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Energy Based Carbon Emissions – Section 12
Economic Instruments for Long-term Reductions in Energy-based Carbon Emissions
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12. Macroeconomic Impacts of the Proposed Measures
As stated earlier, the NRTEE commissioned a qualitative assessment of the likely macroeconomic costs of the various instruments proposed in the case studies. It then compared these estimates with similar estimates produced in 2000 for the National Climate Change Process. The NRTEE found that, in general, the aggregate macroeconomic costs of the various instruments proposed in the NRTEE case studies are likely much smaller than those proposed for the NCCP.
There are several reasons:
- For the most part, the marginal costs of emission reductions in the case studies are lower than those assumed under the NCCP to meet the Kyoto targets.
- The total emission reductions by 2010, even without adjusting for possible double-counting among the case studies (e.g., both the renewables and energy efficiency case studies include reductions in the electricity sector), are 3 to 10 times lower in the case studies than those assumed in the NCCP study.
- Some proposed instruments such as subsidies have no direct impact on prices. Even for instruments such as emission prices, the estimated impacts on energy and other product prices are smaller than those estimated for the NCCP, suggesting more limited demand feedbacks.
It must be stressed, however, that in all cases the macroeconomic impacts of economic instruments related to greenhouse.
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