Efficient Abatement of Different Greenhouse Gases

Although CO₂ is the most important greenhouse gas, there are a number of other greenhouse gases which are important for the development of the climate. An efficient climate policy should in principle be related to emissions of all climate gases, weighed together with their impact on the climate. Constructing a climate policy which is efficient across greenhouse gases would in principle be straightforward if the relative impact of different greenhouse gases on the climate was given by some fixed physical coefficients. This is, however, not the case. The most important reason for this is that the relationship between emissions and the development of atmospheric concentration differs significantly across greenhouse gases, since different greenhouse gases have different lifetimes in the atmosphere.

In this chapter we present a model which illustrates the importance of the above issues for the appropriate weights of the different greenhouse gases. Using optimal control theory, the conditions for intertemporally efficient time paths of greenhouse gas emissions are derived. The weights of the different greenhouse gases relative to CO₂ are at any time given by the relative costate variables associated with the differential equations describing the development of the different greenhouse gases. It is shown how these weights depend on assumptions about important characteristics of the future economy. In particular, the discount rate and the assumed growth rate of the economy are important for the weights of the different greenhouse gases. Properties of the function describing the costs of climate change are also important.