A Quantitative Assessment of the Implications of Including Non-CO2 Emissions in the European ETS

25 Pages Posted: 11 Jan 2014

See all articles by Carlo Orecchia

Carlo Orecchia

Fondazione Eni Enrico Mattei (FEEM); CMCC - Centro Euro-Mediterraneo sui Cambiamenti Climatici

Ramiro Parrado

CMCC - Centro Euro-Mediterraneo sui Cambiamenti Climatici; Fondazione Eni Enrico Mattei (FEEM); Ca Foscari University of Venice - SMCC Phd

Multiple version iconThere are 2 versions of this paper

Date Written: January 10, 2014

Abstract

Although CO2 emissions stand for most of greenhouse gas (GHG) emissions, the contribution of mitigation efforts based on non-CO2 emissions is still a field that needs to be explored more thoroughly. Extending abatement opportunities to non-CO2 could reduce overall mitigation costs but it could also exert a negative pressure on agricultural output. This paper offers insights about the first effect while provides a preliminary discussion for the second. We investigate the role of non-CO2 GHGs in climate change mitigation in Europe using a computable general equilibrium (CGE) model. We develop a specific modelling framework extending the model with non-CO2 GHGs as an additional mitigation alternative. These modifications allow us to analyse the implications for the European Union (EU) of including non-CO2 GHG emissions in its cap and trade system. We distinguish two targets on all GHG emissions for 2020, a reduction by 20% and 30% with respect to 1990 levels. Within each reduction cap, we consider two mitigation opportunities by means of a carbon tax levied on: 1) CO2 emissions only, and 2) All GHGs emissions (both CO2 and non-CO2 GHG). Results show that a multi-gas mitigation policy would slightly decrease policy costs compared to the CO2 only alternative.

Keywords: CGE, Greenhouse gas emissions, Cap-and-trade system, Agriculture, Non-CO2 emissions, European Union, Effort Sharing Decision

JEL Classification: Q5, Q58

Suggested Citation

Orecchia, Carlo and Parrado, Ramiro, A Quantitative Assessment of the Implications of Including Non-CO2 Emissions in the European ETS (January 10, 2014). FEEM Working Paper No. 100.2013. Available at SSRN: https://ssrn.com/abstract=2377299 or http://dx.doi.org/10.2139/ssrn.2377299

Carlo Orecchia (Contact Author)

Fondazione Eni Enrico Mattei (FEEM) ( email )

C.so Magenta 63
Milano, 20123
Italy

CMCC - Centro Euro-Mediterraneo sui Cambiamenti Climatici ( email )

via Augusto Imperatore, 16
Lecce, I-73100
Italy

Ramiro Parrado

CMCC - Centro Euro-Mediterraneo sui Cambiamenti Climatici ( email )

via Augusto Imperatore, 16
Lecce, I-73100
Italy

Fondazione Eni Enrico Mattei (FEEM) ( email )

Isola di San Giorgio Maggiore
Venezia, VE 30124
Italy

Ca Foscari University of Venice - SMCC Phd ( email )

Dorsoduro 3246
Venice, Veneto 30123
Italy

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