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Costs Savings of a Flexible Multi-Gas Climate Policy

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  • Asbjorn Aaheim, Jan S. Fuglestvedt and Odd Godal

Abstract

Current climate policies are based on the use of Global Warming Potentials (GWPs) to compare emissions of various greenhouse gases. Yet, from an economic point of view, more efficient methods exist. We compare the potential costs of implementing some long-term goal for stabilization of the climate in three cases: Reduce CO2 emissions only, reduce emissions of the four greenhouse gases CO2, CH4, N2O and SF6 using the standard IPCC GWPs and reduce emissions of the same four gases with efficient and flexible, time dependent metrics. A multi-gas approach with GWPs reduces the costs by 8 percent when compared with CO2 reductions only, whereas the costs may be reduced by an additional 2 percent if using flexible metrics. If compared with the use of GWPs, we find that efficient weights increase the cost savings of including non-CO2 gases in climate policy by 15-40%, depending on the stabilization goal.

Suggested Citation

  • Asbjorn Aaheim, Jan S. Fuglestvedt and Odd Godal, 2006. "Costs Savings of a Flexible Multi-Gas Climate Policy," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 485-502.
    • Handle: RePEc:aen:journl:2006se_weyant-a25
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    Citations

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    Cited by:

    1. Timo Kuosmanen & Marita Laukkanen, 2011. "(In)Efficient Environmental Policy with Interacting Pollutants," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 48(4), pages 629-649, April.
    2. 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.
    3. Anthony Wiskich, 2024. "Social Costs of Methane and Carbon Dioxide in a Tipping Climate," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 87(5), pages 1275-1293, May.
    4. Marten, Alex L. & Newbold, Stephen C., 2012. "Estimating the social cost of non-CO2 GHG emissions: Methane and nitrous oxide," Energy Policy, Elsevier, vol. 51(C), pages 957-972.
    5. Kuosmanen, Timo & Laukkanen, Marita, 2009. "(In)Efficient Management of Interacting Environmental Bads," Discussion Papers 54287, MTT Agrifood Research Finland.
    6. Christian Azar & Jorge García Martín & Daniel JA. Johansson & Thomas Sterner, 2023. "The social cost of methane," Climatic Change, Springer, vol. 176(6), pages 1-22, June.
    7. Jessica Strefler & Gunnar Luderer & Tino Aboumahboub & Elmar Kriegler, 2014. "Economic impacts of alternative greenhouse gas emission metrics: a model-based assessment," Climatic Change, Springer, vol. 125(3), pages 319-331, August.
    8. Aaheim, Asbjørn, 2010. "The determination of optimal climate policy," Ecological Economics, Elsevier, vol. 69(3), pages 562-568, January.
    9. Aaheim, Asbjørn & Mideksa, Torben, 2017. "Requirements to metrics of greenhouse gas emissions, given a cap on temperature," Ecological Economics, Elsevier, vol. 131(C), pages 460-467.
    10. Steven Smith & Joseph Karas & Jae Edmonds & Jiyong Eom & Andrew Mizrahi, 2013. "Sensitivity of multi-gas climate policy to emission metrics," Climatic Change, Springer, vol. 117(4), pages 663-675, April.
    11. Katsumasa Tanaka & Daniel Johansson & Brian O’Neill & Jan Fuglestvedt, 2013. "Emission metrics under the 2 °C climate stabilization target," Climatic Change, Springer, vol. 117(4), pages 933-941, April.

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    JEL classification:

    • F0 - International Economics - - General

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