مزایای کمکی سیاست آب و هوایی در یک اقتصاد کوچک باز : مورد سوئد

It is increasingly recognised that GHG reduction policies can have important ancillary benefits in the form of positive local and regional environmental impacts. The purpose of this paper is to estimate the domestic ancillary pollution benefits of climate policy in Sweden, and investigate how these are affected by different climate policy designs. The latter differ primarily in terms of how the country chooses to meet a specific target and where the necessary emission reductions take place. The analysis relies on simulations within the energy system optimisation model TIMES-Sweden, and focuses on four non-GHG pollutants: Nitrogen Oxides (NOX), Non Methane Volatile Organic Compounds (NMVOC), inhalable particles (PM2.5), and Sulphur dioxide (SO2). The simulations permit detailed assessments of the respective technology and fuel choices that underlie any net changes in the estimated ancillary effects. The results indicate that the ancillary benefits constitute a far from insignificant share of total system costs, and this share appears to be highest in the scenarios that entail the largest emission reductions domestically. This result reflects the fact that carbon dioxide emission reductions abroad also implies a lost opportunity of achieving substantial domestic welfare gain from the reductions of regional and local environmental pollutants.

The balance of evidence suggests that anthropogenic emissions of greenhouse gases – out of which carbon dioxide is the most significant – are having a distinct negative impact on the global climate (e.g., IPCC, 2007). Since the Framework Convention on Climate Change was concluded in 1992, nations have been negotiating commitments to stabilise and then reduce emissions of greenhouse gases, which will otherwise continue to build up in the atmosphere. The debate on climate change policy, particularly with respect to the Kyoto Protocol in 1997, has been heavily focused on the economic costs and feasibility of the proposed mitigation plans. Despite concerns about the costs of Kyoto implementation – expressed by politicians, analysts, and industry representatives in industrial countries – the Protocol was ratified by a large number of states and therefore came into force in February 2005. Some nations, such as the USA and Australia, based their decisions to withdraw from the Kyoto process in part on the high perceived costs for their respective economies. Also in the countries that have ratified the Protocol continued concerns exist, not the least about the future costs of the additional policy measures needed to stabilise greenhouse gas concentrations. This became evident during the 2009 Copenhagen (COP15) meeting at which no new global commitment of continued reductions of greenhouse gas (GHG) emissions could be reached. One of the most important strategies to reduce GHG emissions is to move away from the use of fossil fuels. In substituting carbon-free fuels for fossil fuels other harmful emissions are likely to be reduced along with the reduction of carbon dioxide, e.g., in replacing coal with renewable energy sources the emissions of regional air pollutants such as nitrogen oxides (NOX) and sulphur dioxide (SO2) are reduced as well. The resulting reductions in damages to health, crops and materials represent real economic benefits, i.e., reduced costs that typically are referred to as the ancillary benefits from climate mitigation (e.g., Ekins, 1996, Hourcade et al., 2001 and Burtraw et al., 2003). Clearly these side-effects can also be negative (e.g., increases in the emissions of particles when diesel replaces gasoline in the transport sector), but many previous studies show that compared to a baseline scenario the net economic cost of climate policy could be reduced substantially (e.g., Repetto and Austin, 1997, Boyd et al., 1985 and Van Vuuren et al., 2006). In addition, by addressing the impacts of ancillary benefits and costs the optimal abatement strategy may change in terms of the reduction level, the timing of policy measures as well as the allocation of mitigation efforts across the different sectors of the economy (OECD, 2002 and Kuosmanen et al., 2009). The objective of this paper is to estimate the ancillary pollution benefits of climate policy in a small open economy, and compare the outcomes of different climate policy designs. We analyse policy designs that differ in terms of how the country chooses to meet a specific target in the year 2020 including where the necessary emission reductions take place. Sweden is used as a case country, and methodologically we employ the so-called TIMES-Sweden model, a dynamic technology-rich energy system optimisation model. It represents a partial equilibrium model of the entire Swedish energy system, including stationary sources as well as the transport sectors. In addition to the supply and energy conversion sectors, five different demand sectors are described: agriculture, commercial, residential, industry and transportation. TIMES-Sweden permits the analysis of several non-GHG pollutants, including Nitrogen Oxides (NOX), Non Methane Volatile Organic Compounds (NMVOC), inhalable particles with a diameter less than 2.5 μm (PM2.5), and Sulphur dioxide (SO2). For each climate policy scenario the model is here used to address three different ancillary benefit measures: (a) total reduced damage cost; (b) reduced damage cost per reduced tonnes of CO2; and (c) reduced damage costs as a share of the total increase in system costs following the imposed climate policy. For any country the choice between domestic GHG-reduction efforts on the one hand and financing similar efforts abroad on the other is important. In accordance with the Kyoto Protocol and the EU Burden Sharing Agreement, Sweden is committed to an Assigned Amount Unit (AAU) for the compliance period 2008–2012 corresponding to an increase by 4% compared to the 1990 emission level. Still, in an attempt to precede stricter future requirements Sweden decided in 2002 on a national emission target stating that during this five-year period the country's greenhouse gas emission level must not exceed five times 96% of the 1990 level. An important implication of this policy target has been that if a firm that participates in the European Union Emissions Trading Scheme (EU ETS) buys permits, a corresponding emission reduction has to be made in the non-trading sector (e.g., through adjustments in the CO2 tax) (Carlén, 2004 and Söderholm and Pettersson, 2008). In this way emission reduction burdens are transferred from the trading to the non-trading sector. Other than Germany and Great Britain, Sweden is the only EU country that has decided to focus on a national emissions target, addressing thus emissions made on domestic soil. In a Government Bill (2008/09:162) a new target is outlined, namely to decrease domestic emissions in the non-trading sector by 40% by the year 2020 (compared to the 1990 level). In meeting these stricter reduction requirements the Swedish government aims at locating one third of the obligated carbon dioxide reduction in other countries, thus increasing the reliance on international flexible mechanisms in the nation's compliance strategy. Previous studies indicate that accounting for the local and regional ancillary benefits arising from climate policy that are achieved jointly with the reduction of carbon dioxide can be significant in the Swedish case, and may thus partly strengthen the case for the present adoption of a domestic emissions target. For instance, Östblom and Samakovlis, 2004 and Östblom and Samakovlis, 2007 employ the static general equilibrium model EMEC to evaluate the economic impacts of Swedish climate policy in the presence of benefits to health and labour productivity following reductions in nitrogen dioxide (NO2) emissions. Their results indicate that the costs of climate policy could be substantially reduced, and the benefits of international emissions trading for the Swedish economy become less pronounced once the ancillary benefits of nitrogen dioxide reductions are taken into consideration. Similar results for Sweden are presented in Nilsson and Huthala (2000), where the EMEC model is used to address the ancillary impacts of both nitrogen oxides and sulphur dioxide. Bye et al. (2002) provide a review of the cost of climate policies and the associated ancillary benefits in the Nordic countries, the UK and Ireland. The approach in this paper differs from many earlier studies in a number of ways. First, a number of previous energy system studies use the estimated monetary damages costs for different non-GHG pollutants, and investigate, for instance, the consequences on CO2 emissions of internalising these external costs (e.g., Das et al., 2007, Klaassen and Riahi, 2007 and Krook Riekkola and Ahlgren, 2003). While these studies thus address the climate-related ancillary benefits of other environmental policies, we instead focus on the corresponding side-effects of different climate policy designs. These earlier studies also address only the external costs of the electricity (and heat) sectors. Furthermore, another set of previous studies employ general equilibrium models to analyse the ancillary impacts of GHG mitigation (Davis et al., 2000 and Östblom and Samakovlis, 2007), while we instead adopt a technology rich bottom-up representation of the entire energy system. Van Vuuren et al. (2006) employ a similar bottom-up approach but with a focus on Europe (divided into East, Central and West), and with no results for neither individual countries nor different climate policy designs. The TIMES-Sweden model can explicitly address important discrete technology shifts and their consequences in the presence of stringent climate policy. Moreover, the model covers the entire chain from energy supply to useful energy per demand segment, something which facilitates the identification of the sectors and technologies where the ancillary benefits are most prevalent. Moreover, in line with Östblom and Samakovlis, 2004 and Östblom and Samakovlis, 2007, the present paper also addresses the ancillary benefits arising from different climate policy designs for a small open economy, but unlike the previous studies we highlight in more detail the technology choice trade-offs involved in abating emissions domestically or relying more extensively on CO2 emission reductions abroad. Specifically, we investigate how the estimated ancillary benefits are influenced by changes in the stringency of the policy target, the CO2 permit price within EU ETS and the energy sector's rate-of-return requirement. We also present detailed results for the electricity and transport sectors, and highlight important differences in fuel mixes across the different policy scenarios. Finally, the range of non-GHG pollutants considered in the analysis is also wider, not the least given the inclusion of particles (PM2.5) and NMVOC, substances that are typically ignored in most previous studies. Section 2 presents the TIMES modelling framework, and clarifies how the assessment of ancillary benefits can be incorporated into the model simulations. In Section 3 we discuss the different policy scenarios, while Section 4 presents the model simulation results. Finally, some concluding remarks are provided in Section 5.

In this paper we build on the well-established literature suggesting that GHG reduction policies, which create incentives to alter the use of fossil fuels, can have important local and regional environmental impacts quite distinct from the global and longer-term benefits directly associated with avoided climate change. The paper has addressed a number of health-related improvements (ancillary benefits) that could accompany the reduction in CO2 under different climate policy designs in Sweden. These designs differ primarily in terms of how the country chooses to meet a specific target and where the necessary emission reductions take place. The reliance on a technology-rich energy system optimisation model of the Swedish energy system (TIMES-Sweden) has permitted us to address the economic significance of these environmental side-effects as well as to provide a detailed assessment of the respective technology and fuel choices that underlie any net changes in the estimated ancillary benefits. The results indicate that significant ancillary benefits accompany Swedish climate policy and they constitute a far from insignificant share of the increase in total system costs, thus reducing the overall cost of climate policy. Moreover, this share appears to be particularly significant in the scenarios that entail the largest emission reductions domestically. The latter results reflect the fact that since an increase in emissions reductions abroad also implies a lost opportunity of achieving important welfare gains from the reductions of a number of regional and local environmental pollutants. This shows, thus, that the notion of full flexibility in compliance measures (including geographical location) may not necessarily represent the most cost-effective strategy for an individual country. Still, in our case the estimated size of the ancillary benefits is overall not large enough to fundamentally alter the ranking of climate policy design in terms of system cost impacts. Nevertheless, under the model assumptions made the results tend to provide some support for the current Swedish government's policy to partly restrict emission reductions abroad. While these overall results have been highlighted also in previous work, an important contribution of the present paper has been to investigate in more detail the technology choices underlying the aggregate figures, including a sensitivity analysis of the impact of policy target levels, permit prices and discount rates on the estimated ancillary benefits. The choice of bottom-up (technology-rich) energy system model facilitates these assessments. For instance, from an energy system perspective the results suggesting higher ancillary benefits in the policy scenarios restricting permit trading can be explained by the role of climate policy in inducing relatively large reductions of NOX emissions from the transport sector as well as reductions of SO2 in the non-trading industry segments when substituting away from oil products to biomass. The model simulations also illustrate that the estimated ancillary benefits of climate policy in Sweden appear to be a non-linear function of the reduced CO2-emissions, both in terms of the ancillary benefits per reduced tonne of CO2 and as a share of the total system cost. This is explained by differences in the technology choices following each of the policy scenarios. Overall our findings illustrate the usefulness of analysing the ancillary benefits of climate policy with a bottom-up energy system model. In this paper we have, for instance, highlighted the allocation of biomass in the presence of the weight given to domestic emission reduction versus the use of permit trading. We also find important differences across policy scenarios with respect to wind power and oil use, in part resulting in significantly higher ancillary benefits from NOX and SO2 reductions in the scenarios involving a stronger focus on domestic emission reductions. The sensitivity analyses show that the absolute size of the ancillary benefits are sensitive to the assumed CO2 reduction target (in the domestic reduction scenario) and to changes in the permit price (in the permit trading scenario), but appear not to be heavily influenced by changes in the discount rate. Clearly additional research efforts are needed to shed more light on the issue of to what extent the ancillary benefits of climate policies could potentially offset a portion of the costs of these policies. For instance, in most studies the baseline issues probably deserve more attention. In our analysis we pay attention mainly to the impact of environmental policy and fuel taxes. Still, other baseline issues may be equally important to consider in more detail, including other policy issues (e.g., health policy) and non-policy issues such as technological change, transportation trends and demographic developments. In the Swedish context it is worth noting that a significant proportion of the estimated ancillary benefits appear in the transport sector, and limited diffusion of alternative fuels in the transport sector appears already in the baseline scenario. Clearly, however, the future evolution of vehicles and fuels is highly uncertain, not the least due to the competition for the biomass (in part illustrated in this paper), and the presence of significant network externalities in the fuel supply infrastructure. It is also useful to highlight in more detail the importance of domestic ancillary benefits following the implementation of JI and CDM projects. For instance, van Vuuren et al. (2006) show that Western European countries may experience domestic non-climate ancillary effects from JI projects in Eastern Europe, not the least through the reduction of reduced trans-boundary pollution (e.g., sulphur dioxide). Additional research on understanding the presence of ancillary benefits may not the least be motivated from a policy transition perspective. In national climate mitigation strategies there is a need to identify (no regrets) policy measures that generate important external benefits, and that for this reason become politically legitimate. The resulting reductions in non-GHG damages to health, crops and materials represent real economic benefits, and other side-benefits of the promotion of carbon-free energy sources include, for instance, improved security of supply and regional employment impacts. So far energy modelling studies have tended to pay most attention to analysing the impact of well-defined and uniform carbon taxes on the energy system, while fewer studies factor in the role of policy and institutional change in achieving these energy futures in practices.