The costs of CO2 emission reductions: Some insights from global analyses

In recent years numerous studies on the costs of CO2 emissions abatement have been published.. The majority of these efforts have been at the country level. Such studies have contributed substantially to our understanding of the costs of emissions abatement. Studies which confine emission reduction opportunities to the boundaries of a single country however have certain limitations. First, they ignore low cost abatement opportunities available elsewhere in the world. Hence, they fail to identify least cost mitigation strategies. Second, they ignore potentially important ‘spill over effects’ — for example, the effect of a slowdown in economic growth in one country on the prices and incomes of another. Additional insights can be gained from taking a more global perspective. Capturing the relevant interactions, however, requires a ‘general equilibrium’ formulation of the global economic system.