POTENTIAL EFFECTS OF EMISSION TAXES ON CO2 EMISSIONS IN THE OECD AND LDCS

A set of existing optimization models, which represent the energy systems of the OECD and LDCs (less developed countries excluding centrally planned economies) with a time horizon to 2020, has been applied to derive first-order estimates of the techno-economic potential for emission reduction. The driving force for the introduction of reduction measures is a scheme of taxes levied on the emission of six pollutants, including the greenhouse gases CO2 and methane. The tax levels introduced are based on taxes discussed by the Swedish government: they are the break-even point to test which measures are cost-effective and which emission levels can be reached at these costs. The regional models include the following alternatives: (i) reduction of final energy demand by supplying the requested services by other means (i.e., conservation); (ii) substitution of new fuels for polluting fuels; (iii) introduction of clean technologies for the same purposes; (iv) additions of pollution-reduction technologies. Alternative scenarios with emission taxes are compared with a base scenario without taxes related to pollutant emissions. The results indicate that an increase in CO2 emissions in the OECD and LDC regions of 47% over the next 30 yr in the base scenario would be changed to stable levels to 2010 by tax-induced measures. Thereafter, energy-consumption growth in the LDCs reverses this trend.