Stabilization of emissions of CO2: A computable general equilibrium assessment

Abstract

Using a multisector applied general equilibrium model, the paper studies economic development perspectives in Norway under limits to emissions of carbon dioxide (CO2 ). A wide range of effects are discussed, including impacts on main macroeconomic indicators and economic growth, sectoral allocation of production, labour and capital, and effects on the market for energy. We also assess the impact on emissions of other pollutants than CO2 , and finally the related impact on health, nature and materials. The results indicate that CO2 emissions might be stabilized in Norway without dramatically reducing economic growth. Sectoral allocation effects are much larger. A substantial reduction is found in other emissions to air than CO2 , yielding considerable benefits.