The Economics of Greenhouse Gas Mitigation in Developing Asia

42 Pages Posted: 8 Jan 2017

See all articles by Lara Reis

Lara Reis

Fondazione Eni Enrico Mattei (FEEM)

Johannes Emmerling

CMCC - Centro Euro-Mediterraneo sui Cambiamenti Climatici - European Institute onEconomy and the Environment (EIEE)

Massimo Tavoni

Fondazione Eni Enrico Mattei (FEEM); Princeton University - Princeton Environmental Institute

David Raitzer

Asian Development Bank

Date Written: December 23, 2016

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.

Keywords: climate change, energy, greenhouse gas, mitigation, Paris Agreement

JEL Classification: C61, D58, Q52, Q53, Q54

Suggested Citation

Reis, Lara and Emmerling, Johannes and Tavoni, Massimo and Raitzer, David, The Economics of Greenhouse Gas Mitigation in Developing Asia (December 23, 2016). Asian Development Bank Economics Working Paper Series No. 504, Available at SSRN: https://ssrn.com/abstract=2894782 or http://dx.doi.org/10.2139/ssrn.2894782

Lara Reis

Fondazione Eni Enrico Mattei (FEEM) ( email )

C.so Magenta 63
Milano, 20123
Italy

Johannes Emmerling

CMCC - Centro Euro-Mediterraneo sui Cambiamenti Climatici - European Institute onEconomy and the Environment (EIEE) ( email )

Via Bergognone, 34
Milan
Italy

Massimo Tavoni

Fondazione Eni Enrico Mattei (FEEM) ( email )

Corso Magenta 63
20123 Milan
Italy

Princeton University - Princeton Environmental Institute

22 Chambers Street
Princeton, NJ 08544-0708
United States

David Raitzer (Contact Author)

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

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