Economic costs of aggressive climate policy

Xiaobing Zhao, Ding Du

Research output: Contribution to journalArticlepeer-review

2 Scopus citations


Whether aggressive climate policy is warranted crucially depends on the economic costs of emission cuts. Different from previous studies, this study estimates the economic costs of emission costs with a reduced-form approach. The major advantages of this approach are its simplicity and less assumption dependence. Based on the study’s parameter estimates, it is found that a 25% aggressive reduction in CO2 emissions from 1990 levels will lead to a 3.69% decrease in the combined GDP of developed OECD countries. Although the cost is significant, in relation to the benefits of such policy, this study’s finding still suggests that nations should implement more aggressive climate policy.

Original languageEnglish (US)
Pages (from-to)312-317
Number of pages6
JournalEnergy Sources, Part B: Economics, Planning and Policy
Issue number4
StatePublished - Apr 3 2017


  • Climate change policy
  • carbon emissions
  • economic costs
  • fixed-effects panel regression
  • reduced-form model

ASJC Scopus subject areas

  • General Chemical Engineering
  • Energy Engineering and Power Technology
  • Fuel Technology


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