Understanding Marginal Abatement Cost Curve in Turkish Economy on the Way to Reduce of Greenhouse Gas Emission

Year 2017, Volume: 2 Issue: 5, 33 - 46, 20.12.2017

Levent Aydın

Abstract

This paper examines the
possibility of reducing greenhouse gas emissions in Turkey and estimates its
costs in a number of sectors of the economy. The main output of this paper is
introduced as a "marginal cost reduction curve" or MACC for Turkish
economic sectors. A MACC is a graphical representation of the extent of
emissions reductions that can be achieved through carbon pricing made in
different rates across the economy, and the benefits or costs associated with
reducing emissions per ton.

In order to build the
MACCs for Turkish economy, we use computable general equilibrium model. The
scenarios of the model is to run the model under different constraints
corresponding to different carbon prices, such as 1,5, 10, 25, 50, 75, and 100
dollars per ton of carbon. For each set of carbon price constraints, the
corresponding regional levels of carbon abatement are generated by the model.
We then determine the levels of abatement as a function of the carbon prices
for economy. 

Keywords

Marginal abatement cost, Carbon tax, Greenhouse gasses, CGE model, , Turkey

References

• Bauman, Y., Lee, M., Seeley, K., 2008, ‘Does technological innovation really reduce marginal abatement costs? Some theory, algebraic evidence, and policy implications’, Environmental and Resource Economics 40, 507–527.
• Burniaux, J. M., & Truong, T. (2002). GTAP-E: An energy-environmental version of the GTAP model (GTAP Technical Paper No:16). West Lafayette: Purdue University.
• Bavbek Gökşin, 2016. Adopting a carbon Tax in Turkey: Main considerations, EDAM Energy and Climate Change Climate Action Paper Series 2016/3.
• Bergman, L., 1991. “General Equilibrium Effects of Environmental Policy: A CGE Modeling Approach,” Environmental and Resource Economics, 1, 43–61.
• Blok, K., de Jager, D., Hendriks, C., Kouvaritakis, N., Mantzos, L., 2001, Economic Evaluation of Sectoral Emission Reduction Objectives for Climate Change – Comparison of ‘Top-down’ and ‘Bottom-up’ Analysis of Emission Reduction Opportunities for CO2 in European Union, Memorandum, Contribution to Environment Directorate General, European Commission by Ecofys Energy and Environment, Utrecht, Netherlands, AEA Technology Environment, London, and National Technical University of Athens, Athens.
• Blumstein, C., Stoft, S.E., 1995, ‘Technical efficiency, production functions and conservation supply curves’, Energy Policy 23, 765 –768.
• Conrad, K., 2002. “Computable General Equilibrium Models in Environmental and Resource Economics,” in T. Tietenberg and H. Folmer, eds., The International Yearbook of Environmental and Resource Economics 2002/03, Edward Elgar, pp. 66–114.
• Difiglio, C., Duleep, K.G., 1990, ‘Cost effectiveness of future fuel economy improvements’,
• Downing, P.B., White, L.J., 1986, ‘Innovation in pollution control’, Journal of Environmental Economics and Management 13, 18–29.
• Fabian Kesicki & Paul Ekins, 2012. Marginal abatement cost curves: a call for caution, Climate Policy, 12:2, 219-236, DOI: 10.1080/14693062.2011.582347
• Hertel, T. W., & Tsigas, M. (1997). Structure of GTAP. In Global trade analysis, modelling and applications. Cambridge: Cambridge University Press
• Hourcade, J. C., Jaccard, M., Bataille, C., & Ghersi, F. 2006. Hybrid modelling: New answers to old challenges. Energy Journal, Special Issue II– Hybrid Modeling of Energy Environmental Policies, 1–12
• IPCC. (1995). Climate change, 1995: Economic and social dimensions of climate change. Contribution of Working Group II to the Second Assessment Report of the Intergovernmental Panel on Climate Change, International Panel on Climate Change (IPCC), Ch. 8, Cambridge,1996.
• IPCC. (2006). Guidelines for National Greenhouse Gas Inventories Volume 2 Energy, available from http://www.ipcc-nggip.iges.or.jp/public/2006gl/vol2.html
• Jackson, T., 1991. ‘Least-cost greenhouse planning supply curves for global warming abatement’, Energy Policy 19, 35 –46.
• Keller, W.J. 1980. Tax Incidence, A General Equilibrium Approach. North-Holland.
• Kennedy, M., 2010. Ireland’s Future: A Low Carbon Economy? The Impact of Green Stimulus Investment, IAEE European Conference, Vilnius, Lithuania.
• Koetse, M. J., de Grooot, H. L. F., & Florax, R. J. G. M. 2008. Capital-energy substitution and shifts in factor demand: A meta-analysis. Energy Economics, 30, 2236–2251.
• Kiuila, O., Rutherford T., 2011. The cost of reducing CO2 emissions: Integrating abatement technologies into economic modeling, Working Papers No. 26/2011 (66), University of Warsaw Faculty of Economic Sciences.
• Kiuila, O., J. Sleszynski, 2003. “Expected effects of the ecological tax reform for the Polish economy,” Ecological Economics, 2003, 46, 103–120.
• Loulou, R., Remne, U., Kanudia, A., Lehtila, A., & Goldstein, G. 2005. Documentation for the TIMES Model PART I. Wien: Energy Technology Systems Analysis Programme.
• McKinsey & Co., 2009, A Carbon Cost Curve for Israel – A McKinsey & Company Study Reveals the Economics of Greenhouse Gas Abatement Opportunities in Israel, Jerusalem [available at http://209.172.180.101/clientservice/ccsi/Costcurves.asp].
• McKinsey & Co., 2010, Climate Change Special Initiative – Greenhouse Gas Abatement Cost Curves [available at www.mckinsey.com/clientservice/ccsi/costcurves.asp.mckinsey.com/clientservice/ccsi/costcurves.asp].
• McKitrick, R., 1999, ‘A derivation of the marginal abatement cost curve’, Journal of Environmental Economics and Management 37, 306–314.
• Meier, A.K., 1982, Supply Curves of Conserved Energy, PhD thesis, Lawrence Berkeley Laboratory, University of California, Berkeley
• Mills, E., Wilson, D., Johansson, T.B., 1991, ‘Getting started: no-regrets strategies for reducing greenhouse gas emissions’, Energy Policy 19, 526–542.
• Naucle´r, T., Enkvist, P.A., 2009, Pathways to a Low-Carbon Economy – Version 2 of the Global Greenhouse Gas Abatement Cost Curve, McKinsey & Company, New York.
• Olivier, D., Miall, H., Nectoux, F., Opperman, M., 1983, Energy-Efficient Futures: Opening the Solar Option, Blackrose Press, London.
• Pye, S., Fletcher, K., Gardiner, A., Angelini, T., Greenleaf, J., Wiley, T., Haydock, H., 2008, Review and Update of UK Abatement Costs Curves for the Industrial, Domestic and Non-Domestic Sectors, AEA Energy & Environment, Didcot
• Rentz, O., Haasis, H.D., Jattke, A., Ru, P., Wietschel, M., Amann, M., 1994, ‘Influence of energy-supply structure on emission-reduction costs’, Energy 19, 641–651.
• Robinson, S., S. Subramanian, and J. Geoghegan, 1994. “Modeling Air Pollution Abatement in a Market Based Incentive Framework for the Los Angeles Basin,” in G.
• Klaassen and F. R. Forsund, eds., Economic Instruments for Air Pollution Control, Vol. 9 of Economy and Environment, Kluwer Academic Publishers, chapter 3.
• Rosenfeld, A., Atkinson, C., Koomey, J., Meier, A., Mowris, R.J., Price, L., 1993, ‘Conserved energy supply curves for U.S. buildings’, Contemporary Economic Policy 11, 45–68
• Schmutzler, A. and L.H. Goulder, “The Choice between emission taxes and output taxes under imperfect monitoring,” Journal of Environmental Economics and Management, 1997, 32, 51–64.
• Sitnicki, S., Budzinski, K., Juda, J., Michna, J., Szpilewicz, A., 1991, ‘Opportunities for carbon emissions control in Poland’, Energy Policy 19, 995 –1002.
• Sweeney, J., Weyant, J., Chan, T.T., Chowdhary, R., Gillingham, K., Guy, A., Houde, S., Lambie, A., Naga, R.P.,
• Raybin, R., Sathe, A., Sudarshan, A., Westersund, J., Zheng, A.Y., 2008, Analysis of Measures to Meet the Requirements of California’s Assembly Bill 32, Precourt Institute for Energy Efficiency, Standford University, Stanford, CA.
• Xie, J. and S. Saltzman, “Environmental Policy Analysis: An Environmental Computable General-Equilibrium Approach for Developing Countries,” Journal of Policy Modeling, 2000, 22, 453–489.