Webinars in Economics of Environment, Energy and Transports
At 4pm on Zoom and has a duration of 60 minutes, with questions at the end.
In order to attend the webinar, registration is mandatory. Please use the following link to access the registration form.
Guy Meunier (Inrae) Jean-Pierre Ponssard (Ecole Polytechnique)
Extending the limits of the abatement cost
The paper examines the relevant cost benefit framework for state agencies investigating
the potential of local projects to mitigate climate change. While these projects are typically limited in time and space, continuation paths need be introduced for capturing the benefits provided by the project. It is a particularly acute issue in the case of the transition toward carbon neutrality, because one day or the other emissions need be abated. The relevant question is not whether to decarbonate or not an activity but when to do so, and how. We propose a new metric that incorporates into the analytical framework the dynamic interactions between the project and its continuation. It is defined as the annual overall discounted cost divided by the long term annual abatement. The new metric is a non trivial extension of the standard cost of abatement. It precisely determines when to launch a given project. It solves the question of comparing competing projects using their on going emissions up to their respective optimal launching dates. Two illustrations make clear the novelty of our approach: the choice of the optimal mix of technologies for the electricity sector and the comparison between competing green technologies for mobility.