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Multi-Gas Emission Reduction for Climate Change Policy: An Application of Fund

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  • Richard S.J. Tol

Abstract

The costs of greenhouse gas emission reduction with abatement of carbon dioxide, methane, and nitrous oxide are investigated using the FUND model. The central policy scenario keeps anthropogenic radiative forcing below 4.5 Wm2. If CO2 emission reduction were the only possibility to meet this target, the net present value of consumption losses would be $45 trillion; with abatement of the other gases added, costs fall to $33 trillion. The bulk of these costs savings can be ascribed to reductions of nitrous oxide. Because nitrous oxide emission reduction is so much more important than methane emission reduction, the choice of equivalence metric between the greenhouse gases does not matter much. Sensitivity analyses show that the shape of the cost curves for CH4 and N2O emission reductions matter, and that the inclusion of sulphate aerosols makes policy targets substantially harder to achieve. The costs of emission reduction vary greatly with the choice of stabilisation target. A target of 4.5 Wm-2 is not justified by our current knowledge of the damage costs of climate change.

Suggested Citation

  • Richard S.J. Tol, 2006. "Multi-Gas Emission Reduction for Climate Change Policy: An Application of Fund," The Energy Journal, , vol. 27(3_suppl), pages 235-250, December.
    • Handle: RePEc:sae:enejou:v:27:y:2006:i:3_suppl:p:235-250
    DOI: 10.5547/ISSN0195-6574-EJ-VolSI2006-NoSI3-11
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    More about this item

    Keywords

    Multi-gas emission reduction; Climate change policy; FUND model;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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