11.4.3.2 Policy studies for Canada

Jaccard et al. (2003) provide estimates of the costs of reaching the Kyoto targets in Canada as part of their wider effort to reconcile top-down and bottom-up modelling results. Using their benchmark run, and assuming compliance without international trading, they find an allowance price of 100 US$/tCO₂-eq with an associated GDP loss of nearly 3% in 2010. They note that, while these costs are in line with similar studies of reduction costs in the United States conducted by EIA, they are considerably higher than alternative results for Canada derived from a bottom-up model, and they predict a roughly 33 US$/tCO₂-eq allowance price. The authors then show how, by making what they consider longer-run assumptions – lower capital and greater price sensitivity – they can duplicate the lower GDP costs in their model.