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The cost of greenhouse gas (GHG) mitigation over time depends on both the rate of technical change in leading-edge technologies and the diffusion of knowledge and capabilities throughout international markets. This paper presents a framework developed by the U.S. Environmental Protection Agency (EPA) and RTI International (RTI) for incorporating technical change in non-CO2 GHG mitigation projections over time. An engineering (bottom-up) approach is used to model technical change as a set of price and productivity factors that change over time as a function of technology advances and the location of developing countries relative to the technology efficiency frontier. S-shaped diffusion curves are generated, which demonstrate the maturity of the market for a given technology in a given region. The framework is demonstrated for coal mine methane mitigation technologies in the United States and China, but it is applicable for the full range of technology adoption issues. [PUBLICATION ABSTRACT]

Traditionally, economic analyses of greenhouse gas (GHG) mitigation focused on carbon dioxide (CO₃) emissions from energy sources, while non-CO₃ GHGs were not incorporated into the studies, due to the lack of data on abatement costs of non-CO₃ GHGs. In recent years, however, increasing attention has been dedicated to the benefits of reducing emissions of non-CO₃ GHGs such as methane and nitrous oxide. Increased attention to the potential role of these gases in a GHG reduction policy increased the need for better data on the costs of non-CO2 GHG abatement for countries and regions outside of the US and the European Union (EU). Using a net present value calculation, this analysis develops regionally adjusted costs per mitigation option and marginal abatement cost curves by region for use in economic models. The result is worldwide cost estimates for methane and nitrous oxide from waste, energy and the industrial sectors. This paper also demonstrates the ability to significantly reduce greenhouse gases from these sectors with current technologies and the low cost of methane and nitrous oxide relative to CO₃ reductions.

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Landfill gas (LFG) projects use the gas created from decomposing waste, which is approximately 49% methane, and substitute it for natural gas in engines, boilers, turbines, and other technologies to produce energy or heat. The projects are beneficial in terms of increased safety at the landfill, production of a cost-effective source of energy or heat, reduced odor, reduced air pollution emissions, and reduced greenhouse gas emissions. However, landfills sometimes face conflicting policy incentives. The theory of technical change shows that the diffusion of a technology or groups of technologies increases slowly in the beginning and then picks up speed as knowledge and better understanding of using the technology diffuses among potential users. Using duration analysis, data on energy prices, State and Federal policies related to landfill gas, renewable energy, and air pollution, as well as control data on landfill characteristics, I estimate the influence and direction of influence of renewable portfolio standards (RPS). The analysis found that RPS positively influences the diffusion of landfill gas technologies, encouraging landfills to consider electricity generation projects over direct sales of LFG to another facility. Energy price increases or increased revenues for a project are also critical. Barriers to diffusion include air emission permits in non-attainment areas and policies, such as net metering, which promote other renewables over LFG projects. Using the estimates from the diffusion equations, I analyze the potential influence of a Federal RPS as well as the potential interaction with a Federal, market based climate change policy, which will increase the revenue of a project through higher energy sale prices. My analysis shows that a market based climate change policy such as a cap-and-trade or carbon tax scheme would increase the number of landfill gas projects significantly more than a Federal RPS.

Introduction“Other greenhouse gases” (OGHGs) and “non-CO2 greenhouse gases” (NCGGs): these are terms that are now much more familiar to the climate modeling community than they were a decade ago. Much of the increased analytical relevance of these gases, which include methane, nitrous oxide, and a group of fluorinated compounds, is due to work conducted under the Stanford Energy Modeling Forum (EMF) and facilitated by meetings at Snowmass, Colorado, going back to 1998.The two principal insights from over five years of analysis on NCGGs are (1) the range of economic sectors from which these emissions originate is far larger and more diverse than for carbon dioxide (CO2); and (2) the mitigation costs for these sectors and their associated gases can be lower than for energy-related CO2. Taken together, these two factors result in a larger portfolio of potential mitigation options, and thus more potential for reduced costs, for a given climate policy objective. This is especially important where carbon dioxide is not the dominant gas, on a percentage basis, for a particular economic sector and even for a particular region.This paper provides an analytical history of non-CO2 work and also lays out promising new areas of further research. There are five sections following this introduction. Section 22.2 provides a summary of non-CO2 gases and important economic sectors. Section 22.3 covers early efforts to estimate non-CO2 emissions and mitigation potential. Section 22.5 covers recent work focusing on mitigation.