Stabilization Levels: Cost Estimates Generally

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There are a number of variables that can be manipulated when estimating the cost of stabilization.  As the stabilization level targets become more restrictive, the costs trend upwards.  These cost estimates vary greatly because of the uncertainty surrounding technological learning and environmental effects of GHG emissions.  Several papers focus on the rate of technological learning in determining the ideal level of R&D investment that would result in achieving the desired stabilization level most cheaply.  Certain sectors are targeted in climate stabilization policies because they are the largest emitters and/or their emissions can be reduced most efficiently.  The regions of the world that emit the most tend to not be the regions that can reduce projected future emissions most efficiently.  Developing countries generally allow for more efficient reductions of emissions because emissions control technology has not yet diffused to those areas.  The costs of diffusion and implementation of emissions control technology could inhibit growth, however, and having developing countries bear the burden of emissions stabilization is generally considered inequitable.  As a result, equitable analyses featuring regional cost distributions are fairly common.

Some papers argue that climate control is compatible with economic growth, contrary to prevailing conventional wisdom.  There are still concerns about distribution of costs, especially if industrial leakage results from inconsistent climate control participation.  Generally speaking, costs of attaining stabilization levels also depend upon the level of global cooperation.

There are a number of factors that influence the cost estimates.  The treatment of these factors may vary across studies, making it difficult to compare cost estimates directly using different studies.  Cost estimates depend upon the assumed baseline emissions (or BAU).  They also depend upon whether the targeted stabilization level is CO2 only or multi-gas.  Much more cost savings is seen from climate policies controlling all greenhouse gases versus climate policies only controlling CO2.  Correctly calculating the Global Warming Potentials (GWPs) of the various GHGs reduces costs across various stabilization levels, albeit very slightly.  Induced technological change can also change the cost estimates.  A cost estimate also depends on the time profile of emissions reductions, and whether the cost of immediate reductions is offset by the (presumably) resulting lower cost of future reductions.  The number of regions and energy sources included in the model can also affect the final cost estimate.  Furthermore, the assumed terrestrial response (e.g., when the earth becomes a carbon source instead of a carbon sink) can also affect the cost estimate.  Some studies might not be comparable to other studies because their assumptions differ; therefore, caution is warranted when comparing the results of different studies.