How Inertia and Limited Potentials Affect the Timing of Sectoral Abatements in Optimal Climate Policy

This paper investigates the optimal timing of greenhouse gas abatement efforts in a multi-sectoral model with economic inertia, each sector having a limited abatement potential. It defines economic inertia as the conjunction of technical inertia --...

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Main Authors:	Vogt-Schilb, Adrien, Meunier, Guy, Hallegatte, Stephane
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2012
Subjects:	ABATEMENT ABATEMENT COSTS ABATEMENT POTENTIAL ABATEMENT STRATEGIES AMOUNT OF ABATEMENT ANNUAL EMISSIONS AUTOMOBILE BASELINE EMISSIONS CAPITAL STOCKS CARBON BUDGET CARBON ECONOMY CARBON EMISSIONS CARBON PRICE CARBON PRICES CARBON TAXES CARBON TECHNOLOGIES CARS CLIMATE CLIMATE CHANGE CLIMATE CHANGE MITIGATION CLIMATE CHANGE PROBLEM CLIMATE POLICIES CLIMATE POLICY CLIMATIC CHANGE CO CO2 COAL COST ESTIMATES COST OF CARBON COSTS OF ABATEMENT CUMULATIVE EMISSIONS DISCOUNT FACTOR DISCOUNT RATE ECOLOGICAL ECONOMICS ECONOMIC COSTS ECONOMIC SECTORS ECONOMIC THEORY ELASTICITY ELECTRICITY ELECTRICITY PRODUCTION EMISSION EMISSION ABATEMENT EMISSION REDUCTIONS EMISSIONS EMISSIONS PATHWAYS EMISSIONS SCENARIOS ENERGY BUILDINGS ENERGY ECONOMICS ENERGY POLICY ENERGY SAVINGS ENVIRONMENTAL ECONOMICS ENVIRONMENTAL POLICY EXTERNALITIES FORESTRY GHG GREENHOUSE GREENHOUSE GAS GREENHOUSE GAS ABATEMENT GREENHOUSE GAS EMISSIONS GREENHOUSE GASES INFRASTRUCTURE DEVELOPMENT IPCC LAND-USE PLANNING LOW CARBON TECHNOLOGIES LOW-CARBON MARGINAL ABATEMENT MARGINAL ABATEMENT COST MARGINAL COST MARGINAL PRICE MARKET FAILURES MOBILITY PORTFOLIO POWER SECTOR PRESENT VALUE PRICE SIGNAL RENEWABLE ENERGY RESOURCE ECONOMICS SCENARIOS SOCIAL COST OF CARBON SUBSTITUTION SUSTAINABLE DEVELOPMENT TAX TEMPERATURE TOTAL ABATEMENT COST TOTAL COST TOTAL COSTS TRANSPORT TRANSPORT SECTOR VEHICLE VEHICLES WASTE
Online Access:	http://documents.worldbank.org/curated/en/2012/08/16563648/inertia-limited-potentials-affect-timing-sectoral-abatements-optimal-climate-policy http://hdl.handle.net/10986/11991

id	okr-10986-11991
recordtype	oai_dc
spelling	okr-10986-119912021-04-23T14:02:58Z How Inertia and Limited Potentials Affect the Timing of Sectoral Abatements in Optimal Climate Policy Vogt-Schilb, Adrien Meunier, Guy Hallegatte, Stephane ABATEMENT ABATEMENT COSTS ABATEMENT POTENTIAL ABATEMENT STRATEGIES AMOUNT OF ABATEMENT ANNUAL EMISSIONS AUTOMOBILE BASELINE EMISSIONS CAPITAL STOCKS CARBON BUDGET CARBON ECONOMY CARBON EMISSIONS CARBON PRICE CARBON PRICES CARBON TAXES CARBON TECHNOLOGIES CARS CLIMATE CLIMATE CHANGE CLIMATE CHANGE MITIGATION CLIMATE CHANGE PROBLEM CLIMATE POLICIES CLIMATE POLICY CLIMATIC CHANGE CO CO2 COAL COST ESTIMATES COST OF CARBON COSTS OF ABATEMENT CUMULATIVE EMISSIONS DISCOUNT FACTOR DISCOUNT RATE ECOLOGICAL ECONOMICS ECONOMIC COSTS ECONOMIC SECTORS ECONOMIC THEORY ELASTICITY ELECTRICITY ELECTRICITY PRODUCTION EMISSION EMISSION ABATEMENT EMISSION REDUCTIONS EMISSIONS EMISSIONS PATHWAYS EMISSIONS SCENARIOS ENERGY BUILDINGS ENERGY ECONOMICS ENERGY POLICY ENERGY SAVINGS ENVIRONMENTAL ECONOMICS ENVIRONMENTAL POLICY EXTERNALITIES FORESTRY GHG GREENHOUSE GREENHOUSE GAS GREENHOUSE GAS ABATEMENT GREENHOUSE GAS EMISSIONS GREENHOUSE GASES INFRASTRUCTURE DEVELOPMENT IPCC LAND-USE PLANNING LOW CARBON TECHNOLOGIES LOW-CARBON MARGINAL ABATEMENT MARGINAL ABATEMENT COST MARGINAL COST MARGINAL PRICE MARKET FAILURES MOBILITY PORTFOLIO POWER SECTOR PRESENT VALUE PRICE SIGNAL RENEWABLE ENERGY RESOURCE ECONOMICS SCENARIOS SOCIAL COST OF CARBON SUBSTITUTION SUSTAINABLE DEVELOPMENT TAX TEMPERATURE TOTAL ABATEMENT COST TOTAL COST TOTAL COSTS TRANSPORT TRANSPORT SECTOR VEHICLE VEHICLES WASTE This paper investigates the optimal timing of greenhouse gas abatement efforts in a multi-sectoral model with economic inertia, each sector having a limited abatement potential. It defines economic inertia as the conjunction of technical inertia -- a social planner chooses investment on persistent abating activities, as opposed to choosing abatement at each time period independently -- and increasing marginal investment costs in abating activities. It shows that in the presence of economic inertia, optimal abatement efforts (in dollars per ton) are bell-shaped and trigger a transition toward a low-carbon economy. The authors prove that optimal marginal abatement costs should differ across sectors: they depend on the global carbon price, but also on sector-specific shadow costs of the sectoral abatement potential. The paper discusses the impact of the convexity of abatement investment costs: more rigid sectors are represented with more convex cost functions and should invest more in early abatement. The conclusion is that overlapping mitigation policies should not be discarded based on the argument that they set different marginal costs (`"different carbon prices"') in different sectors. 2012-12-21T18:58:41Z 2012-12-21T18:58:41Z 2012-08 http://documents.worldbank.org/curated/en/2012/08/16563648/inertia-limited-potentials-affect-timing-sectoral-abatements-optimal-climate-policy http://hdl.handle.net/10986/11991 English en_US Policy Research working paper;no. WPS 6154 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ABATEMENT ABATEMENT COSTS ABATEMENT POTENTIAL ABATEMENT STRATEGIES AMOUNT OF ABATEMENT ANNUAL EMISSIONS AUTOMOBILE BASELINE EMISSIONS CAPITAL STOCKS CARBON BUDGET CARBON ECONOMY CARBON EMISSIONS CARBON PRICE CARBON PRICES CARBON TAXES CARBON TECHNOLOGIES CARS CLIMATE CLIMATE CHANGE CLIMATE CHANGE MITIGATION CLIMATE CHANGE PROBLEM CLIMATE POLICIES CLIMATE POLICY CLIMATIC CHANGE CO CO2 COAL COST ESTIMATES COST OF CARBON COSTS OF ABATEMENT CUMULATIVE EMISSIONS DISCOUNT FACTOR DISCOUNT RATE ECOLOGICAL ECONOMICS ECONOMIC COSTS ECONOMIC SECTORS ECONOMIC THEORY ELASTICITY ELECTRICITY ELECTRICITY PRODUCTION EMISSION EMISSION ABATEMENT EMISSION REDUCTIONS EMISSIONS EMISSIONS PATHWAYS EMISSIONS SCENARIOS ENERGY BUILDINGS ENERGY ECONOMICS ENERGY POLICY ENERGY SAVINGS ENVIRONMENTAL ECONOMICS ENVIRONMENTAL POLICY EXTERNALITIES FORESTRY GHG GREENHOUSE GREENHOUSE GAS GREENHOUSE GAS ABATEMENT GREENHOUSE GAS EMISSIONS GREENHOUSE GASES INFRASTRUCTURE DEVELOPMENT IPCC LAND-USE PLANNING LOW CARBON TECHNOLOGIES LOW-CARBON MARGINAL ABATEMENT MARGINAL ABATEMENT COST MARGINAL COST MARGINAL PRICE MARKET FAILURES MOBILITY PORTFOLIO POWER SECTOR PRESENT VALUE PRICE SIGNAL RENEWABLE ENERGY RESOURCE ECONOMICS SCENARIOS SOCIAL COST OF CARBON SUBSTITUTION SUSTAINABLE DEVELOPMENT TAX TEMPERATURE TOTAL ABATEMENT COST TOTAL COST TOTAL COSTS TRANSPORT TRANSPORT SECTOR VEHICLE VEHICLES WASTE
spellingShingle	ABATEMENT ABATEMENT COSTS ABATEMENT POTENTIAL ABATEMENT STRATEGIES AMOUNT OF ABATEMENT ANNUAL EMISSIONS AUTOMOBILE BASELINE EMISSIONS CAPITAL STOCKS CARBON BUDGET CARBON ECONOMY CARBON EMISSIONS CARBON PRICE CARBON PRICES CARBON TAXES CARBON TECHNOLOGIES CARS CLIMATE CLIMATE CHANGE CLIMATE CHANGE MITIGATION CLIMATE CHANGE PROBLEM CLIMATE POLICIES CLIMATE POLICY CLIMATIC CHANGE CO CO2 COAL COST ESTIMATES COST OF CARBON COSTS OF ABATEMENT CUMULATIVE EMISSIONS DISCOUNT FACTOR DISCOUNT RATE ECOLOGICAL ECONOMICS ECONOMIC COSTS ECONOMIC SECTORS ECONOMIC THEORY ELASTICITY ELECTRICITY ELECTRICITY PRODUCTION EMISSION EMISSION ABATEMENT EMISSION REDUCTIONS EMISSIONS EMISSIONS PATHWAYS EMISSIONS SCENARIOS ENERGY BUILDINGS ENERGY ECONOMICS ENERGY POLICY ENERGY SAVINGS ENVIRONMENTAL ECONOMICS ENVIRONMENTAL POLICY EXTERNALITIES FORESTRY GHG GREENHOUSE GREENHOUSE GAS GREENHOUSE GAS ABATEMENT GREENHOUSE GAS EMISSIONS GREENHOUSE GASES INFRASTRUCTURE DEVELOPMENT IPCC LAND-USE PLANNING LOW CARBON TECHNOLOGIES LOW-CARBON MARGINAL ABATEMENT MARGINAL ABATEMENT COST MARGINAL COST MARGINAL PRICE MARKET FAILURES MOBILITY PORTFOLIO POWER SECTOR PRESENT VALUE PRICE SIGNAL RENEWABLE ENERGY RESOURCE ECONOMICS SCENARIOS SOCIAL COST OF CARBON SUBSTITUTION SUSTAINABLE DEVELOPMENT TAX TEMPERATURE TOTAL ABATEMENT COST TOTAL COST TOTAL COSTS TRANSPORT TRANSPORT SECTOR VEHICLE VEHICLES WASTE Vogt-Schilb, Adrien Meunier, Guy Hallegatte, Stephane How Inertia and Limited Potentials Affect the Timing of Sectoral Abatements in Optimal Climate Policy
relation	Policy Research working paper;no. WPS 6154
description	This paper investigates the optimal timing of greenhouse gas abatement efforts in a multi-sectoral model with economic inertia, each sector having a limited abatement potential. It defines economic inertia as the conjunction of technical inertia -- a social planner chooses investment on persistent abating activities, as opposed to choosing abatement at each time period independently -- and increasing marginal investment costs in abating activities. It shows that in the presence of economic inertia, optimal abatement efforts (in dollars per ton) are bell-shaped and trigger a transition toward a low-carbon economy. The authors prove that optimal marginal abatement costs should differ across sectors: they depend on the global carbon price, but also on sector-specific shadow costs of the sectoral abatement potential. The paper discusses the impact of the convexity of abatement investment costs: more rigid sectors are represented with more convex cost functions and should invest more in early abatement. The conclusion is that overlapping mitigation policies should not be discarded based on the argument that they set different marginal costs (`"different carbon prices"') in different sectors.
format	Publications & Research :: Policy Research Working Paper
author	Vogt-Schilb, Adrien Meunier, Guy Hallegatte, Stephane
author_facet	Vogt-Schilb, Adrien Meunier, Guy Hallegatte, Stephane
author_sort	Vogt-Schilb, Adrien
title	How Inertia and Limited Potentials Affect the Timing of Sectoral Abatements in Optimal Climate Policy
title_short	How Inertia and Limited Potentials Affect the Timing of Sectoral Abatements in Optimal Climate Policy
title_full	How Inertia and Limited Potentials Affect the Timing of Sectoral Abatements in Optimal Climate Policy
title_fullStr	How Inertia and Limited Potentials Affect the Timing of Sectoral Abatements in Optimal Climate Policy
title_full_unstemmed	How Inertia and Limited Potentials Affect the Timing of Sectoral Abatements in Optimal Climate Policy
title_sort	how inertia and limited potentials affect the timing of sectoral abatements in optimal climate policy
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2012/08/16563648/inertia-limited-potentials-affect-timing-sectoral-abatements-optimal-climate-policy http://hdl.handle.net/10986/11991
_version_	1764418660659625984

How Inertia and Limited Potentials Affect the Timing of Sectoral Abatements in Optimal Climate Policy

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