Implications of global emission policy scenarios for domestic agriculture: a New Zealand case study

Agricultural GHG mitigation policies are important if ambitious climate change goals are to be achieved, and have the potential to significantly lower global mitigation costs [Reisinger, A., Havlik, P., Riahi, K., van Vliet, O., Obersteiner, M., & Herrero, M. (2013). Implications of alternative metrics for global mitigation costs and greenhouse gas emissions from agriculture. Climatic Change, 117, 677–690]. In the post-Paris world of ‘nationally determined contributions’ to mitigation, the prospects for agricultural mitigation policies may rest on whether they are in the national economic interest of large agricultural producers. New Zealand is a major exporter of livestock products; this article uses New Zealand as a case study to consider the policy implications of three global policy scenarios at the global, national and farm levels. Building on global modelling, a model dairy farm and a model sheep and beef farm are used to estimate the changes in profit when agricultural emissions are priced and mitigated globally or not, and priced domestically or not, in 2020. Related to these scenarios is the metric or GHG exchange rate. Most livestock emissions are non-CO₂, with methane being particularly sensitive to the choice of metric. The results provide evidence that farm profitability is more sensitive to differing international policy scenarios than national economic welfare. The impact of the choice of metric is not as great as the impact of whether other countries mitigate agricultural emissions or not. Livestock farmers do best when agricultural emissions are not priced, as livestock commodity prices rise significantly due to competition for land from forestry. However, efficient farmers may still see a rise in profitability when agricultural emissions are fully priced worldwide.

Policy relevance

Exempting agricultural emissions from mitigation significantly increases the costs of limiting warming to 2 °C, placing the burden on other sectors. However, there may be a large impact on farmers if agricultural emissions are priced domestically when other countries are not doing the same. The impacts of global and national climate policies on farmers need to be better understood in order for climate policies to be politically sustainable. Transitional assistance that is not linked to emission levels could help, as long as the incentives to mitigate are maintained. In the long run, efficient farmers may benefit from climate policy; international efforts should focus on mitigation options and effective domestic policy development, rather than on metrics.     

The emissions gap between the Copenhagen pledges and the 2 °C climate goal: Options for closing and risks that could widen the gap

As part of the Copenhagen Accord, Annex I Parties (industrialised countries) and non-Annex I Parties (developing countries) have submitted reduction proposals (pledges) and mitigation actions to the UNFCCC secretariat. Our calculations show that if the current reduction offers of Annex I and non-Annex I countries are fully implemented, global greenhouse gas emissions could amount to 48.6-49.7 GtCO₂eq by 2020. Recent literature suggests that the emission level should be between 42 and 46 GtCO₂eq by 2020 to maintain a “medium” chance (50-66%) of meeting the 2 °C target. The emission gap is therefore 2.6-7.7 GtCO₂eq. We have identified a combined set of options, which could result in an additional 2.8 GtCO₂eq emission reduction. This would lead to an emission level just within the range needed. The options include reducing deforestation and emissions from bunker fuels, excluding emissions allowance increases from land use and forestry rules, and taking into account the national climate plans of China and India. However, there are also important risks that could widen the emissions gap, like lower reductions from countries with only a conditional pledge and the use of Kyoto and/or trading of new surplus emission allowances.     

Future mitigation commitments: differentiating among non-Annex I countries

Abstract

In the long term, any definition of adequacy consistent with UNFCCC Article 2 will require increased mitigation efforts from almost all countries. Therefore, an expansion of emission limitation commitments will form a central element of any future architecture of the climate regime. This expansion has two elements: deepening of quantitative commitments for Annex B countries and the adoption of commitments for those countries outside of the current limitation regime. This article seeks to provide a more analytical basis for further differentiation among non-Annex I countries. To be both fair and reflective of national circumstances, it is based on the criteria of responsibility, capability and potential to mitigate. Altogether, non-Annex I countries were differentiated in four groups, each including countries with similar national circumstances: newly industrialized countries (NICs), rapidly industrializing countries (RIDCs), ‘other developing countries’, and least developed countries (LDCs). Based on the same criteria that were used for differentiating among non-Annex I countries, a set of decision rules was developed to assign mitigation and financial transfer commitments to each group of countries (including Annex I countries). Applying these decision rules results in (strict) reduction commitments for Annex I countries, but also implies quantifiable mitigation obligations for NICs and RIDCs, assisted by financial transfers from the North. Other developing countries are obliged to take qualitative commitments, but quantifiable mitigation commitments for these countries and the LDC group would be not justifiable. As national circumstances in countries evolve over time, the composition of the groups will change according to agreed triggers.     

Rethinking the Kyoto Emissions Targets

The overall targets for greenhouse gas emissions of the Kyoto Protocol are not based on a specific objective for the future world climate. Moreover, the allocations of emissions restrictions among countries do not have a principled logic and impose arbitrary differences in costs. Calculations arepresented of the costs of alternative guidelines for emissions restrictions, each of which has a plausible ethical basis: equal per capita reductions, equal country shares in reductions, equalized welfare costs, and emulation of the United Nations budget allocations. All of these would result in far lower total costs of reaching the Kyoto targets. The alternatives would also eliminate the wholly capricious accommodations given to the Former Soviet Union and Eastern Europe. The lower cost alternativeswould permit the Annex B countries to make unequivocal commitments for cost reimbursement to the non-Annex B countries to induce them to participate in emissions reductions. Everyone would gain from that.     

Non-energy use of fossil fuels and resulting carbon dioxide emissions: bottom–up estimates for the world as a whole and for major developing countries

We present and apply a simple bottom–up model for estimating non-energy use of fossil fuels and resulting CO₂ (carbon dioxide) emissions. We apply this model for the year 2000: (1) to the world as a whole, (2) to the aggregate of Annex I countries and non-Annex I countries, and (3) to the ten non-Annex I countries with the highest consumption of fossil fuels for non-energy purposes. We find that worldwide non-energy use is equivalent to 1,670 ± 120 Mt (megatonnes) CO₂ and leads to 700 ± 90 Mt CO₂ emissions. Around 75% of non-energy use emissions is related to industrial processes. The remainder is attributed to the emission source categories of solvent and other product use, agriculture, and waste. Annex I countries account for 51% (360 ± 50 Mt CO₂) and non-Annex I countries for 49% (340 ± 70 Mt CO₂) of worldwide non-energy use emissions. Among non-Annex I countries, China is by far the largest emitter of non-energy use emissions (122 ± 18 Mt CO₂). Our research deepens the understanding of non-energy use and related CO₂ emissions in countries for which detailed emission inventories do not yet exist. Despite existing model uncertainties, we recommend NEAT-SIMP to inventory experts for preparing correct and complete non-energy use emission estimates for any country in the world.     

A CER discounting scheme could save climate change regime after 2012

We can generate a net global GHG emission reduction from developing countries (in an UNFCCC term, non-Annex 1 Parties) without imposing targets on them, if we discount CERs generated from CDM projects. The CER discounting scheme means that a part or all of CDM credits, i.e., CERs, made by developing countries through unilateral CDM projects will be retired rather than sold to developed countries to increase their emissions. It is not feasible to impose certain forms of target (whether sectoral or intensity targets) on non-Annex 1 whose emission trend is hard to predict and whose industrial structure is undergoing a rapid change.

Instead of imposing targets (a command and control approach), we should apply market instruments in generating a net global emission reduction from non-Annex 1. Since April 2005 when the first unilateral CDM was approved by the CDM Executive Board, CDM has been functioning as a market mechanism to provide incentives for developing countries to initiate their own emission reduction projects. As CDM is the only market mechanism engaging developing countries in the Kyoto Protocol, we should try to re-design CDM so that it can generate net global emission reductions by introducing the idea of discounting CERs. But in order to produce meaningful GHG emission reductions by discounting CERs, the project scope of CDM has to be expanded by relaxing project additionality criteria while maintaining strict technical additionality criteria. Agreeing on the CERs Discounting Scheme will have a better political chance than agreeing on imposing emission reduction targets on developing countries.     

Stabilizing CO2 concentrations with incomplete international cooperation

Many stabilization scenarios have examined the implications of stabilization on the assumption that all regions and all sectors of all of the world's economies undertake emissions mitigations wherever and whenever it is cheapest to do so. This idealized assumption is just one of many ways in which emissions mitigation actions could play out globally, but not necessarily the most likely. This paper explores the implications of generic policy regimes that lead to stabilization of CO₂ concentrations under conditions in which non-Annex I regions delay emissions reductions and in which carbon prices vary across participating regions. The resulting stabilization scenarios are contrasted with the idealized results. Delays in the date by which non-Annex I regions begin to reduce emissions raise the price of carbon in Annex I regions relative to the price of carbon in Annex I in an idealized regime for any given CO₂ concentration limit. This effect increases the longer the delay in non-Annex I accession, the lower the non-Annex I carbon prices relative to the Annex I prices, and the more stringent the stabilization level. The effect of delay is very pronounced when CO₂ concentrations are stabilized at 450 ppmv, however the effect is much less pronounced at 550 ppmv and above. For long delays in non-Annex I accession, 450 ppmv stabilization levels become infeasible.     

Reductions of greenhouse gas emissions in Annex I and non-Annex I countries for meeting concentration stabilisation targets

The IPCC Fourth Assessment Report, Working Group III, summarises in Box 13.7 the required emission reduction ranges in Annex I and non-Annex I countries as a group, to achieve greenhouse gas concentration stabilisation levels between 450 and 650 ppm CO₂-eq. The box summarises the results of the IPCC authors’ analysis of the literature on the regional allocation of the emission reductions. The box states that Annex I countries as a group would need to reduce their emissions to below 1990 levels in 2020 by 25% to 40% for 450 ppm, 10% to 30% for 550 ppm and 0% to 25% for 650 ppm CO₂-eq, even if emissions in developing countries deviate substantially from baseline for the low concentration target. In this paper, the IPCC authors of Box 13.7 provide background information and analyse whether new information, obtained after completion of the IPCC report, influences these ranges. The authors concluded that there is no argument for updating the ranges in Box 13.7. The allocation studies, which were published after the writing of the IPCC report, show reductions in line with the reduction ranges in the box. From the studies analysed, this paper specifies the “substantial deviation” or “deviation from baseline” in the box: emissions of non-Annex I countries as a group have to be below the baseline roughly between 15% to 30% for 450 ppm CO₂-eq, 0% to 20% for 550 ppm CO₂-eq and from 10% above to 10% below the baseline for 650 ppm CO₂-eq, in 2020. These ranges apply to the whole group of non-Annex I countries and may differ substantially per country. The most important factor influencing these ranges above, for non-Annex I countries, and in the box, for Annex I countries, is new information on higher baseline emissions (e.g. that of Sheehan, Climatic Change, 2008, this issue). Other factors are the assumed global emission level in 2020 and assumptions on land-use change and forestry emissions. The current, slow pace in climate policy and the steady increase in global emissions, make it almost unfeasible to reach relatively low global emission levels in 2020 needed to meet 450 ppm CO₂-eq, as was first assumed feasible by some studies, 5 years ago.     

Sharing the burden of financing adaptation to climate change

Climate change may cause most harm to countries that have historically contributed the least to greenhouse gas emissions and land-use change. This paper identifies consequentialist and non-consequentialist ethical principles to guide a fair international burden-sharing scheme of climate change adaptation costs. We use these ethical principles to derive political principles – historical responsibility and capacity to pay – that can be applied in assigning a share of the financial burden to individual countries. We then propose a hybrid ‘common but differentiated responsibilities and respective capabilities’ approach as a promising starting point for international negotiations on the design of burden-sharing schemes. A numerical assessment of seven scenarios shows that the countries of Annex I of the United Nations Framework Convention on Climate Change would bear the bulk of the costs of adaptation, but contributions differ substantially subject to the choice of a capacity to pay indicator. The contributions are less sensitive to choices related to responsibility calculations, apart from those associated with land-use-related emissions. Assuming costs of climate adaptation of USD 100 billion per year, the total financial contribution by the Annex I countries would be in the range of USD 65–70 billion per year. Expressed as a per capita basis, this gives a range of USD 43–82 per capita per year.     

Joint Implementation in Ukraine: national benefits and implications for further climate pacts

The contribution that no-lose target schemes for non-Annex I (NAI) countries could make to achieve the 2°C target is explored by accounting for the incentives of 18 NAI countries’ participation in no-lose target schemes. Using various scenarios, it is shown that implementing uniform no-lose targets as part of the burden-sharing will not lead to global emissions levels compatible with the 2°C target, because uniform no-lose targets will only be beneficial to a few NAI countries. Employing more lenient uniform no-lose targets or individual no-lose targets for large emitters could increase participation by NAI countries and decrease global emissions, global compliance costs, rents by NAI countries, and compliance costs for Annex I (AI) countries. However, the resulting global emissions levels will not be compatible with attaining the 2°C target. Achieving this target will require more stringent emissions targets for AI countries and more lenient no-lose targets for NAI countries. As such, no-lose targets should account for 20% to 47% of global emissions reductions, while due to emissions trading around two-thirds of global emissions reductions should be realized in NAI countries. Indeed, an effective solution may only require no-lose targets for five to seven of the largest NAI countries.

Policy relevance

No-lose targets are one of a number of instruments discussed under the United Nations Framework Convention on Climate Change New Market Mechanism to integrate NAI countries in global emissions reduction efforts. In contrast to binding reduction targets, which apply penalties if a target is not met, no-lose targets provide incentives for meeting a target, e.g. in the form of excess emissions certificates that can be sold on the global carbon market. The presented simulations show that no-lose targets can result in contributions from NAI countries to global emissions reduction efforts. However, the simulations also show that the necessary incentives for no-lose targets need to be adjusted. AI countries require more ambitious targets and NAI countries require less ambitious no-lose targets than proposed by the Intergovernmental Panel on Climate Change report. Effective no-lose targets may only be required for five to seven of the largest NAI countries.     

Stabilization of Atmospheric Concentrations of Greenhouse Gases

Given the present commitment of the developed countries according to the Kyoto Protocol, most published scenarios demonstrate that global greenhouse gases concentrations would not be stabilized at any level. In order to stabilize these concentrations, a deeper global involvement is needed. Taking Israel as an example of a `recently-developed' country, we assess the role that such countries could play by assuming voluntary commitments in strengthening global involvement. This case as a model may encourage a global scheme for curbing carbon emissions, in which the more developed countries assume a stronger role and the less developed countries participate according to the principle of common but differentiated responsibility. The scheme builds on the inverse relation that exists between the per capita gross domestic product and the rate of increase of emissions due to economic growth. According to this theoretical scheme, the voluntary commitments assumed by the `recently-developed' countries encourage the more developed countries to deepen their involvement by assuming more stringent reductions of emissions at home and transferring technological and financial means to the less developed countries. The proposed scheme would enable non-Annex I countries, both `recently-developed' countries and less developed countries, to participate much earlier in the net mitigation of greenhouse gases.     

Who picks up the remainder? Mitigation in developed and developing countries

A fair, effective, flexible and inclusive climate regime beyond 2012 will need several political balances. Mitigation and funding will be at the heart of the agreement. The IPCC's Fourth Assessment Report indicates that absolute reductions will be needed in Annex I (AI) countries and substantial deviation from baseline in some non-Annex I (NAI) regions by 2020. Although the latter was not explicitly quantified by the IPCC, the EU subsequently proposed a range for developing countries. Sharing the burden for mitigation is essentially zero-sum: if one does less, the other has to do more. We critically examine the implicit assumption that NAI countries would pick up the remainder of the required global effort minus the AI contribution. We suggest that greater levels of ambition can be achieved by turning the formula around politically, starting from the achievable ‘deviation below baseline’ given NAI's national programmes and appropriate international support. AI countries may have to exceed the IPCC ranges or pay for the remainder. For notional levels of NAI mitigation action, Annex I has to reduce by between ?52% and ?69% below 1990 by 2020, only dropping to a domestic ?35% with commitments to offset payments through the carbon market. Given the large mitigation gap, a political agreement on the question of ‘who pays’ is fundamental. The carbon market will provide some investment, but it mainly serves to reduce costs, particularly in developed countries, rather than adding to the overall effort. Market-linked levies and Annex I public funding will therefore be crucial to bridge the gap.     

Carbon tariffs for financing clean development

In order to address carbon leakage and preserve the competitiveness of domestic industries, some industrialized Annex I countries have proposed to implement carbon tariffs. These tariffs would be levied on energy-intensive imports from developing non-Annex I countries that have not agreed to binding emissions reductions. This action could have detrimental welfare impacts, especially on those developing countries, and may not lead to significant reductions in leakage. A recent proposal is to use the revenues generated from carbon tariffs to finance clean development in the relevant exporting non-Annex I countries. This proposal is evaluated using an energy-economic model of the global economy. The model is supplemented by marginal abatement cost curves and bottom-up information on abatement potentials in order to represent how clean development financing affects emissions reductions. The results indicate that carbon tariffs could raise US$3.5–24.5 billion (with a central value of $9.8 billion) for clean development financing. This could reduce the emissions of non-Annex I countries by 5–15% and still leave funds available for other purposes, such as adaptation. Furthermore, recycling the revenues generated from carbon tariffs back to the exporting country itself could alleviate some of the negative welfare impacts associated with them. However, a net negative impact especially on the welfare and gross domestic product of developing countries would remain.     

Global and regional trends in greenhouse gas emissions from livestock

Following IPCC guidelines (IPCC 2006), we estimate greenhouse gas emissions related to livestock in 237 countries and 11 livestock categories during the period 1961–2010. We find that in 2010 emissions of methane and nitrous oxide related to livestock worldwide represented approximately 9 % of total greenhouse gas (GHG) emissions. Global GHG emissions from livestock increased by 51 % during the analyzed period, mostly due to strong growth of emissions in developing (Non-Annex I) countries (+117 %). In contrast, developed country (Annex I) emissions decreased (?23 %). Beef and dairy cattle are the largest source of livestock emissions (74 % of global livestock emissions). Since developed countries tend to have lower CO₂-equivalent GHG emissions per unit GDP and per quantity of product generated in the livestock sector, the amount of wealth generated per unit GHG emitted from the livestock sector can be increased by improving both livestock farming practices in developing countries and the overall state of economic development. Our results reveal important details of how livestock production and associated GHG emissions have occurred in time and space. Discrepancies with higher tiers, demonstrate the value of more detailed analyses, and discourage over interpretation of smaller-scale trends in the Tier 1 results, but do not undermine the value of global Tier 1 analysis.     

Sector-based approach to the post-2012 climate change policy architecture

A sectoral approach to GHG emissions reductions in developing countries is proposed as a key component of the post-2012 climate change mitigation framework. In this approach, the ten highest-emitting developing countries in the electricity and other major industrial sectors pledge to meet voluntary, ‘no-lose’ GHG emissions targets in these sectors. No penalties are incurred for failing to meet a target, but emissions reductions achieved beyond the target level earn emissions reduction credits (ERCs) that can be sold to industrialized nations. Participating developing countries establish initial ‘no-lose’ emissions targets, based upon their national circumstances, from sector-specific energyintensity benchmarks that have been developed by independent experts. Industrialized nations then offer incentives for the developing countries to adopt more stringent emissions targets through a ‘Technology Finance and Assistance Package’, which helps to overcome financial and other barriers to technology transfer and deployment. These sectorspecific energy-intensity benchmarks could also serve as a means for establishing national economy-wide targets in developed countries in the post-2012 regime. Preliminary modelling of a hybrid scenario, in which Annex I countries adopt economy-wide absolute GHG emissions targets and high-emitting developing countries adopt ‘no-lose’ sectoral targets, indicates that such an approach significantly improves the likelihood that atmospheric concentrations of CO₂ can be stabilized at 450 ppmv by the end of the century.     

Greenhouse gas emissions from Indian livestock

Livestock constitutes an integral component of Indian agriculture sector and also a major source of GHGs emissions. The study presents a detailed inventory of GHG emissions at district/state level from different age-groups, indigenous and exotic breed of different Indian livestock categories estimated using the recent census 2003 and country-specific emission coefficients based on IPCC guidelines. The total methane emission including enteric fermentation and manure management of livestock was estimated at 11.75 Tg/year for the year 2003. Enteric fermentation constitutes ~91 % of the total methane emissions from Indian livestock. Dairy buffalo and indigenous dairy cattle together contribute 60 % of the methane emissions. The total nitrous oxide emission from Indian livestock for the year 2003 is estimated at 1.42 Gg/year, with 86.1 % contribution from poultry. The total GHGs emission from Indian livestock is estimated at 247.2 Mt in terms of CO₂ equivalent emissions. Although the Indian livestock contributes substantially to the methane budget, the per capita emission is only 24.23 kgCH₄/animal/year. Using the remote sensing derived potential feed/fodder area available for livestock, the average methane flux was calculated as 74.4 kg/ha. The spatial patterns derived in GIS environment indicated the regions with high GHGs emissions that need to be focused subsequently for mitigation measures. The projected estimates indicate a likely increase of 40 % in methane emissions from buffalo population.     

Considering the options: climate targets for all countries

This paper assesses five options for targets that could be taken by all countries to meet the ultimate objective of the climate change convention: fixed, binding targets; dynamic targets; non-binding targets; sectoral targets; policies and measures. Each is evaluated according to criteria of environmental effectiveness, cost-effectiveness, contribution to economic growth and sustainable development, and equity. While fixed, binding targets continue to be viable for industrialised countries, they do not seem suitable for many developing countries in the near future. Dynamic targets could alleviate developing countries’ concerns about constraining their development as well as broader concerns about possible introduction of “hot air” in a world trading regime; they could also be considered for some or all industrialised countries. Non-binding targets could be politically appealing to developing countries, alleviate fears about development and/or hot air, but might only allow conditional participation in emissions trading by developing countries. Sectoral targets could offer a pragmatic first step — although their cost-effectiveness might be questioned. Finally, targets based on commitments to implement specific policies and measures might drive mitigation action and be part of negotiated packages including financial and technological co-operation. All these options may coexist in the future.     

A low-carbon society: global visions,pathways, and challenges

The feasibility of two low-carbon society (LCS) scenarios, one with and one without nuclear power and carbon capture and storage (CCS), is evaluated using the AIM/Enduse[Global] model. Both scenarios suggest that achieving a 50% emissions reduction target (relative to 1990 levels) by 2050 is technically feasible if locally suited technologies are introduced and the relevant policies, including necessary financial transfers, are appropriately implemented. In the scenario that includes nuclear and CCS options, it will be vital to consider the risks and acceptance of these technologies. In the scenario without these technologies, the challenge will be how to reduce energy service demand. In both scenarios, the estimated investment costs will be higher in non-Annex I countries than in Annex I countries. Finally, the enhancement of capacity building to support the deployment of locally suited technologies will be central to achieving an LCS.

Policy relevance

Policies to reduce GHG emissions up to 2050 are critical if the long-term target of stabilizing the climate is to be achieved. From a policy perspective, the cost and social acceptability of the policy used to reduce emissions are two of the key factors in determining the optimal pathways to achieve this. However, the nuclear accident at Fukushima highlighted the risk of depending on large-scale technologies for the provision of energy and has led to a backlash against the use of nuclear technology. It is found that if nuclear and CCS are used it will be technically feasible to halve GHG emissions by 2050, although very costly. However, although the cost of halving emissions will be about the same if neither nuclear nor CCS is used, a 50% reduction in emissions reduction will not be achievable unless the demand for energy service is substantially reduced.     

Meeting the EU 2°C climate target: global and regional emission implications

Abstract

This article presents a set of multi-gas emission pathways for different CO₂-equivalent concentration stabilization levels, i.e. 400, 450, 500 and 550 ppm CO₂-equivalent, along with an analysis of their global and regional reduction implications and implied probability of achieving the EU climate target of 2°C. For achieving the 2°C target with a probability of more than 60%, greenhouse gas concentrations need to be stabilized at 450 ppm CO₂-equivalent or below, if the 90% uncertainty range for climate sensitivity is believed to be 1.5–4.5°C. A stabilization at 450 ppm CO₂-equivalent or below (400 ppm) requires global emissions to peak around 2015, followed by substantial overall reductions of as much as 25% (45% for 400 ppm) compared to 1990 levels in 2050. In 2020, Annex I emissions need to be approximately 15% (30%) below 1990 levels, and non-Annex I emissions also need to be reduced by 15–20% compared to their baseline emissions. A further delay in peaking of global emissions by 10 years doubles maximum reduction rates to about 5% per year, and very probably leads to high costs. In order to keep the option open of stabilizing at 400 and 450 ppm CO₂-equivalent, the USA and major advanced non-Annex I countries will have to participate in the reductions within the next 10–15 years.     

The impact of shale gas on the costs of climate policy

The use of shale gas is commonly considered as a low-cost option for meeting ambitious climate policy targets. This article explores global and country-specific effects of increasing global shale gas exploitation on the energy markets, on greenhouse gas emissions, and on mitigation costs. The global techno-economic partial equilibrium model POLES (Prospective Outlook on Long-term Energy Systems) is employed to compare policies which limit global warming to 2°C and baseline scenarios when the availability of shale gas is either high or low. According to the simulation results, a high availability of shale gas has rather small effects on the costs of meeting climate targets in the medium and long term. In the long term, a higher availability of shale gas increases baseline emissions of greenhouse gases for most countries and for the world, and leads to higher compliance costs for most, but not all, countries. Allowing for global trading of emission certificates does not alter these general results. In sum, these findings cast doubt on shale gas’s potential as a low-cost option for meeting ambitious global climate targets.

POLICY RELEVANCE

Many countries with a large shale gas resource base consider the expansion of local shale gas extraction as an option to reduce their GHG emissions. The findings in this article imply that a higher availability of shale gas in these countries might actually increase emissions and mitigation costs for these countries and also for the world. An increase in shale gas extraction may spur a switch from coal to gas electricity generation, thus lowering emissions. At the global level and for many countries, though, this effect is more than offset by a crowding out of renewable and nuclear energy carriers, and by lower energy prices, leading to higher emissions and higher mitigation costs in turn. These findings would warrant a re-evaluation of the climate strategy in most countries relying on the exploitation of shale gas to meet their climate targets.