How Inertia and Limited Potentials Affect the Timing of Sectoral Abatements in Optimal Climate Policy
This paper investigates the optimal timing of greenhouse gas abatement efforts in a multi-sectoral model with economic inertia, each sector having a limited abatement potential. It defines economic inertia as the conjunction of technical inertia -- a social planner chooses investment on persistent abating activities, as opposed to choosing abatement at each time period independently -- and increasing marginal investment costs in abating activities. It shows that in the presence of economic inertia, optimal abatement efforts (in dollars per ton) are bell-shaped and trigger a transition toward a low-carbon economy. The authors prove that optimal marginal abatement costs should differ across sectors: they depend on the global carbon price, but also on sector-specific shadow costs of the sectoral abatement potential. The paper discusses the impact of the convexity of abatement investment costs: more rigid sectors are represented with more convex cost functions and should invest more in early abatement. The conclusion is that overlapping mitigation policies should not be discarded based on the argument that they set different marginal costs (`"different carbon prices"') in different sectors.
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dig-okr-10986119912024-08-08T14:58:02Z How Inertia and Limited Potentials Affect the Timing of Sectoral Abatements in Optimal Climate Policy Meunier, Guy Vogt-Schilb, Adrien Hallegatte, Stephane ABATEMENT ABATEMENT COSTS ABATEMENT POTENTIAL ABATEMENT STRATEGIES AMOUNT OF ABATEMENT ANNUAL EMISSIONS AUTOMOBILE BASELINE EMISSIONS CAPITAL STOCKS CARBON BUDGET CARBON ECONOMY CARBON EMISSIONS CARBON PRICE CARBON PRICES CARBON TAXES CARBON TECHNOLOGIES CARS CLIMATE CLIMATE CHANGE CLIMATE CHANGE MITIGATION CLIMATE CHANGE PROBLEM CLIMATE POLICIES CLIMATE POLICY CLIMATIC CHANGE CO CO2 COAL COST ESTIMATES COST OF CARBON COSTS OF ABATEMENT CUMULATIVE EMISSIONS DISCOUNT FACTOR DISCOUNT RATE ECOLOGICAL ECONOMICS ECONOMIC COSTS ECONOMIC SECTORS ECONOMIC THEORY ELASTICITY ELECTRICITY ELECTRICITY PRODUCTION EMISSION EMISSION ABATEMENT EMISSION REDUCTIONS EMISSIONS EMISSIONS PATHWAYS EMISSIONS SCENARIOS ENERGY BUILDINGS ENERGY ECONOMICS ENERGY POLICY ENERGY SAVINGS ENVIRONMENTAL ECONOMICS ENVIRONMENTAL POLICY EXTERNALITIES FORESTRY GHG GREENHOUSE GREENHOUSE GAS GREENHOUSE GAS ABATEMENT GREENHOUSE GAS EMISSIONS GREENHOUSE GASES INFRASTRUCTURE DEVELOPMENT IPCC LAND-USE PLANNING LOW CARBON TECHNOLOGIES LOW-CARBON MARGINAL ABATEMENT MARGINAL ABATEMENT COST MARGINAL COST MARGINAL PRICE MARKET FAILURES MOBILITY PORTFOLIO POWER SECTOR PRESENT VALUE PRICE SIGNAL RENEWABLE ENERGY RESOURCE ECONOMICS SCENARIOS SOCIAL COST OF CARBON SUBSTITUTION SUSTAINABLE DEVELOPMENT TAX TEMPERATURE TOTAL ABATEMENT COST TOTAL COST TOTAL COSTS TRANSPORT TRANSPORT SECTOR VEHICLE VEHICLES WASTE This paper investigates the optimal timing of greenhouse gas abatement efforts in a multi-sectoral model with economic inertia, each sector having a limited abatement potential. It defines economic inertia as the conjunction of technical inertia -- a social planner chooses investment on persistent abating activities, as opposed to choosing abatement at each time period independently -- and increasing marginal investment costs in abating activities. It shows that in the presence of economic inertia, optimal abatement efforts (in dollars per ton) are bell-shaped and trigger a transition toward a low-carbon economy. The authors prove that optimal marginal abatement costs should differ across sectors: they depend on the global carbon price, but also on sector-specific shadow costs of the sectoral abatement potential. The paper discusses the impact of the convexity of abatement investment costs: more rigid sectors are represented with more convex cost functions and should invest more in early abatement. The conclusion is that overlapping mitigation policies should not be discarded based on the argument that they set different marginal costs (`"different carbon prices"') in different sectors. 2012-12-21T18:58:41Z 2012-12-21T18:58:41Z 2012-08 http://documents.worldbank.org/curated/en/2012/08/16563648/inertia-limited-potentials-affect-timing-sectoral-abatements-optimal-climate-policy https://hdl.handle.net/10986/11991 English en_US Policy Research working paper;no. WPS 6154 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank application/pdf text/plain World Bank, Washington, DC |
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Banco Mundial |
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Estados Unidos |
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US |
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Bibliográfico |
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dig-okr |
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biblioteca |
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America del Norte |
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Biblioteca del Banco Mundial |
| language |
English en_US |
| topic |
ABATEMENT ABATEMENT COSTS ABATEMENT POTENTIAL ABATEMENT STRATEGIES AMOUNT OF ABATEMENT ANNUAL EMISSIONS AUTOMOBILE BASELINE EMISSIONS CAPITAL STOCKS CARBON BUDGET CARBON ECONOMY CARBON EMISSIONS CARBON PRICE CARBON PRICES CARBON TAXES CARBON TECHNOLOGIES CARS CLIMATE CLIMATE CHANGE CLIMATE CHANGE MITIGATION CLIMATE CHANGE PROBLEM CLIMATE POLICIES CLIMATE POLICY CLIMATIC CHANGE CO CO2 COAL COST ESTIMATES COST OF CARBON COSTS OF ABATEMENT CUMULATIVE EMISSIONS DISCOUNT FACTOR DISCOUNT RATE ECOLOGICAL ECONOMICS ECONOMIC COSTS ECONOMIC SECTORS ECONOMIC THEORY ELASTICITY ELECTRICITY ELECTRICITY PRODUCTION EMISSION EMISSION ABATEMENT EMISSION REDUCTIONS EMISSIONS EMISSIONS PATHWAYS EMISSIONS SCENARIOS ENERGY BUILDINGS ENERGY ECONOMICS ENERGY POLICY ENERGY SAVINGS ENVIRONMENTAL ECONOMICS ENVIRONMENTAL POLICY EXTERNALITIES FORESTRY GHG GREENHOUSE GREENHOUSE GAS GREENHOUSE GAS ABATEMENT GREENHOUSE GAS EMISSIONS GREENHOUSE GASES INFRASTRUCTURE DEVELOPMENT IPCC LAND-USE PLANNING LOW CARBON TECHNOLOGIES LOW-CARBON MARGINAL ABATEMENT MARGINAL ABATEMENT COST MARGINAL COST MARGINAL PRICE MARKET FAILURES MOBILITY PORTFOLIO POWER SECTOR PRESENT VALUE PRICE SIGNAL RENEWABLE ENERGY RESOURCE ECONOMICS SCENARIOS SOCIAL COST OF CARBON SUBSTITUTION SUSTAINABLE DEVELOPMENT TAX TEMPERATURE TOTAL ABATEMENT COST TOTAL COST TOTAL COSTS TRANSPORT TRANSPORT SECTOR VEHICLE VEHICLES WASTE ABATEMENT ABATEMENT COSTS ABATEMENT POTENTIAL ABATEMENT STRATEGIES AMOUNT OF ABATEMENT ANNUAL EMISSIONS AUTOMOBILE BASELINE EMISSIONS CAPITAL STOCKS CARBON BUDGET CARBON ECONOMY CARBON EMISSIONS CARBON PRICE CARBON PRICES CARBON TAXES CARBON TECHNOLOGIES CARS CLIMATE CLIMATE CHANGE CLIMATE CHANGE MITIGATION CLIMATE CHANGE PROBLEM CLIMATE POLICIES CLIMATE POLICY CLIMATIC CHANGE CO CO2 COAL COST ESTIMATES COST OF CARBON COSTS OF ABATEMENT CUMULATIVE EMISSIONS DISCOUNT FACTOR DISCOUNT RATE ECOLOGICAL ECONOMICS ECONOMIC COSTS ECONOMIC SECTORS ECONOMIC THEORY ELASTICITY ELECTRICITY ELECTRICITY PRODUCTION EMISSION EMISSION ABATEMENT EMISSION REDUCTIONS EMISSIONS EMISSIONS PATHWAYS EMISSIONS SCENARIOS ENERGY BUILDINGS ENERGY ECONOMICS ENERGY POLICY ENERGY SAVINGS ENVIRONMENTAL ECONOMICS ENVIRONMENTAL POLICY EXTERNALITIES FORESTRY GHG GREENHOUSE GREENHOUSE GAS GREENHOUSE GAS ABATEMENT GREENHOUSE GAS EMISSIONS GREENHOUSE GASES INFRASTRUCTURE DEVELOPMENT IPCC LAND-USE PLANNING LOW CARBON TECHNOLOGIES LOW-CARBON MARGINAL ABATEMENT MARGINAL ABATEMENT COST MARGINAL COST MARGINAL PRICE MARKET FAILURES MOBILITY PORTFOLIO POWER SECTOR PRESENT VALUE PRICE SIGNAL RENEWABLE ENERGY RESOURCE ECONOMICS SCENARIOS SOCIAL COST OF CARBON SUBSTITUTION SUSTAINABLE DEVELOPMENT TAX TEMPERATURE TOTAL ABATEMENT COST TOTAL COST TOTAL COSTS TRANSPORT TRANSPORT SECTOR VEHICLE VEHICLES WASTE |
| spellingShingle |
ABATEMENT ABATEMENT COSTS ABATEMENT POTENTIAL ABATEMENT STRATEGIES AMOUNT OF ABATEMENT ANNUAL EMISSIONS AUTOMOBILE BASELINE EMISSIONS CAPITAL STOCKS CARBON BUDGET CARBON ECONOMY CARBON EMISSIONS CARBON PRICE CARBON PRICES CARBON TAXES CARBON TECHNOLOGIES CARS CLIMATE CLIMATE CHANGE CLIMATE CHANGE MITIGATION CLIMATE CHANGE PROBLEM CLIMATE POLICIES CLIMATE POLICY CLIMATIC CHANGE CO CO2 COAL COST ESTIMATES COST OF CARBON COSTS OF ABATEMENT CUMULATIVE EMISSIONS DISCOUNT FACTOR DISCOUNT RATE ECOLOGICAL ECONOMICS ECONOMIC COSTS ECONOMIC SECTORS ECONOMIC THEORY ELASTICITY ELECTRICITY ELECTRICITY PRODUCTION EMISSION EMISSION ABATEMENT EMISSION REDUCTIONS EMISSIONS EMISSIONS PATHWAYS EMISSIONS SCENARIOS ENERGY BUILDINGS ENERGY ECONOMICS ENERGY POLICY ENERGY SAVINGS ENVIRONMENTAL ECONOMICS ENVIRONMENTAL POLICY EXTERNALITIES FORESTRY GHG GREENHOUSE GREENHOUSE GAS GREENHOUSE GAS ABATEMENT GREENHOUSE GAS EMISSIONS GREENHOUSE GASES INFRASTRUCTURE DEVELOPMENT IPCC LAND-USE PLANNING LOW CARBON TECHNOLOGIES LOW-CARBON MARGINAL ABATEMENT MARGINAL ABATEMENT COST MARGINAL COST MARGINAL PRICE MARKET FAILURES MOBILITY PORTFOLIO POWER SECTOR PRESENT VALUE PRICE SIGNAL RENEWABLE ENERGY RESOURCE ECONOMICS SCENARIOS SOCIAL COST OF CARBON SUBSTITUTION SUSTAINABLE DEVELOPMENT TAX TEMPERATURE TOTAL ABATEMENT COST TOTAL COST TOTAL COSTS TRANSPORT TRANSPORT SECTOR VEHICLE VEHICLES WASTE ABATEMENT ABATEMENT COSTS ABATEMENT POTENTIAL ABATEMENT STRATEGIES AMOUNT OF ABATEMENT ANNUAL EMISSIONS AUTOMOBILE BASELINE EMISSIONS CAPITAL STOCKS CARBON BUDGET CARBON ECONOMY CARBON EMISSIONS CARBON PRICE CARBON PRICES CARBON TAXES CARBON TECHNOLOGIES CARS CLIMATE CLIMATE CHANGE CLIMATE CHANGE MITIGATION CLIMATE CHANGE PROBLEM CLIMATE POLICIES CLIMATE POLICY CLIMATIC CHANGE CO CO2 COAL COST ESTIMATES COST OF CARBON COSTS OF ABATEMENT CUMULATIVE EMISSIONS DISCOUNT FACTOR DISCOUNT RATE ECOLOGICAL ECONOMICS ECONOMIC COSTS ECONOMIC SECTORS ECONOMIC THEORY ELASTICITY ELECTRICITY ELECTRICITY PRODUCTION EMISSION EMISSION ABATEMENT EMISSION REDUCTIONS EMISSIONS EMISSIONS PATHWAYS EMISSIONS SCENARIOS ENERGY BUILDINGS ENERGY ECONOMICS ENERGY POLICY ENERGY SAVINGS ENVIRONMENTAL ECONOMICS ENVIRONMENTAL POLICY EXTERNALITIES FORESTRY GHG GREENHOUSE GREENHOUSE GAS GREENHOUSE GAS ABATEMENT GREENHOUSE GAS EMISSIONS GREENHOUSE GASES INFRASTRUCTURE DEVELOPMENT IPCC LAND-USE PLANNING LOW CARBON TECHNOLOGIES LOW-CARBON MARGINAL ABATEMENT MARGINAL ABATEMENT COST MARGINAL COST MARGINAL PRICE MARKET FAILURES MOBILITY PORTFOLIO POWER SECTOR PRESENT VALUE PRICE SIGNAL RENEWABLE ENERGY RESOURCE ECONOMICS SCENARIOS SOCIAL COST OF CARBON SUBSTITUTION SUSTAINABLE DEVELOPMENT TAX TEMPERATURE TOTAL ABATEMENT COST TOTAL COST TOTAL COSTS TRANSPORT TRANSPORT SECTOR VEHICLE VEHICLES WASTE Meunier, Guy Vogt-Schilb, Adrien Hallegatte, Stephane How Inertia and Limited Potentials Affect the Timing of Sectoral Abatements in Optimal Climate Policy |
| description |
This paper investigates the optimal
timing of greenhouse gas abatement efforts in a
multi-sectoral model with economic inertia, each sector
having a limited abatement potential. It defines economic
inertia as the conjunction of technical inertia -- a social
planner chooses investment on persistent abating activities,
as opposed to choosing abatement at each time period
independently -- and increasing marginal investment costs in
abating activities. It shows that in the presence of
economic inertia, optimal abatement efforts (in dollars per
ton) are bell-shaped and trigger a transition toward a
low-carbon economy. The authors prove that optimal marginal
abatement costs should differ across sectors: they depend on
the global carbon price, but also on sector-specific shadow
costs of the sectoral abatement potential. The paper
discusses the impact of the convexity of abatement
investment costs: more rigid sectors are represented with
more convex cost functions and should invest more in early
abatement. The conclusion is that overlapping mitigation
policies should not be discarded based on the argument that
they set different marginal costs (`"different carbon
prices"') in different sectors. |
| topic_facet |
ABATEMENT ABATEMENT COSTS ABATEMENT POTENTIAL ABATEMENT STRATEGIES AMOUNT OF ABATEMENT ANNUAL EMISSIONS AUTOMOBILE BASELINE EMISSIONS CAPITAL STOCKS CARBON BUDGET CARBON ECONOMY CARBON EMISSIONS CARBON PRICE CARBON PRICES CARBON TAXES CARBON TECHNOLOGIES CARS CLIMATE CLIMATE CHANGE CLIMATE CHANGE MITIGATION CLIMATE CHANGE PROBLEM CLIMATE POLICIES CLIMATE POLICY CLIMATIC CHANGE CO CO2 COAL COST ESTIMATES COST OF CARBON COSTS OF ABATEMENT CUMULATIVE EMISSIONS DISCOUNT FACTOR DISCOUNT RATE ECOLOGICAL ECONOMICS ECONOMIC COSTS ECONOMIC SECTORS ECONOMIC THEORY ELASTICITY ELECTRICITY ELECTRICITY PRODUCTION EMISSION EMISSION ABATEMENT EMISSION REDUCTIONS EMISSIONS EMISSIONS PATHWAYS EMISSIONS SCENARIOS ENERGY BUILDINGS ENERGY ECONOMICS ENERGY POLICY ENERGY SAVINGS ENVIRONMENTAL ECONOMICS ENVIRONMENTAL POLICY EXTERNALITIES FORESTRY GHG GREENHOUSE GREENHOUSE GAS GREENHOUSE GAS ABATEMENT GREENHOUSE GAS EMISSIONS GREENHOUSE GASES INFRASTRUCTURE DEVELOPMENT IPCC LAND-USE PLANNING LOW CARBON TECHNOLOGIES LOW-CARBON MARGINAL ABATEMENT MARGINAL ABATEMENT COST MARGINAL COST MARGINAL PRICE MARKET FAILURES MOBILITY PORTFOLIO POWER SECTOR PRESENT VALUE PRICE SIGNAL RENEWABLE ENERGY RESOURCE ECONOMICS SCENARIOS SOCIAL COST OF CARBON SUBSTITUTION SUSTAINABLE DEVELOPMENT TAX TEMPERATURE TOTAL ABATEMENT COST TOTAL COST TOTAL COSTS TRANSPORT TRANSPORT SECTOR VEHICLE VEHICLES WASTE |
| author |
Meunier, Guy Vogt-Schilb, Adrien Hallegatte, Stephane |
| author_facet |
Meunier, Guy Vogt-Schilb, Adrien Hallegatte, Stephane |
| author_sort |
Meunier, Guy |
| title |
How Inertia and Limited Potentials Affect the Timing of Sectoral Abatements in Optimal Climate Policy |
| title_short |
How Inertia and Limited Potentials Affect the Timing of Sectoral Abatements in Optimal Climate Policy |
| title_full |
How Inertia and Limited Potentials Affect the Timing of Sectoral Abatements in Optimal Climate Policy |
| title_fullStr |
How Inertia and Limited Potentials Affect the Timing of Sectoral Abatements in Optimal Climate Policy |
| title_full_unstemmed |
How Inertia and Limited Potentials Affect the Timing of Sectoral Abatements in Optimal Climate Policy |
| title_sort |
how inertia and limited potentials affect the timing of sectoral abatements in optimal climate policy |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012-08 |
| url |
http://documents.worldbank.org/curated/en/2012/08/16563648/inertia-limited-potentials-affect-timing-sectoral-abatements-optimal-climate-policy https://hdl.handle.net/10986/11991 |
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| _version_ |
1807158415911288832 |