Evaluating cost-effective strategies for meeting regional CO 2 targets

Abstract

Various climate protocol proposals oblige different industrialized countries to reduce CO 2 and other greenhouse gas emissions. In principle, the total costs of these obligations could be substantially reduced if emission reductions are implemented in regions with low marginal costs for CO 2 reduction. This has been difficult to quantify because of lack of models with suitable regional and sectoral detail. In this paper we perform these calculations by taking advantage of the capability of the IMAGE 2 model to compute regional emissions and costs. Two main options are examined for allocating emission reductions required of industrialized regions in a cost effective manner: (1) allocating them among industrialized regions (2) allocating them among all world regions. The cost savings for each of these options are presented. The main conclusions are that (a) it is of great importance for the cost comparisons of protocols to use a well defined baseline scenario and clearly formulated targets, and (b) large economic benefits, in the order of 35–65%, can accrue from joint-implementation agreements which allocate investments on the basis of net marginal costs of CO 2 emission reduction.