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The Costs of Stabilizing Global CO2 Emissions: A Probabilistic Analysis Based on Expert Judgments

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  • Alan S. Manne
  • Richard G. Richels

Abstract

In this paper, we examine the economic costs of stabilizing global CO2 emissions at 1990 levels. Previous analyses of the costs of emissions abatement have tended to be deterministic. That is, no attempt was made to assign probabilities to various scenarios. Policy-makers need information both on the range of possible outcomes and on their relative likelihood. We use a probability poll to characterize the uncertainty surrounding critical parameters and to construct probability distributions over the outcomes of interest. The analysis suggests a wide range for abatement costs. In order to stabilize global emissions, the annual price tag lies between a 2 and 6.8 percent of gross world product. This distribution is highly skewed. The expected costs are approximately 1.5 percent.

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  • Alan S. Manne & Richard G. Richels, 1994. "The Costs of Stabilizing Global CO2 Emissions: A Probabilistic Analysis Based on Expert Judgments," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 31-56.
    • Handle: RePEc:aen:journl:1994v15-01-a03
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    1. William R. Cline, 1992. "Economics of Global Warming, The," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 39, April.
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    1. Webster, Mort & Cho, Cheol-Hung, 2006. "Analysis of variability and correlation in long-term economic growth rates," Energy Economics, Elsevier, vol. 28(5-6), pages 653-666, November.
    2. Marcucci, Adriana & Panos, Evangelos & Kypreos, Socrates & Fragkos, Panagiotis, 2019. "Probabilistic assessment of realizing the 1.5 °C climate target," Applied Energy, Elsevier, vol. 239(C), pages 239-251.
    3. Jensen, Jesper & Rasmussen, Tobias N., 2000. "Allocation of CO2 Emissions Permits: A General Equilibrium Analysis of Policy Instruments," Journal of Environmental Economics and Management, Elsevier, vol. 40(2), pages 111-136, September.
    4. Manne, Alan & Richels, Richard, 1996. "The Berlin Mandate: The costs of meeting post-2000 targets and timetables," Energy Policy, Elsevier, vol. 24(3), pages 205-210, March.
    5. Mort Webster & Nidhi Santen & Panos Parpas, 2012. "An approximate dynamic programming framework for modeling global climate policy under decision-dependent uncertainty," Computational Management Science, Springer, vol. 9(3), pages 339-362, August.
    6. Adrian Cooper & Scott Livermore & Vanessa Rossi & Alan Wilson & John Walker, 1999. "The Economic Implications of Reducing Carbon Emissions," The Energy Journal, , vol. 20(1_suppl), pages 335-365, June.
    7. Yang, Yuan & Zhang, Junjie & Wang, Can, 2014. "Is China on Track to Comply with Its 2020 Copenhagen Carbon Intensity Commitment?," University of California at San Diego, Economics Working Paper Series qt1r5251g8, Department of Economics, UC San Diego.
    8. Horne, Matt & Jaccard, Mark & Tiedemann, Ken, 2005. "Improving behavioral realism in hybrid energy-economy models using discrete choice studies of personal transportation decisions," Energy Economics, Elsevier, vol. 27(1), pages 59-77, January.
    9. Gjerde, Jon & Grepperud, Sverre & Kverndokk, Snorre, 1999. "Optimal climate policy under the possibility of a catastrophe," Resource and Energy Economics, Elsevier, vol. 21(3-4), pages 289-317, August.
    10. Hourcade, Jean-Charles & Chapuis, Thierry, 1995. "No-regret potentials and technical innovation : A viability approach to integrated assessment of climate policies," Energy Policy, Elsevier, vol. 23(4-5), pages 433-445.
    11. Richels, Richard & Sturm, Peter, 1996. "The costs of CO2 emission reductions : Some insights from global analyses," Energy Policy, Elsevier, vol. 24(10-11), pages 875-887.
    12. Loschel, Andreas, 2002. "Technological change in economic models of environmental policy: a survey," Ecological Economics, Elsevier, vol. 43(2-3), pages 105-126, December.
    13. Mort Webster, 2009. "Uncertainty and the IPCC. An editorial comment," Climatic Change, Springer, vol. 92(1), pages 37-40, January.
    14. Mark K. Jaccard & John Nyboer & Crhis Bataille & Bryn Sadownik, 2003. "Modeling the Cost of Climate Policy: Distinguishing Between Alternative Cost Definitions and Long-Run Cost Dynamics," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 49-73.
    15. Richels, Richard & Edmonds, Jae, 1995. "The economics of stabilizing atmospheric CO2 concentrations," Energy Policy, Elsevier, vol. 23(4-5), pages 373-378.
    16. Kram, Tom & Hill, Douglas, 1996. "A multinational model for CO2 reduction : Defining boundaries of future CO2 emissions in nine countries," Energy Policy, Elsevier, vol. 24(1), pages 39-51, January.
    17. Böhringer, Christoph & Jensen, Jesper & Rutherford, Thomas F., 1999. "Energy market projections and differentiated carbon abatement in the European Union," ZEW Discussion Papers 99-11, ZEW - Leibniz Centre for European Economic Research.

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