The simple analytics of greenhouse gas emission intensity reduction targets

The Bush Administration followed its March 2001 withdrawal from the Kyoto Protocol by a February 14, 2002 proposal for unilateral action to reduce the intensity of US greenhouse gas emissions, with intensity defined as emissions per unit of GDP. The idea is to focus on the rate of decline of the emissions intensity of the economy, rather than the total amount of emissions (though the two are obviously related). In this paper we examine the characteristics of a goal of a rate of decline in intensity. We present a simple model and show that in order to stabilize greenhouse gas concentrations, the rate of decline in intensity must equal the rate of growth of GDP. Additionally, we show that cost uncertainty can be reduced through the use of intensity reduction targets.