The additional contribution of Non-CO2 mitigation in Climate Policy costs and efforts in Europe

The use of CGE models to study the role and costs of mitigation in climate policy has provided a vast literature. However, most of the models used have focused on mitigation policies analyzing  emission reductions focused only on CO2 emissions. Although CO2 emissions stand for most of greenhouse gases (GHG) emissions, the contribution of mitigation efforts based on non-CO2 emissions is still a field that should be explored.

This paper investigates the role of non-CO2 greenhouse gases in climate change mitigation in Europe. We develop a specific modeling framework extending a GTAP-E based model with non-CO2 gases emissions as an additional mitigation alternative. The base model is a recursive-dynamic CGE based on the Gtap 7 database, and  incorporates several model and database improvements. On the supply side, the energy production has been differentiated to include renewables and nuclear energy sources which offer more flexibility for mitigation policy analysis. In addition to these features, we introduce non-CO2 emissions using the existing satellite GTAP dataset.  To model and evaluate the general equilibrium responses to mitigation policies, we tied emissions to explicit endowment, input and output flows.

These modifications allow us to evaluate the additional contribution for mitigation of multi-gas emissions considering its impact on growth and output sectoral composition. We circumscribe the analysis considering a scenario in which European Union implements a climate policy until 2020. In particular, two sets of policy scenarios have been developed. In a first scenario, Europe is assumed to reduce only CO2 emissions by 20% and 30% with respect to 1990 levels. In a second scenario, the same targets are imposed but considering a simultaneous mitigation of  CO2 and non-CO2 GHG emissions. Results show that multi-gas mitigation options  will slightly decrease GDP loss with respect to CO2 only mitigation options for 2020 climate stabilization.

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This seminar has been jointly organized by FEEM and IEFE, Bocconi University.