Modelling CO2 abatement

The costs of CO2 abatement have been estimated in three principal ways: through the use of global models; through the use of single-country models (the results of which may or may not then be generalized to the world level); and through detailed calculations of the cost and environmental performance of different carbon-saving technologies. The models may be either general equilibrium models, macro models or technology-based models. Whole economy modelling is sometimes referred to as a 'top-down' approach; modelling based on detailed technological analysis is sometimes called 'bottom-up'.

There have been several reviews in varying amounts of detail of the studies reporting results of various CO2-abatement modelling exercises: Boero et al. (1991), Hoeller et al. (1991), Nordhaus (1991b), Cline (1992:ch. 4), Dean and Hoeller (1992).

Boero et al. divide the CO2-abatement models into two broad classes, while emphasizing that many of the models contain characteristics from each class. There are the general equilibrium models, concentrating on long-term equilibrium resource allocations and relative prices; and there are the macroeconomic models focusing more on short-term adjustments and disequilibrium. It is not the purpose of this chapter to repeat or extend Boero et al. 's analysis, but rather to concentrate on a few issues that have been important in influencing the results obtained.

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