Robust technology policy against emission leakage: The case of upstream subsidies

Asymmetric regulation of a global pollutant between countries can alter the competitiveness of industries and lead to emissions leakage, which hampers countries’ welfare. In order to limit leakage, governments consider supporting domestic trade-exposed firms by subsidizing their investments in abatement technology. The suppliers of such technologies tend to be less than perfectly competitive, particularly when both emissions regulations and advanced technologies are new. In this context of twin market failures, we consider the relative effects and desirability of subsidies for abatement technology. We find a more robust recommendation for upstream subsidies than for downstream subsidies. Downstream subsidies tend to increase global abatement technology prices, reduce pollution abatement abroad and increase emission leakage. On the contrary, upstream subsidies reduce abatement technology prices, and hence also emissions leakage.     

Ammonia emissions from livestock industries in Canada: Feasibility of abatement strategies

An updated national ammonia (NH₃) emissions inventory was employed to study the relationship between NH₃ emissions and livestock industries in Canada. Emissions from animal agriculture accounted for 322 kilotonnes (kt) or 64% of Canadian NH₃ emissions in 2002. Cattle and swine accounted for the bulk of livestock emissions. The provinces of Alberta, Ontario, Quebec, and Saskatchewan accounted for 28.1%, 22.0%, 18.7%, and 13.1% of total livestock emissions, respectively. Emissions from Ontario and Quebec were attributed to the intensive production of dairy, hogs and poultry. Dairy cattle emissions per hectolitre of milk were higher in Ontario and Québec than in other provinces, while swine emissions per livestock unit were higher than either beef or dairy cattle. A review of the abatement literature indicated diet manipulation to improve N efficiency and land spreading methods are very effective techniques to lower NH₃ emissions. Future research is required to evaluate the feasibility of biofilters and feces/urine separation methods.     

The geography of conflict between elk and agricultural values in the Cypress Hills, Canada

Complex ecological issues like depredation and its management are determined by multiple factors acting at more than one scale and are interlinked with complex human social and economic behaviour. Depredation by wild herbivores can be a major obstacle to agricultural community support for wildlife conservation. For three decades, crop and fence damage, competition with livestock for native rangeland and tame pasture, and depredation of stored feed by elk (Cervus elaphus canadensis) have been the cause of conflict with agricultural producers in the Cypress Hills, Alberta and Saskatchewan. Tolerance of elk presence on private lands is low because few benefits accrue to private landowners; rather they largely perceive elk as a public resource produced at their expense. Government management actions have focused on abatement inputs (e.g., population reduction; fencing) and compensation, but incentives to alter land use patterns (crop choice and location) in response to damages have not been considered. Nor has there been information on spatial structure of the elk population that would allow targeted management actions instead of attempting to manage the entire population. In this study we analysed the spatial structure of the Cypress Hills elk population, the distribution of the elk harvest in relation to agricultural conflicts, developed models of the spatial patterns of conflict fields, and evaluated compensation patterns for damage by wild herbivores. We propose modifications to current abatement and compensation programs and discuss alternative approaches involving changes to agricultural land use patterns that may reduce the intensity of conflicts with elk, and increase the acceptance capacity of landowners.     

The Role of Abatement Costs in GHG Permit Allocations: A Global Stabilization Scenario Analysis

Our objective is to propose permit allocation schemes that lead to a fair distribution of the net abatement cost among regions in a global greenhouse gas (GHG) stabilization scenario. We use a detailed technology-based energy model, World-MARKAL, to determine efficient abatement decisions, and to calculate the regional gross abatement costs (before permit allocation and trading). The net abatement costs are then calculated and used for different permit allocation schemes.     

Global and regional abatement costs of Nationally Determined Contributions (NDCs) and of enhanced action to levels well below 2 °C and 1.5 °C

As part of the Paris climate agreement, countries have submitted (Intended) Nationally Determined Contributions (NDCs), which includes greenhouse gas reduction proposals beyond 2020. In this paper, we apply the IMAGE integrated assessment model to estimate the annual abatement costs of achieving the NDC reduction targets, and the additional costs if countries would take targets in line with keeping global warming well below 2 °C and “pursue efforts” towards 1.5 °C. We have found that abatement costs are very sensitive to socio-economic assumptions: under Shared Socioeconomic Pathway 3 (SSP3) assumptions of slow economic growth, rapidly growing population, and high inequality, global abatement costs of achieving the unconditional NDCs are estimated at USD135 billion by 2030, which is more than twice the level as under the more sustainable socio-economic assumptions of SSP1. Furthermore, we project that the additional costs of full implementation of the conditional NDCs are substantial, ranging from 40 to 55 billion USD, depending on socio-economic assumptions. Of the ten major emitting economies, Brazil, Canada and the USA are projected to have the highest cots as share of GDP to implement the conditional NDCs, while the costs for Japan, China, Russia, and India are relatively low. Allowing for emission trading could decrease global costs substantially, by more than half for the unconditional NDCs and almost by half for the conditional NDCs. Finally, the required effort in terms of abatement costs of achieving 2030 emission levels consistent with 2 °C pathways would be at least three times higher than the costs of achieving the conditional NDCs – even though reductions need to be twice as much. For 1.5 °C, the costs would be 5–6 times as high.     

Cars on crutches: How much abatement do smog check repairs actually provide?

Not as much abatement as has been presumed. Smog check programs aim to curb tailpipe emissions from in-use vehicles by requiring repairs whenever emissions, measured at regular time intervals, exceed a certain threshold. Using data from California, we estimate that on average 41% of the initial emissions abatement from repairs is lost by the time of the subsequent inspection, normally two years later. Our estimates imply that the cost per pound of pollution avoided is an order of magnitude greater for smog check repairs than alternative policies such as new-vehicle standards or emissions trading among industrial point sources.     

Regulatory attitudes and environmental innovation in a model combining internal and external R&D

The extent to which environmental regulatory institutions are either ‘green’ or ‘brown’ impacts not just the intensity of regulation at any moment, but also the incentives for the development of new pollution-control technologies. We set up a strategic model of R&D in which a polluter can deploy technologies developed in-house, or license technologies developed by specialist outsiders (an ‘eco-industry’). Polluters exert R&D effort and may even develop redundant technologies to improve the terms on which they procure technology from outside. We find that, while regulatory bias has an ambiguous impact on the best-available technology, strategic delegation to systematically biased regulators can improve social welfare.     

On reducing the windfall profits in environmental subsidy programs

Investment subsidies are widely used to induce adoption of new technologies that can lower the (marginal) cost of reducing emissions. To economize on these subsidies, governments would like to distinguish between firms that need to receive a subsidy to adopt a new technology, and firms that would adopt that technology even without subsidies. We show that policies consisting of a menu of emission taxes and investment subsidies can potentially induce firms to self-select.     

Halogenated compounds and climate change: future emission levels and reduction costs

OBJECTIVES: This work assesses the contribution to climate change resulting from emissions of the group of halogenated greenhouse gases. METHODS: A bottom-up emission model covering 22 technological sectors in four major regions is described. Emission estimates for 1996 and projection for 2010 and 2020 are presented. The costs for deep cuts into projected emission levels are calculated. RESULTS: The substances covered by this study have contributed emissions of 1100 +/- 800 MT CO2 equivalents per year in 1996. In terms of their relative contribution to emissions of CO2 equivalents, this corresponds to 3 +/- 2% of global emissions of all anthropogenic greenhouse gases. The wide range of uncertainty is due to the poorly quantified net global warming potential of the ozone depleting substances, which have an indirect cooling effect on climate through the destruction of stratospheric ozone. For annual emissions of HFCs, PFCs and SF6 (which are regulated under the Kyoto Protocol and for which global warming potentials are well defined), the relative contribution is projected to increase to 2% (600 MT CO2 eq.) of global greenhouse gas emissions by 2010. This trend is expected to continue, emissions are projected to grow to a contribution of roughly 3% (870 MT CO2 eq.) in 2020 compared to 0.9% (300 MT CO2 eq.) in 1996. For HFCs, PFCs and SF6, this study identifies global emission reduction potentials of 260 MT CO2 eq. per year in 2010 and 640 MT CO2 eq. per year in 2020 at below US$ 50 per ton. These values correspond to roughly 40% and 75% of projected emissions in 2010 and 2020, respectively.     

Cost estimates of the Kigali Amendment to phase-down hydrofluorocarbons

Hydrofluorocarbons (HFCs) are synthetically produced compounds primarily used for cooling purposes and with strong global warming properties. In this paper, we analyze the global abatement costs for achieving the substantial reductions in HFC consumption agreed in the Kigali Amendment (KA) of the Montreal Protocol from October 2016. We estimate that compliance with the KA is expected to remove 39 Pg CO₂eq or 61% of global baseline HFC emissions over the entire period 2018–2050. The marginal cost of meeting the KA targets is expected to remain below 60 €/t CO₂eq throughout the period in all world regions except for developed regions where legislation to control HFC emissions has already been in place since a few years. For the latter regions, the required HFC consumption reduction is expected to come at a marginal cost increasing steadily to between 90 and 118 €/t CO₂eq in 2050. Depending on the expected rate of technological development and the extent to which envisaged electricity savings can be realized, compliance with KA is estimated attainable at a global cost ranging from a net cost-saving of 240 billion € to a net cost of 350 billion € over the entire period 2018 to 2050 and with future global electricity-savings estimated at between 0.2% and 0.7% of expected future electricity consumption.