12. Gupta S, Tirpak DA et al (2007) Policies, instruments, and co-operative arrangements. In: Metz B, Davidson OR, Bosch PR, Dave R, Meyer LA (eds) Climate change 2007: mitigation. Contribution of working group III to the fourth assessment report of the inter-governmental panel on climate change. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USAGoogle Scholar
  13. Hof AF, den Elzen MGJ, van Vuuren DP (2008) Environmental effectiveness and economic consequences of fragmented versus universal regimes: what can we learn from model studies? Int Environ Agreements Polit Law Econ 9(1):39–62. doi: 10.1007/s10784-008-9087-1 CrossRefGoogle Scholar
  14. Höhne N, den Elzen MGJ, Weiss M (2006) Common but differentiated convergence (CDC), a new conceptual approach to long-term climate policy. Clim Pol 6(2):181–199CrossRefGoogle Scholar
  15. Hourcade JC et al (1996) A review of mitigation cost studies. In: Bruce PJ, Lee H, Haites EF (eds) Climate change 1995. Economic and social dimensions of climate change. Contribution of working group III to the second assessment report of the intergovernmental panel on climate change. Cambridge University Press, CambridgeGoogle Scholar
  16. Hourcade JC, Shukla PR et al (2001) Global, regional, and national costs and ancillary benefits of mitigation. In: Metz B, Davidson O, Swart R, Pan J (eds) Climate change 2001—mitigation. Contribution of working group III to the third assessment report of the intergovernmental panel on climate change. Cambridge University Press, CambridgeGoogle Scholar
  17. Jakob M, Bosetti V, Weisman H, De Cian E, Steckel J, Leimbach M, Baumstark L (2009a) The RECIPE reference scenarios. RECIPE Background Paper, Potsdam Institute for Climate Impact Research. Available online at http://www.pik-potsdam.de/recipe
  18. Jakob M, Waisman H, Bosetti V, De Cian E, Leimbach M, Baumstark L, Luderer G (2009b) Description of the RECIPE models. RECIPE Background Paper, Potsdam Institute for Climate Impact Research. Available online at http://www.pik-potsdam.de/recipe
  19. Jakob M, Luderer G, Steckel J, Bosetti V, Tavoni M, Waisman H (2010) Time to act now? assessing the costs of delaying climate measures and benefits of early action. Clim Change, this issue, doi: 10.1007/s10584-011-0128-3
  20. Leimbach M, Bauer N, Baumstark L, Edenhofer O (2010a) Mitigation costs in a globalized world: climate policy analysis with REMIND-R. Environ Model Assess 15(3):155–173. doi: 10.1007/s10666-009-9204-8 CrossRefGoogle Scholar
  21. Leimbach M, Bauer N, Baumstark L, Lüken M, Edenhofer O (2010b) Technological change and international trade–insights from REMIND-R. Energ J 31:109–136Google Scholar
  22. Luderer G, Bosetti V, Jakob M, Leimbach M, Edenhofer O (2011) The economics of decarbonizing the energy system: results and insights from the RECIPE model intercomparison. Clim Change, this issueGoogle Scholar
  23. Lüken M, Edenhofer O, Knopf B, Leimbach M, Luderer G, Bauer N (2011) The role of technological availability for the distributive impacts of climate change mitigation policy. Energ Pol 39(10):6030–6039CrossRefGoogle Scholar
  24. Manne AS, Stephan G (2005) Global climate change and the equity-efficiency puzzle. Energy 30:2525–2536CrossRefGoogle Scholar
  25. Meinshausen M, Meinshausen N, Hare W, Raper SCB, Frieler K, Knutti R, Frame DJ, Allen MR (2009) Greenhouse-gas emission targets for limiting global warming to 2 °C. Nature 458(7242):1158–1162CrossRefGoogle Scholar
  26. Meyer A (2000) Contraction & convergence. The global solution to climate change. Schumacher Briefings, 5. Green Books, Bristol, UK. http://www.gci.org.uk/Briefings/ICE.pdf
  27. Rogelj J, Nabel J, Chen C, Hare W, Markmann K, Meinshausen M, Schaeffer M, Macey K, Hohne N (2010) “Copenhagen accord pledges are paltry.” Nature 464(7292) (April 22): 1126–1128. doi: 10.1038/4641126a
  28. Rose A, Stevens B, Edmonds J, Wise M (1998) International equity and differentiation in global warming policy. An application to tradable emission permits. Environ Resour Econ 12:25–51CrossRefGoogle Scholar
  29. Sassi O, Crassous R, Hourcade JC, Gitz V, Waisman H, Guivarch C (2010) IMACLIM-R: a modelling framework to simulate sustainable development pathways. Int J Glob Environ Issues 10:5–24CrossRefGoogle Scholar
  30. Stern N (2006) The economics of climate change—the stern review. Cambridge University Press, New YorkGoogle Scholar
  31. Tavoni M, et al. (2011) Technology option values and technological change towards a low carbon economy. Clim Change, this issueGoogle Scholar
  32. Waisman H, Guivarch C, Grazi F, Hourcade JC (2011) The IMACLIM-R model: infrastructures, technical inertia and the costs of low carbon futures under imperfect foresight. Clim Change, this issueGoogle Scholar
  33. WBGU (2009) Solving the climate dilemma: the budget approach. Special Report, Wissenschaftlicher Beirat Globale Umweltveränderungen, Berlin, Germany. Available online at http://www.wbgu.de/wbgu_sn2009_en.pdf

Copyright information

© Springer Science+Business Media B.V. 2012

Authors and Affiliations

  • Gunnar Luderer
    • 1
    Email author
  • Enrica DeCian
    • 2
  • Jean-Charles Hourcade
    • 3
  • Marian Leimbach
    • 1
  • Henri Waisman
    • 3
  • Ottmar Edenhofer
    • 1
  1. 1.Potsdam Institute for Climate Impact ResearchPotsdamGermany
  2. 2.Euro-Mediterranean Centre for Climate ChangeVeniceItaly
  3. 3.Centre International de Recherche sur l’Environment et le DévelopmentParisFrance

Personalised recommendations