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Where in the World is it Cheapest to Cut Carbon Emissions? Ranking Countries by Total and Marginal Cost of Abatement

Author

Listed:
  • David I. Stern

    (Crawford School of Public Policy, The Australian National University)

  • John C. V. Pezzey

    (Fenner School of the Environment and Society, The Australian National University)

  • N. Ross Lambie

    (Crawford School of Public Policy, The Australian National University)

Abstract
Countries with low marginal costs of abating carbon emissions may have high total costs, and vice versa, for a given climate mitigation policy. This may help to explain different countries' policy stances on climate mitigation. We hypothesize that, under a common percentage cut in emissions intensity relative to business as usual (BAU), countries with higher BAU emissions intensities have lower marginal abatement costs, but total costs relative to output will be similar across countries; and under a common carbon price, relative total costs are higher in emissions-intensive countries. Using the results of the 22nd Energy Modeling Forum, we estimate marginal abatement cost curves for the US, EU, China, and India, which we use to estimate marginal and total costs of abatement under a number of policy options currently under international debate. The results of this analysis provide support for our hypotheses.

Suggested Citation

  • David I. Stern & John C. V. Pezzey & N. Ross Lambie, 2011. "Where in the World is it Cheapest to Cut Carbon Emissions? Ranking Countries by Total and Marginal Cost of Abatement," CCEP Working Papers 1111, Centre for Climate & Energy Policy, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:ccepwp:1111
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    File URL: http://ccep.anu.edu.au/data/2011/pdf/wpapers/CCEP1111Stern.pdf
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    References listed on IDEAS

    as
    1. Jotzo, Frank, 2010. "Comparing the Copenhagen emissions targets," Working Papers 249378, Australian National University, Centre for Climate Economics & Policy.
    2. Bang, Guri, 2010. "Energy security and climate change concerns: Triggers for energy policy change in the United States?," Energy Policy, Elsevier, vol. 38(4), pages 1645-1653, April.
    3. Kuik, Onno & Brander, Luke & Tol, Richard S.J., 2009. "Marginal abatement costs of greenhouse gas emissions: A meta-analysis," Energy Policy, Elsevier, vol. 37(4), pages 1395-1403, April.
    4. Garnaut,Ross, 2008. "The Garnaut Climate Change Review," Cambridge Books, Cambridge University Press, number 9780521744447, January.
    5. Tavoni, Massimo & Tol, Richard S. J., 2009. "Counting Only the Hits? The Risk of Underestimating the Costs of Stringent Climate Policy," Papers WP324, Economic and Social Research Institute (ESRI).
    6. Stern, David I. & Jotzo, Frank, 2010. "How ambitious are China and India's emissions intensity targets?," Energy Policy, Elsevier, vol. 38(11), pages 6776-6783, November.
    7. Dasgupta, Susmita & Hettige, Hemamala & Wheeler, David, 2000. "What Improves Environmental Compliance? Evidence from Mexican Industry," Journal of Environmental Economics and Management, Elsevier, vol. 39(1), pages 39-66, January.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Where is it cheapest to cut carbon emissions?
      by David Stern, Professor at Australian National University in The Conversation on 2012-09-04 01:32:16
    2. Bunch of New CCEP Working Papers
      by David Stern in Stochastic Trend on 2011-08-08 05:45:00
    3. Indian Perspective on Climate Change
      by David Stern in Stochastic Trend on 2011-08-14 06:33:00
    4. Paper Accepted by AJARE
      by David Stern in Stochastic Trend on 2011-11-14 09:22:00
    5. Final Versions of Two Papers Published
      by David Stern in Stochastic Trend on 2012-07-06 06:56:00

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    Cited by:

    1. Pradhan, Basanta K. & Ghosh, Joydeep & Yao, Yun-Fei & Liang, Qiao-Mei, 2017. "Carbon pricing and terms of trade effects for China and India: A general equilibrium analysis," Economic Modelling, Elsevier, vol. 63(C), pages 60-74.

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    More about this item

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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