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When Starting with the Most Expensive Option Makes Sense: Optimal Timing, Cost and Sectoral Allocation of Abatement Investment

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dc.contributor.authorMeunier, Guy
dc.contributor.authorVogt-Schilb, Adrien
dc.contributor.authorHallegatte, Stephane
dc.date.accessioned2018-01-26T19:25:52Z
dc.date.available2018-01-26T19:25:52Z
dc.date.issued2018-03
dc.description.abstractThis paper finds that it is optimal to start a long-term emission-reduction strategy with significant short-term abatement investment, even if the optimal carbon price starts low and grows progressively over time. Moreover, optimal marginal abatement investment costs differ across sectors of the economy. It may be preferable to spend $25 to avoid the marginal ton of carbon in a sector where abatement capital is expensive, such as public transportation, or in a sector with large abatement potential, such as the power sector, than $15 for the marginal ton in a sector with lower cost or lower abatement potential. The reason, distinct from learning spillovers, is that reducing greenhouse gas emissions requires investment in long-lived abatement capital such as clean power plants or public transport infrastructure. The value of abatement investment comes from avoided emissions, but also from the value of abatement capital in the future. The optimal levelized cost of conserved carbon can thus be higher than the optimal carbon price. It is higher in sectors with higher investment needs: those where abatement capital is more expensive or sectors with larger abatement potential. We compare our approach to the traditional abatement-cost-curve model and discuss implications for policy design.en
dc.identifier.citationJournal of Environmental Economics and Management
dc.identifier.doi10.1596/29238
dc.identifier.issn0095-0696
dc.identifier.urihttps://hdl.handle.net/10986/29238
dc.publisherElsevier
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo
dc.subjectCLIMATE CHANGE MITIGATION
dc.subjectCLEAN CAPITAL
dc.subjectPATH DEPENDENCE
dc.subjectSOCIAL COST
dc.subjectMARGINAL ABATEMENT COST
dc.subjectTIMING
dc.subjectCARBON POLICY
dc.subjectGREENHOUSE GAS EMISSIONS
dc.titleWhen Starting with the Most Expensive Option Makes Senseen
dc.title.subtitleOptimal Timing, Cost and Sectoral Allocation of Abatement Investmenten
dc.typeJournal Articleen
dc.typeArticle de journalfr
dc.typeArtículo de revistaes
dspace.entity.typePublication
okr.associatedcontenthttps://www.sciencedirect.com/science/article/pii/S0095069617308392 Journal website (version of record)en
okr.crossref.titleWhen Starting with the Most Expensive Option Makes Sense: Optimal Timing, Cost and Sectoral Allocation of Abatement Investment
okr.date.disclosure2017-12-12
okr.doctypePublications & Research::Journal Article
okr.doctypePublications & Research
okr.externalcontentExternal Content
okr.guid696551518603478681
okr.identifier.doi10.1016/j.jeem.2017.12.001
okr.identifier.doi10.1596/29238
okr.identifier.report123223
okr.journal.nbpages210-33
okr.language.supporteden
okr.peerreviewAcademic Peer Review
okr.topicEnvironment::Carbon Policy and Trading
okr.topicEnvironment::Climate Change Mitigation and Green House Gases
okr.topicEnvironment::Environmental Economics & Policies
okr.unitClimate Change Group
okr.volume88
relation.isAuthorOfPublication464cf77e-5e05-5115-97fe-d40b61d3996e
relation.isAuthorOfPublication2fea2b63-4a74-5fbd-b964-71ef895df009
relation.isAuthorOfPublication.latestForDiscovery464cf77e-5e05-5115-97fe-d40b61d3996e
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