A Climate for Change

(^190) Reducing emissions in Croatia – the Costs of Mitigation Human Development Report - Croatia 2008
Box 12-2: Methodology for calculating emissions reduction potentials and costs
To calculate the likely costs/ benefits of reducing emis-
sions, this analysis focused solely on 2020. The basic
concept is to take how much CO 2 e can be reduced by
a certain measure in that year. Then multiply the total
potential reduction by the cost of reduction per tonne
of emissions (marginal cost of reduction of CO 2 e). If the
measure actually has a net benefit – i.e. it is cheaper
than carrying out a process that emits more carbon –
then the marginal cost of reduction is negative. Energy
efficiency measures are a good example of this. Own-
ing a fuel-efficient car or using compact fluorescent
light-bulbs (CFLs) saves money over a short time span.
On the other hand, if a measure costs extra money –
such as replacing coal fired power plants with solar
photovoltaic cells – the measure has a positive mar-
ginal cost for reduction of CO 2 e.
Most of the numbers for potential emissions reduc-
tions were taken from Ekonerg’s series of top-down
models and studies for the LIFE project in 2006
and 2007. In some areas the potential of the reduc-
tion measures were only available for either 2015
or 2012. The annual marginal costs of reduction
for most measures were calculated in the Ekonerg
studies utilizing capital costs, operational costs, and
a discount rate of 4%. In those cases, the reduction
potentials from previous years were assumed to be
the same for 2020 – though they may be larger.
The costs associated with these measures should
be considered as rough estimates only. This is be-
cause the initial model was based on a timeframe
until 2012, whereas this analysis is looking at 2020.
Additionally, these estimates did not include the
administrative and institutional costs associated
with implementation – which may be large in the
households and services sector. Because of this and
other uncertainties in cost, this analysis took the
estimated values plus/ minus EUR 10 per tonne. In
certain cases where the initial capital costs would
be significant, the timeframe for overall use, once
the measure becomes operational, would be more
important (such as solar, wind, and nuclear energy
production), estimates were taken from the IPCC’s
most recent assessment of likely costs of mitigation
for economies in transition.^14 For the agricultural
sector an independent analysis was carried out for
the purposes of this Report.
While exact numbers have been calculated for
most measures, it is better to provide a range of
potential values that reflect the uncertainty of
costs – grouping them in terms of whether the
measures might have a net economic gain, be
close to cost neutral, be economically advanta-
geous in the case of a cost of EUR 25 per tonne, or
be more expensive.
All costs are listed in terms of current value, as cal-
culating inflation and Euro or Croatian Kuna values
in 2020 is complex and superfluous to the core mes-
sage of this chapter.