A non-linear model for estimating the cost of achieving emission reduction targets: The case of the U.S., China and India

Abstract

With the world talking about climate change, the United States (U.S.), China and India have announced their carbon emission reduction targets. For these three countries to achieve their targets, significant questions arise, such as what will be the annual emission reduction efforts to achieve those targets, how much it would cost and what would be the economic effects. This paper puts the carbon intensity reduction targets of China and India together with the absolute emission reduction target of the U.S. into the same non-linear model to quantitatively study the optimal emission control strategies and associated total cost for achieving those targets by the year 2020, and estimate and compare the minimized total costs of the three countries to reach their targets. Our results show that the total cost for the U.S. to achieve its emission reduction target is greater than those of China and India in terms of absolute amount. However, in terms of proportion of total cost to GDP, China and India’s ratios are significantly greater than that of the U.S., indicating that for the developing countries such as China and India, the achievement of emission reduction targets needs relatively greater effort.