Economic Evaluation of Sectoral Emission Reduction Objectives for Climate Change

Publisher Summary This paper summarizes a study that identifies a least-cost allocation of objectives for different sectors and greenhouse gases so that the European Union would meet its Kyoto target of –8% in 2008–2012 compared to 1990 emissions. For the purposes of the study, it was assumed that the EU would comply with its Kyoto target without the “Kyoto mechanisms.” The study concludes that the marginal abatement cost amounts to € 99 42/tCO 2 -eq if each Member State fulfils their Kyoto “burden sharing” target individually. However, the cost would be reduced to € 99 20/tCO 2 -eq if the EU Member States fulfill their Kyoto obligations jointly, allowing to take measures where they are most cost-effective. In this least cost case, the annual compliance cost in 2010 is estimated at € 99 3.7 billion. The compliance cost would be fairly small in most sectors. This approach will fully maintain the environmental integrity of the Kyoto Protocol, while identifying those policies and measures that achieve the Kyoto target in a manner that minimizes the cost. Simply, the intention is to identify a least-cost allocation so that the cost of production of energy and other goods would increase as little as possible.