STABILIZATION OF EMISSIONS OF CO2 - A COMPUTABLE GENERAL EQUILIBRIUM ASSESSMENT

A multisector computable general equilibrium model is used to study economic development perspectives in Norway if CO2 emissions were stabilized. The effects discussed include impacts on main macroeconomic indicators and economic growth, sectoral allocation of production, and effects on the market for energy. The impact of other pollutants than CO2 on emissions is assessed along with the related impact on noneconomic welfare. 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 in emissions to air other than CO2 is found, yielding considerable gains in noneconomic welfare.