Economic impacts of alternative greenhouse gas emission metrics: a model-based assessment

In this paper we study the impact of alternative metrics on short- and long-term multi-gas emission reduction strategies and the associated global and regional economic costs and emissions budgets. We compare global warming potentials with three different time horizons (20, 100, 500 years), global temperature change potential and global cost potentials with and without temperature overshoot. We find that the choice of metric has a relatively small impact on the CO₂ budget compatible with the 2° target and therefore on global costs. However it substantially influences mid-term emission levels of CH₄, which may either rise or decline in the next decades as compared to today’s levels. Though CO₂ budgets are not affected much, we find changes in CO₂ prices which substantially affect regional costs. Lower CO₂ prices lead to more fossil fuel use and therefore higher resource prices on the global market. This increases profits of fossil-fuel exporters. Due to the different weights of non-CO₂ emissions associated with different metrics, there are large differences in nominal CO₂ equivalent budgets, which do not necessarily imply large differences in the budgets of the single gases. This may induce large shifts in emission permit trade, especially in regions where agriculture with its high associated CH₄ emissions plays an important role. Furthermore it makes it important to determine CO₂ equivalence budgets with respect to the chosen metric. Our results suggest that for limiting warming to 2 °C in 2100, the currently used GWP100 performs well in terms of global mitigation costs despite its conceptual simplicity.