The Economics of Greenhouse Gas Mitigation in Developing Asia

Lara Aleluia Reis,Johannes Emmerling,Massimo Tavoni,David A Raitzer

doi:10.2139/ssrn.2894782

Abstract

Developing Asia has the world’s fastest greenhouse gas emissions growth. This study uses an economy–energy–climate model to assess the effects of Paris Agreement pledges on Asia, in comparison with business as usual (BAU) and more ambitious scenarios. Results confirm that pledges must be strongly increased in ambition to achieve the Paris Agreement’s goal of less than 2 degrees Celsius (2°C) warming. The policy costs of Asia’s pledges are found to be less than 1% of gross domestic product (GDP) through 2050, while 2°C scenarios may cost less than 2% of GDP. However, costs are sensitive to assumptions about international carbon markets and mitigation timing, with costs for 2°C scenarios doubling in the absence of carbon trade, and increasing the later that mitigation is initiated. Under the 2°C scenarios, annual average energy supply investments are about $300 billion above the BAU levels through 2050. Mitigation policy may substantially reduce air pollution mortality, with up to 600,000 fewer deaths in Asia annually by 2050. When costs, benefits of avoided climate change, and cobenefits are considered together, investment in mitigation policy is found to have substantial economic returns for the region — if action is taken rapidly and international carbon market mechanisms are implemented.

Highlights

AND OBJECTIVESAmong world regions, developing Asia has had the most rapid greenhouse gas (GHG) emissions growth globally (Figure 1)
The analysis considers the case of an optimal 2 degrees Celsius (2°C) scenario, which serves as a point of comparison were mitigation to occur optimally
intended nationally determined contributions” (INDCs) lead to emissions mitigation of less than half by 2050, which falls short of the 70% reduction or more that is necessary under the scenarios to limit temperature rise to 2°C (Figure 5)

Summary

Introduction

AND OBJECTIVESAmong world regions, developing Asia has had the most rapid greenhouse gas (GHG) emissions growth globally (Figure 1). Between 1990 and 2012, emissions grew at more than 4% annually, whereas no other region had growth above 4% for the period. Despite substantial GHG emissions of 20 gigatons of carbon dioxide equivalent (GtCO2e) in 2012, per capita income in developing Asia remained below the world average, as did many aspects of energy access (Table 1). With large natural resource-dependent poor populations living in volatile climates, it is a region with high vulnerability to climate change. This means that the region has a large stake in climate change policy, both in terms of the transformation that emissions reduction may entail and the costs that the region may bear if climate change is not contained

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Conclusion