Technologies, energy systems and the timing of CO2 emissions abatement - An overview of economic issues

This paper provides an overview of economic issues involved in timing limitations on CO2 emissions from energy systems. It highlights issues relating to technology availability, development and diffusion, and the inertia of energy systems, as being particularly important. The paper sets this in the context of wider uncertainties surrounding the problem and briefly considers other aspects relevant to timing. The paper is stimulated by the debate in the USA about optimal abatement paths, in particular recent claims that it would be economically preferable to defer such abatement action, in favour of measures that support technology development but do not affect emission trends for many years. This paper categorizes the various economic issues involved and concludes that for each economic argument that has been advanced to justify deferring emission constraints, there are countervailing economic arguments that could be used in support of rapid near term emissions abatement. Rational policy lies between these extremes. A policy of deferring all emissions abatement exposes economic systems and industries, as well as the environment, to significantly greater costs and risks than those arising from a more balanced approach. Furthermore the modelling studies that have been used to justify deferring emissions abatement do so because they embody the economic factors favourable to delay and largely neglect the countervailing issues, to the point where their results have little relevance to the overall problem of timing emissions abatement. (C) 1997 Elsevier Science Ltd.