ABATEMENT CAPITAL ACCUMULATION AND THE SHADOW PRICE OF CARBON

Reducing greenhouse gas emissions involves trade-offs, with the carbon shadow price serving as a key metric for assessing abatement costs and environmental performance. While green technology innovation is crucial for climate mitigation in the EU, its impact on the carbon shadow price remains underexplored. This study estimates the carbon shadow price for 27 EU member states from 1995 to 2019 using By-production Data Envelopment Analysis and examines the role of green innovation through fixed-effects and threshold regression models. The results show a significant increase in the carbon shadow price, indicating improved environmental performance, though disparities across member states reflect uneven progress. A positive relationship between green innovation and the carbon shadow price underscores its importance in enhancing environmental outcomes. Threshold regression reveals a nonlinear effect, suggesting that innovation only significantly affects the carbon shadow price once economic development and policy intensity surpass certain thresholds. This study offers new insights into the relationship between green innovation, economic development, and environmental policy, guiding low-carbon transitions in the EU and beyond.

Worldwide carbon shadow prices during 1990–2011

Global sustainability of carbon shadow pricing: The distance between observed and optimal abatement costs

This note employs the economics paradigm to sort through the complications of relying simultaneously on biomass fuels, carbon capture with active sequestration and passive carbon sequestration to meet Kyoto‐style carbon emission limits. It does so by exploiting the structure of a tax cum repurchase scheme for carbon. Under such a scheme, the carbon content of fossil fuel should be taxed at the point of purchase at a price that matches the shadow price of the carbon emission limit, but carbon embedded in biomass fuel should go un‐taxed. The price of biomass fuel would, though, have to reflect the marginal cost of any externalities it might cause and the opportunity cost of its land‐use requirements. Captured carbon could be repurchased at a price equal to the shadow price of carbon, net of the cost of active sequestration, itself the sum of private and social marginal costs. Finally, the price of the passive sequestration of carbon should equal the shadow price of carbon, net of the opportunity cost of setting those resources aside. Since a marketable permit system would support direct estimates of the requisite shadow price of carbon, such a system would also provide direct information about base prices for the tax cum repurchase scheme. To support long‐term investment in biomass supply and sequestration, though, changes over time in emission limits must be accomplished in a smooth and predictable manner.

The economic appraisal of greenhouse gases (GHG) emissions is complex. The shadow price of carbon (SPC) is derived from the best estimate of the present value of damages associated with a tonne of GHG emission in carbon dioxide equivalents (CO2 eq). The SPC rises with time, reflecting the increasing marginal damage of a tonne of GHG when added to a growing stock of atmospheric GHGs. There are many possible technical mitigation options for livestock systems, one of which includes harnessing selection tools. The study of Stott et al. (2005) describes how relative economic values (REVs) are calculated for traits included in the UK dairy profit index (£PLI) using dynamic programming tools to model a whole farm system. The REV for each trait is calculated by examining the consequence of a unit change in a trait of interest on net farm revenue, while keeping all other traits in the index fixed. The SPC provides a useful mechanism of considering the costs of GHG emissions in an economic index framework, such as £PLI. This study outlines methods for incorporating the environmental value of emissions mitigation into breeding goals.

How policy preferences affect the carbon shadow price in the OECD

The patterns and determinants of the carbon shadow price in China's industrial sector: A by-production framework with directional distance function

Cost-effectiveness comparisons between two typical pricing policies, i.e., cap and trade and carbon tax, are rare in the literature and are tackled in this study. We define various carbon shadow prices at different administrative levels. By using a computable general equilibrium model, the cost-effectiveness of various policies is compared in terms of the estimation of carbon shadow prices. The results show that an energy cap-and-trade policy yields a close GDP-based carbon shadow price but a lower GSPV-based (gross-social-production-value-based) carbon shadow price than a proportional energy reduction policy does. Compared to a cap-and-trade policy, a carbon tax policy yields a much lower GDP-based carbon shadow price but a higher GSPV-based price. Improving the stringency of either a cap-and-trade policy or a carbon tax policy has limit impact on the industrial structure of the whole economy despite the impact on both the GDP and the GSPV are different between these two policies. The comparison of the two carbon pricing policies mainly implies that a carbon tax is more cost-effective than cap-and-trade for a carbon- and trade-intensive economy, but cap-and-trade has lower sector-level impacts than carbon tax especially when the cap restriction is loose.

Role of nuclear fusion in future energy systems and the environment under future uncertainties

Investigating the impact of agricultural informatization on the carbon shadow price

Global warming and the rapid growth of carbon emissions have attracted the attention of governments and academia throughout the world. In 2006, China surpassed the United States as the emitter of the greatest volume of carbon, the largest contribution of which is derived from China’s industrial sector. This study investigated the evolution of industrial carbon shadow prices (CSPs) in China at the provincial level to assess the opportunity costs in terms of value added foregone owing to decreasing carbon emissions. A dual formulation of the by-production data envelopment analysis (DEA) model was applied to estimate the industrial carbon abatement costs in China during 2003–2017. This study represents the first attempt to apply the dual by-production DEA model for this purpose. Empirical results showed that industrial CSP increased by 3.83% annually and that the average provincial CSP was approximately $562.43 USD/ton. A significant upturn in the CSP occurred after 2006. Furthermore, disparities of changes in industrial CSP over time were checked using the test of sigma convergence. Regional divergence was observed for the period 2011–2017. Policy implications were derived from the empirical results in terms of improvements regarding carbon abatement.

The reduction of carbon emissions has become an important climate issue worldwide. However, the diversity of carbon trading systems and the differentiation policy may generate incomparable carbon abatement costs across regions and countries. Based on the nonparametric model, this paper investigates the shadow price of carbon emissions and energy structure in 38 Asian countries from 1991 to 2019. The main findings of this paper are as follows: (1) The annual average shadow price of carbon emissions experienced a fluctuating decline for Asian countries during the period 1991-2000, followed by a continuous rise and then a fluctuating decline. (2) Industrialization may lead to a decline in carbon shadow price, while urbanization may lead to a rise in the opportunity cost of carbon reduction. (3) The carbon shadow price in countries of Asia-Pacific Economic Cooperation (APEC) is lower than that in non-APEC countries. (4) The structure of energy consumption is negatively related to marginal abatement costs, while on the contrary, the coefficients of the level of human resources are significantly positive. We also derive corresponding policy measures to promote intra-regional emission reduction.

Social value of mitigation activities and forms of carbon pricing

This study develops cumulative carbon ''supply curves'' for global forests utilizing a dynamic timber supply model for sequestration of forest carbon. Because the period of concern is the next century, and particular time points within that century, the curves are not traditional Marshallian supply curves or steady-state supply curves. Rather, the focus is on cumulative carbon cost curves (quasi-supply curves) at various points in time over the next 100 years. The research estimates a number of long-term, cumulative, carbon quasi-supply curves under different price scenarios and for different time periods. The curves trace out the relationship between an intertemporal price path for carbon, as given by carbon shadow prices, and the cumulative carbon sequestered from the initiation of the shadow prices, set at 2000, to a selected future year (2010, 2050, 2100). The timber supply model demonstrates that cumulative carbon quasi-supply curves that can be generated through forestry significantly depend on initial carbon prices and expectations regarding the time profile of future carbon prices. Furthermore, long-run quasi-supply curves generated from a constant price will have somewhat different characteristics from quasi-supply curves generated with an expectation of rising carbon prices through time.The ?least-cost? curves vary the time periods under consideration and the time profile of carbon prices. The quasi-supply curves suggest that a policy of gradually increasing carbon prices will generate the least costly supply curves in the shorter periods of a decade or so. Over longer periods of time, however, such as 50 or 100 years, these advantages appear to dissipate.

This study develops cumulative carbon 'supply curves' for global forests utilizing an dynamic timber supply model for sequestration of forest carbon. Because the period of concern is the next century, and particular time points within that century, the curves are not traditional Marshallian supply curves or steady-state supply curves. Rather, the focus is on cumulative carbon cost curves (quasi-supply curves) at various points in time over the next 100 years. The research estimates a number of long-term, cumulative, carbon quasi-supply curves under different price scenarios and for different time periods. The curves trace out the relationship between an intertemporal price path for carbon, as given by carbon shadow prices, and the cumulative carbon sequestered from the initiation of the shadow prices, set at 2000, to a selected future year (2010, 2050, 2100). The timber supply model demonstrates that cumulative carbon quasi-supply curves that can be generated through forestry significantly depend on initial carbon prices and expectations regarding the time profile of future carbon prices. Furthermore, long-run quasisupply curves generated from a constant price will have somewhat different characteristics from quasisupply curves generated with an expectation of rising carbon prices through time. The 'least-cost' curves vary the time periods under consideration and the time profile of carbon prices. The quasi-supply curves suggest that a policy of gradually increasing carbon prices will generate the least costly supply curves in the shorter periods of a decade or so. Over longer periods of time, however, such as 50 or 100 years, these advantages appear to dissipate.