sectoral economic costs and benefits of ghg mitigation - IPCC

Ulrich Bartsch and Benito Müller
Table 5
Oil Revenues, Change from 1995 in Per Cent of 1995, and Change from BaU in Per
Cent of BaU
BaU, Change 1995- Kyoto, Change 1995- Per Cent Change from BaU
2010 2020 2010 2020 2010 2020
USA 3 -4 -11 -14 -14 -10
EUM -43 -66 -51 -69 -14 -9
ROE 16 -16 1 -23 -13 -9
ROO 35 158 19 94 -12 -25
EIT 75 195 40 116 -20 -27
CHN 46 57 30 44 -11 -8
IND -14 -3 -24 -11 -11 -8
ANI -22 -35 -31 -40 -12 -8
AOE 65 121 49 104 -10 -7
LAM 122 210 63 120 -27 -29
ROW -2 41 -14 10 -12 -22
TOTAL CONV. 47 81 30 66 -11 -8
TOTAL OIL 48 98 30 74 -12 -12
6 Comparison with other studies
A comparison with other studies 1 has shown that CLIMOX results are within the range of results
of other general equilibrium analyses, at least in terms of simulated prices for international
emission permits under Annex I trading. Macro-econometric models usually show much less
flexible economies, and therefore higher marginal abatement costs. This is also true for the
OPEC energy model (OWEM), as reported by Ghanem et al. (1999).
This study also shows impacts of Kyoto on the oil market in detail. The study projects global oil
demand to reach 99 million barrels per day under Business-as-usual in 2020, as compared with
93.5 mbl/d of conventional oil and 8.5 mbl/d of non-conventional oil for CLIMOX. The BaU oil
price reaches $23 (in 1998 prices) per barrel, as compared with $24 (in 1995 prices) per barrel
for CLIMOX. Ghanem et al. simulate different scenarios for an implementation of Kyoto on the
basis of national carbon taxes, i.e. without the use of international flexibility mechanisms, and
scenarios are distinguished by assumptions about producer response to Kyoto.
In the first scenario presented, oil producers are assumed to reduce oil production sufficiently to
maintain BaU oil prices. This policy leads to a reduction in global oil revenues by 8.3 per cent
from BaU in 2010, the only year for which results are given in the paper. In comparison,
CLIMOX shows a reduction in oil revenues for a national tax Kyoto scenario of 19.1 per cent of
BaU in 2010 (this scenario is not shown in this paper). Other scenarios described in Ghanem et
al. show changes in oil revenues from BaU in 2010 between an increase by 5.2 per cent (if OPEC
reacts to maintain its BaU revenues, at a greatly reduced production level) and a fall of 44 per
cent (if OPEC maintains its BaU production level which leads to a price collapse).
Ghanem et al. therefore highlight the importance of the producer response to demand changes
due to Kyoto, which can change the overall effects of climate change policies on revenues
tremendously. However, the implied own-price elasticity of oil demand in OWEM, as calculated
over the range of oil prices shown in Ghanem et al., is –0.13, as compared with –0.55 in the case
1 See for a number of studies Weyant, John P., and Jennifer Hill (eds.) ‘The Costs of the Kyoto Protocol: A
Multi-Model Evaluation’, The Energy Journal, Special Issue, 1999.
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