Global warming: Efficient policies in the case of multiple pollutants

Abstract

This article investigates efficient policies against global warming in the case of multiple greenhouse gases. In a dynamic optimization model conditions for an efficient combination of abatement activities are derived. It is shown how this solution can be decentralised by a system of emission charges. Since the determination of the charge rates should be based on a long time horizon, the impact of sequential planning methods is explored. The parameters of the model are specified with respect to the main greenhouse gases (carbon dioxide, methane, nitrous oxide, chlorofluorocarbons) and a scenario for an efficient charge system is calculated. For the main emission sources the tax base and the likely range of tax rates is derived. The results illustrate that efficient policy measures against global warming will not only affect the use of fossil fuels but will also impose a considerable burden on modern agriculture specialising in livestock and in intensive farming techniques. Copyright Kluwer Academic Publishers 1992Environmental policy, greenhouse effect, carbon equivalent taxation, sequential planning,

On the economics of greenhouse gas accumulation: A simulation approach

“…Hence, it might be reasonable to assume that s(t) is not allowed to exceed an exogenously given limit of s° units that corresponds to the maximum permissible increase in temperature. As shown in Michaelis (1992), this approach leads to a cost Tninimiring time path of abatement activities along which the stock of greenhouse gases grows according to a modified Hotelling-rule.…”

“…Michaelis, 1992) the magnitude of qj can easily be derived from the gases' atmospheric lifetimes that are also published by the IPCC (1990). The resulting rates are given in the second row of Table 1.…”

“…The starting point of our analysis is a generalized version of a model originally developed in Michaelis (1992): Assume there exist n greenhouse gases Gj (i = l,2,...,n), let ej(t) denote the basic emission levels which would occur in period t without abatement activities and let v ; (t) denote the amount of pollutants prevented by abatement activities. The basic emission levels e"i(t) are assumed to grow with an exogenous rate gj, i.e.…”

“…Substitution possibilities like these raise the problem how to allocate abatement activities among the different greenhouse gases and over time in order to ensure efficiency. The theoretical properties of this minimization problem are explored in Michaelis (1992). 1 In the present paper, I will shed some light on the empirical relevance of these findings.…”

Double-dipping in environmental markets

“…The case of multiple pollutants that cause tropospheric ozone was studied by von Ungern-Sternberg (1987), who showed the importance of considering costs when developing a policy. Michaelis (1992) took a similar approach to the case of climate change where multiple pollutants (e.g., CO 2 and methane) lead to a single consequence, and develops relative prices for such pollutants. Montero (2001) considers the question as to whether cross-pollutant trading should be allowed, i.e., whether a firm should be allowed to increase emissions of pollutant A by buying credits generated by reducing pollutant B.…”