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Meeting emission targets under uncertainty—the case of Finnish non-emission-trading sector

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  • A. Hast
  • T. Ekholm
  • I. Savolainen

Abstract

The European Union (EU) has set a target to reduce its greenhouse gas (GHG) emissions at least 10 % below the 2005 levels by 2020 in the non-Emission Trading Sector (non-ETS). As part of this, each Member State has a binding national emission limitation target for the non-ETS sector. Finland’s target, examined as a case study in this paper, is to reduce emissions at least 16 % below 2005 levels by 2020. The objective of this study is to find cost optimal mitigation portfolios that meet Finland’s reduction target and to analyze the risks of not attaining the emission target or exceeding the assumed costs. The question was addressed with a stochastic optimization model, Stochastic Optimization of non-ETS Emissions (SONETS) selecting separate mitigation measures that meet the target on expectation. The results show that optimal portfolios include relatively high uncertainty both in costs and achieved reductions. The prices of crude oil and diesel, and the abatement cost of reducing hydrofluorocarbon (HFC) emissions seem to account for the majority of uncertainty regarding total costs. The baseline predictions for various non-ETS subsectors (such as transport and agriculture) were found to have the greatest contribution to the uncertainty of attaining emission target. The results also show that some abatement actions are chosen in nearly all efficient portfolios, while other actions are seldom chosen. For example replacing oil burners in the end of technical life time or recovery of methane (CH 4 ) from waste are often chosen whereas ban of landfilling of organic waste is chosen extremely seldom. It also seems that the results are somewhat sensitive to the inclusion or exclusion of the interdependencies of mitigation measures. Copyright Springer Science+Business Media B.V. 2013

Suggested Citation

  • A. Hast & T. Ekholm & I. Savolainen, 2013. "Meeting emission targets under uncertainty—the case of Finnish non-emission-trading sector," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 18(5), pages 637-658, June.
    • Handle: RePEc:spr:masfgc:v:18:y:2013:i:5:p:637-658
    DOI: 10.1007/s11027-012-9379-1
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    References listed on IDEAS

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    1. Nordhaus, William D, 1991. "To Slow or Not to Slow: The Economics of the Greenhouse Effect," Economic Journal, Royal Economic Society, vol. 101(407), pages 920-937, July.
    2. Manne, Alan S. & Richels, Richard G., 1991. "Buying greenhouse insurance," Energy Policy, Elsevier, vol. 19(6), pages 543-552.
    3. Soimakallio, S. & Mäkinen, T. & Ekholm, T. & Pahkala, K. & Mikkola, H. & Paappanen, T., 2009. "Greenhouse gas balances of transportation biofuels, electricity and heat generation in Finland--Dealing with the uncertainties," Energy Policy, Elsevier, vol. 37(1), pages 80-90, January.
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