09 Nov 2006

Revisiting EU Policy Options for Tackling Climate Change

A Social Cost-Benefit Analysis of GHG Emissions Reduction Strategies

J.C. Jansen / S.J.A. Bakker / Christian Egenhofer / J. Jussila Hammes

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Climate change is a serious and long-term challenge with potentially irreversible consequences. The current design of both national and international climate change policies, however, tends to rest on a narrow application of social cost-benefit analysis, with an emphasis on short-term efficiency of resource allocation. In a departure from the conventional approach, this exploratory study sets out to integrate, from a societal perspective, the long-term impact of climate policy measures into the cost-benefit calculations of GHG emissions reduction strategies. This is achieved on the basis of an extensive literature review, combined with some limited calculations. The numerical application of the proposed analytical framework focuses on ten technical measures in three different sectors: energy and industry, transport and buildings.