Marginal abatement costs for GHG emissions in Canada: a shadow cost approach

Springer Science and Business Media LLC - Tập 25 - Trang 1323-1337 - 2022
Samuel Gamtessa1, Monika Çule1
1Department of Economics, University of Regina, Regina, Canada

Tóm tắt

This study approximates the marginal abatement costs (MACs) of reducing GHG emissions in Canada using the shadow cost approach. Utilizing industry level data, we are the first to offer Canadian estimates based on a Hyperbolic Output Distance Function (HODF) and the stochastic frontier estimation. Accounting for GHG emissions caused by energy consumption, we obtain an average shadow MAC of $130/t across 30 industries. In the GHG-intensive industries such as the electric utilities and non-conventional oil extraction, MACs are lower than the CO2 levy of $50/t imposed by the federal government. Since these low-MACs sectors account for about 98 per cent of total GHG emissions and 94 per cent of total energy use in industries studied, the envisaged $50/t carbon levy could notionally result in a significant GHG abatement in Canada.

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