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