Wednesday, November 4, 2009

AARES 2010 Abstract

I just submitted an abstract for the AARES 2010 meeting in Adelaide. You have till Friday to submit... I also expect to be presenting at the Environmental Economics Research Hub Workshop that precedes it. Here is the abstract:

How Feasible are Developing Country Energy and Carbon Intensity Targets? An Econometric Analysis

Frank Jotzo, Resource Management in the Asia Pacific, Crawford School of Economics and Government, Australian National University
David Stern, Arndt-Corden Division of Economics, Crawford School of Economics and Government, Australian National University and Centre for Applied Macroeconomic Analysis

China has adopted a target of reducing the energy intensity of its economy by 20% in the period 2005-2010 and will likely adopt further targets for 2015 and 2020. At the UN Summit on Climate Change in New York in September 2009, President Hu Jintao announced that China would also adopt a carbon intensity target of so far unspecified level. Other developing economies might also adopt energy or carbon intensity targets as part of the post-Kyoto climate policy regime. Yet the energy intensity of the Chinese economy was essentially unchanged from 2000 to 2007 when a long period of declining energy intensity came to an end. How feasible are the proposed reductions in energy intensity and/or carbon intensity for China and other developing economies? In this paper, we use a production frontier model of energy intensity to decompose energy intensity in a number of major developing economies into input and output mix, climate, and scale effects, and a residual technology variable. A second stage model decomposes the technology residual into the energy efficiency of installed capacity and of new investment and measures the implicit cost of energy efficiency technology in each country. We then evaluate how feasible various targeted reductions below business as usual trajectories would be, assessing what they would imply in terms of changes in the pace of technology adoption or changes in the fuel mix towards lower carbon fuels, and comparing these required changes to historical performance.

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