Integrated assessment of CO2 and SO2 policies in North East Asia

Abstract This study quantifies the costs and impacts of six scenarios for carbon dioxide(CO2) and sulphur dioxide(SO2) emissions in North East Asia(NEA) within an integrated probabilistic analysis. The inclusion of the cooling effect of sulphates means that CO2 control in China would be likely to increase the regional temperature in NEA in the short-term. This is because CO2 control measures would also automatically control SO2 emissions, and so reduce their cooling effect. The scenario that involves no control for CO2 and SO2 emissions has the lowest mean total cumulative net present cost(NPC) as compared to scenarios with various SO2 controls or with CO2 reduced to 5% below year 1990 levels(in China and Japan), or any combination of SO2 + CO2 controls at these levels. The mean value of the total cumulative NPC of climate change damage, acid rain damage, CO2 and SO2 control cost in China for no CO2 or SO2 control is about US$ 0.1 trillion, compared, for instance, to about US$ 1.1 trillion for CO2 emission stabilisation at 1990 levels and no SO2 control. SO2 control also brings more disadvantages than advantages in China and Japan. The higher mean climate change impacts and control costs outweigh the benefit of lower acid rain damage. However, strict SO2 control brings more benefits than costs in South Korea where there is a large urban population and the sensitivity to acid rain is high. However, the impacts of emissions and valuation of these effects are very uncertain. Uncertainty analysis shows that the key determinants of the total NPC of costs and damages are exported climate change damages, followed by domestic climate change damages, and acid rain damages. The use of other valuation methods would make health damage bigger than this study’s estimation and acid rain damage could be a major concern in the future.