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ECN publication
Title:
A sensitivity analysis of timing and costs of greenhouse gas emission reductions under learning effects and niche markets. A study with DEMETER
 
Author(s):
Zwaan, B.C.C. van der; Gerlagh, R.
 
Published by: Publication date:
ECN Policy Studies 1-8-2002
 
ECN report number: Document type:
ECN-C--02-067 ECN publication
 
Number of pages: Full text:
28 Download PDF  

Abstract:
This paper analyses the optimal timing and macro-economic costs of carbonemission reductions that mitigate the global average atmospheric temperature increase. We use a macro-economic model in which there are two competing energy sources, fossil-fuelled and non-fossil-fuelled. Technological change is represented endogenously through learning curves, and niche markets exist implying positive demand for the relatively expensive non-fossil-fuelled energy source. Under these conditions, early abatement is found to be an optimal strategy. The costs of this strategy prove to be low. We perform an extensive sensitivity analysis of our results regarding the uncertainties that dominate various economic and technological modelling parameters. Uncertainties in the learning rate and the elasticity of substitution between the two different energy sources most significantly affect the robustness of our findings.


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