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A Quantitative Assessment of the Implications of Including non-CO2 Emissions in the European ETS

Author

Listed:
  • Carlo Orecchia

    (Fondazione Eni Enrico Mattei (FEEM), and Euro-Mediterranean Center on Climate Change (CMCC), Italy)

  • Ramiro Parrado

    (Fondazione Eni Enrico Mattei (FEEM), and Euro-Mediterranean Center on Climate Change (CMCC), Italy)

Abstract
Although CO2 emissions stand for most of greenhouse gas (GHG) emissions, the contribution of mitigation efforts based on non-CO2 emissions is still a field that needs to be explored more thoroughly. Extending abatement opportunities to non-CO2 could reduce overall mitigation costs but it could also exert a negative pressure on agricultural output. This paper offers insights about the first effect while provides a preliminary discussion for the second. We investigate the role of non-CO2 GHGs in climate change mitigation in Europe using a computable general equilibrium (CGE) model. We develop a specific modelling framework extending the model with non-CO2 GHGs as an additional mitigation alternative. These modifications allow us to analyse the implications for the European Union (EU) of including non-CO2 GHG emissions in its cap and trade system. We distinguish two targets on all GHG emissions for 2020, a reduction by 20% and 30% with respect to 1990 levels. Within each reduction cap, we consider two mitigation opportunities by means of a carbon tax levied on: 1) CO2 emissions only, and 2) All GHGs emissions (both CO2 and non-CO2 GHG). Results show that a multi-gas mitigation policy would slightly decrease policy costs compared to the CO2 only alternative.

Suggested Citation

  • Carlo Orecchia & Ramiro Parrado, 2013. "A Quantitative Assessment of the Implications of Including non-CO2 Emissions in the European ETS," Working Papers 2013.100, Fondazione Eni Enrico Mattei.
    • Handle: RePEc:fem:femwpa:2013.100
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    References listed on IDEAS

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    Cited by:

    1. Standardi, Gabriele & Cai, Yiyong & Yeh, Sonia, 2017. "Sensitivity of modeling results to technological and regional details: The case of Italy's carbon mitigation policy," Energy Economics, Elsevier, vol. 63(C), pages 116-128.
    2. Delpiazzo, Elisa & Parrado, Ramiro & Standardi, Gabriele, 2017. "Extending the Public Sector in the ICES Model with an Explicit Government Institution," EIA: Climate Change: Economic Impacts and Adaptation 254041, Fondazione Eni Enrico Mattei (FEEM).
    3. Bosello, Francesco & Orecchia, Carlo & Raitzer, David A., 2016. "Decarbonization Pathways in Southeast Asia: New Results for Indonesia, Malaysia, Philippines, Thailand and Viet Nam," MITP: Mitigation, Innovation and Transformation Pathways 250260, Fondazione Eni Enrico Mattei (FEEM).
    4. Bosello, Francesco & Marangoni, Giacomo & Orecchia, Carlo & Raitzer, David A. & Tavoni, Massimo, 2016. "The Cost of Climate Stabilization in Southeast Asia, a Joint Assessment with Dynamic Optimization and CGE Models," MITP: Mitigation, Innovation and Transformation Pathways 251810, Fondazione Eni Enrico Mattei (FEEM).

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    More about this item

    Keywords

    CGE; Greenhouse gas emissions; Cap-and-trade system; Agriculture; Non-CO2 emissions; European Union; Effort Sharing Decision;
    All these keywords.

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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