The REMIND-R model: the role of renewables in the low-carbon transformation—first-best vs. second-best worlds

Can near-term public support of renewable energy technologies contain the increase of mitigation costs due to delays of implementing emission caps at the global level? To answer this question we design a set of first and second best scenarios to analyze the impact of early deployment of renewable energy technologies on welfare and emission timing to achieve atmospheric carbon stabilization by 2100. We use the global multiregional energy?Ceconomy?Cclimate hybrid model REMIND-R as a tool for this analysis. An important design feature of the policy scenarios is the timing of climate policy. Immediate climate policy contains the mitigation costs at less than 1% even if the CO₂ concentration target is 410?ppm by 2100. Delayed climate policy increases the costs significantly because the absence of a strong carbon price signal continues the carbon intensive growth path. The additional costs can be decreased by early technology policies supporting renewable energy technologies because emissions grow less, alternative energy technologies are increased in capacity and their costs are reduced through learning by doing. The effects of early technology policy are different in scenarios with immediate carbon pricing. In the case of delayed climate policy, the emission path can be brought closer to the first-best solution, whereas in the case of immediate climate policy additional technology policy would lead to deviations from the optimal emission path. Hence, technology policy in the delayed climate policy case reduces costs, but in the case of immediate climate policy they increase. However, the near-term emission reductions are smaller in the case of delayed climate policies. At the regional level the effects on mitigation costs are heterogeneously distributed. For the USA and Europe early technology policy has a positive welfare effect for immediate and delayed climate policies. In contrast, India looses in both cases. China loses in the case of immediate climate policy, but profits in the delayed case. Early support of renewable energy technologies devalues the stock of emission allowances, and this effect is considerable for delayed climate policies. In combination with the initial allocation rule of contraction and convergence a relatively well-endowed country like India loses and potential importers like the EU gain from early renewable deployment.     

The relationship between short-term emissions and long-term concentration targets

The relationship between long-term climate goals and short/medium-term emission targets forms crucial information for the design of international climate policy. Since IPCC??s 4th Assessment Report (AR4), a large number of new scenario studies have been published. This paper reviews this new literature and finds that there is more flexibility in the timing of short-term emission reductions compared to the earlier scenarios assessed by the AR4. For instance, the current literature suggests that a peak of emissions in 2020 and even 2030 would be consistent with limiting temperature change to about 2??C in the long term. The timing when emissions peak depends on whether negative emissions in the long-term can be achieved. The recent scenarios further indicate that global emissions by 2050 should be 40?C80% below 2000 levels. Above all, the paper argues that there is no clear, single ??law?? that would directly determine the required emissions levels in 2020, but that instead policy-makers need to consider trade-offs between the likelihood of achieving long-term targets, the short-term costs, and their expectation with respect to future technologies (and their possible failure). The higher flexibility might be important in finding acceptable agreements on international climate policy.     

Safe policies in an uncertain climate: an application of FUND

Various aspects of the role of uncertainty in greenhouse gas emission reduction policy are analyzed with the integrated assessment model FUND. FUND couples simple models of economy, climate, climate impacts, and emission abatement. Probability distribution functions are assumed for all major parameters in the model. Monte Carlo analyses are used to study the effects of parametric uncertainties. Uncertainties are found to be large and grow over time. Uncertainties about climate change impacts are more serious than uncertainties about emission reduction costs, so that welfare-maximizing policies are stricter under uncertainty than under certainty. This is more pronounced without than with international cooperation. Whether or not countries cooperate with one another is more important than whether or not uncertainty is considered. Meeting exogenously defined emission targets may be more or less difficult under uncertainty than under certainty, depending on the asymmetry in the uncertainty and the central estimate of interest. The major uncertainty in meeting emissions targets in each of a range of possible future is the timing of starting (serious) reduction policies. In a scenario aiming at a stable CO₂ concentration of 550 ppm, the start date varies 20 years for Annex I countries, and much longer for non-Annex countries. Atmospheric stabilization at 550 ppm does not avoid serious risks with regard to climate change impacts. At the long term, it is possible to avoid such risks but only through very strict emission control at high economic costs.     

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.     

Methane Emission Reduction: An Application of FUND

Methane is, after carbon dioxide, the most important anthropogenic greenhouse gas. Governments plan to abate methane emissions. A crude set of estimates of reduction costs is included in FUND, an integratedassessment model of climate change. In a cost-benefit analysis, methane emission reduction is found to be instrumental in controlling the optimal rate of climate change. In a cost-effectiveness analysis, methane emission reduction largely replaces carbon dioxide emission reduction. Methane emission reduction reinforces the case for international cooperation in climate policy, but complicates the efficient allocation of emission reduction efforts. Methane emission reduction at the short run does not help to achieve the ultimate objective of the Framework Convention on Climate Change.     

Reaching a climate agreement: compensating for energy market effects of climate policy

Because of large economic and environmental asymmetries among world regions and the incentive to free ride, an international climate regime with broad participation is hard to reach. Most of the proposed regimes are based on an allocation of emissions rights that is perceived as fair. Yet, there are also arguments to focus more on the actual welfare implications of different regimes and to focus on a ‘fair’ distribution of resulting costs. In this article, the computable general equilibrium model DART is used to analyse the driving forces of welfare implications in different scenarios in line with the 2?°C target. These include two regimes that are often presumed to be ‘fair’, namely a harmonized international carbon tax and a cap and trade system based on the convergence of per capita emissions rights, and also an ‘equal loss’ scenario where welfare losses relative to a business-as-usual scenario are equal for all major world regions. The main finding is that indirect energy market effects are a major driver of welfare effects and that the ‘equal loss’ scenario would thus require large transfer payments to energy exporters to compensate for welfare losses from lower world energy demand and prices.

Policy relevance

A successful future climate regime requires ‘fair’ burden sharing. Many proposed regimes start from ethical considerations to derive an allocation of emissions reduction requirements or emissions allowances within an international emissions trading scheme. Yet, countries also consider the expected economic costs of a regime that are also driven by other factors besides allowance allocation. Indeed, in simplified lab experiments, successful groups are characterized by sharing costs proportional to wealth. This article shows that the major drivers of welfare effects are reduced demand for fossil energy and reduced fossil fuel prices, which implies that (1) what is often presumed to be a fair allocation of emissions allowances within an international emissions trading scheme leads to a very uneven distribution of economic costs and (2) aiming for equal relative losses for all regions requires large compensation to fossil fuel exporters, as argued, for example, by the Organization of Petroleum Exporting Countries (OPEC).     

Impacts of different diffusion scenarios for mitigation technology options and of model representations regarding renewables intermittency on evaluations of CO2 emissions reductions

This paper evaluated the impacts of climate change mitigation technology options on CO₂ emission reductions and the effects of model representations regarding renewable intermittency on the assessment of reduction by using a world energy systems model. First, different diffusion scenarios for carbon dioxide capture and storage (CCS), nuclear power, and wind power and solar PV are selected from EMF27 scenarios to analyze their impacts on CO₂ emission reductions. These technologies are important for reducing CO₂ intensity of electricity, and the impacts of their diffusion levels on mitigation costs are significant, according to the analyses. Availability of CCS in particular, among the three kinds of technologies, has a large impact on the marginal CO₂ abatement cost. In order to analyze effects of model representations regarding renewables intermittency, four different representations are assumed within the model. A simplistic model representation that does not take into consideration the intermittency of wind power and solar PV evaluates larger contributions of the energy sources than those evaluated by a model representation that takes intermittency into consideration. Appropriate consideration of renewables intermittency within global energy systems models will be important for realistic evaluations of climate change mitigation scenarios.     

A no cap but trade proposal for emission targets

One problem in international climate policy is the refusal of large developing countries to accept emission reduction targets. Brazil, China and India together account for about 20% of today's CO₂ emissions. We analyse the case in which there is no international agreement on emission reduction targets, but countries do have domestic targets, and trade permits across borders. We contrast two scenarios. In one scenario, Brazil, China and India adopt their business as usual emissions as their target. In this scenario, there are substantial exports of emission permits from developing to developed countries, and substantial economic gains for all. In the second scenario, Brazil, China and India reduce their emissions target so that they have no net economic gain from permit trade. Here, developing countries do not accept responsibility for climate change (as they bear no net costs), but they do contribute to an emission reduction policy by refusing to make money out of it. Adopting such break-even targets can be done at minor cost to developed and developing countries (roughly $2 bn/year each in extra costs and forgone benefits), while developing countries are still slightly better off than in the case without international emissions trade. This result is robust to variations in scenarios and parameters. It contrasts with Stewart and Wiener (2003) who propose granting ‘hot air’ to developing countries to seduce them to accept targets. In 2020, China and India could reduce their emissions by some 10% from the baseline without net economic costs.     

Evaluating cost-effective strategies for meeting regional CO2 targets

Various climate protocol proposals oblige different industrialized countries to reduce CO₂ and other greenhouse gas emissions. In principle, the total costs of these obligations could be substantially reduced if emission reductions are implemented in regions with low marginal costs for CO₂ reduction. This has been difficult to quantify because of lack of models with suitable regional and sectoral detail. In this paper we perform these calculations by taking advantage of the capability of the IMAGE 2 model to compute regional emissions and costs. Two main options are examined for allocating emission reductions required of industrialized regions in a cost effective manner: (1) allocating them among industrialized regions (2) allocating them among all world regions. The cost savings for each of these options are presented. The main conclusions are that (a) it is of great importance for the cost comparisons of protocols to use a well defined baseline scenario and clearly formulated targets, and (b) large economic benefits, in the order of 35–65%, can accrue from joint-implementation agreements which allocate investments on the basis of net marginal costs of CO₂ emission reduction.     

Assessing the value of price caps and floors

This article assesses the long-term economic and climatic effects of introducing price caps and price floors in hypothetical global climate change mitigation policy. Based on emission trends, abatement costs and equilibrium climate sensitivity from IPCC and IEA reports, this quantitative analysis confirms that price caps could significantly reduce economic uncertainty. This uncertainty stems primarily from unpredictable economic growth and energy prices, and ultimately unabated emission trends. In addition, the development of abatement technologies is uncertain. Furthermore, this analysis shows that rigid targets may entail greater economic risks with little or no comparative advantage for the climate. More ambitious emission objectives, combined with price caps and price floors, could still entail significantly lower expected costs while driving similar, or even slightly better, climatic outcomes in probabilistic terms.     

Scenarios of methane emission reductions to 2030: abatement costs and co-benefits to ozone air quality and human mortality

Methane emissions contribute to global baseline surface ozone concentrations; therefore reducing methane to address climate change has significant co-benefits for air quality and human health. We analyze the costs of reducing methane from 2005 to 2030, as might be motivated to reduce climate forcing, and the resulting benefits from lower surface ozone to 2060. We construct three plausible scenarios of methane emission reductions, relative to a base scenario, ranging from 75 to 180 Mton CH₄ yr^?1 decreased in 2030. Using compilations of the global availability of methane emission reductions, the least aggressive scenario (A) does not incur any positive marginal costs to 2030, while the most aggressive (C) requires discovery of new methane abatement technologies. The present value of implementation costs for Scenario B are nearly equal to Scenario A, as it implements cost-saving options more quickly, even though it adopts positive cost measures. We estimate the avoided premature human mortalities due to surface ozone decreases by combining transient full-chemistry simulations of these scenarios in a global atmospheric chemical transport model, with concentration-mortality relationships from a short-term epidemiologic study and projected global population. An estimated 38,000 premature mortalities are avoided globally in 2030 under Scenario B. As benefits of methane reduction are positive but costs are negative for Scenario A, it is justified regardless of how avoided mortalities are valued. The incremental benefits of Scenario B also far outweigh the incremental costs. Scenario C has incremental costs that roughly equal benefits, only when technological learning is assumed. Benefits within industrialized nations alone also exceed costs in Scenarios A and B, assuming that the lowest-cost emission reductions, including those in developing nations, are implemented. Monetized co-benefits of methane mitigation for human health are estimated to be $13–17 per ton CO₂eq, with a wider range possible under alternative assumptions. Methane mitigation can be a cost-effective means of long-term and international air quality management, with concurrent benefits for climate.     

Evaluating the US Mid-Century Strategy for Deep Decarbonization amidst early century uncertainty

The recent change in US presidential administrations has introduced significant uncertainty about both domestic and international policy support for continued reductions in GHG emissions. This brief analysis estimates the potential climate ramifications of changing US leadership, contrasting the Mid-Century Strategy for Deep Decarbonization (MCS) released under the Obama Administration, with campaign statements, early executive actions, and prevailing market conditions to estimate potential emission pathways under the Trump Administration. The analysis highlights areas where GHG reductions are less robust to changing policy conditions, and offers brief recommendations for addressing emissions in the interim. It specifically finds that continued reductions in the electricity sector are less vulnerable to changes in federal policy than those in the built environment and land use sectors. Given the long-lived nature of investments in these latter two sectors, however, opportunities for near-term climate action by willing cities, states, private landowners, and non-profit organizations warrant renewed attention in this time of climate uncertainty.

Key policy insights

• The recent US presidential election has already impacted mitigation goals and practices, injecting considerable uncertainty into domestic and international efforts to address climate change.

• A strategic assessment issued in the final days of the Obama Administration for how to reach long-term climate mitigation objectives provides a baseline from which to gauge potential changes under the Trump Administration.

• Though market trends may continue to foster emission declines in the energy sector, emission reductions in the land use sector and the built environment are subject to considerable uncertainty.

• Regardless of actions to scale back climate mitigation efforts, US emissions are likely to be flat in the coming years. Assuming that emissions remain constant under President Trump and that reductions resume afterwards to meet the Obama Administration mid-century targets in 2050, this near-term pause in reductions yields a difference in total emissions equivalent to 0.3–0.6 years of additional global greenhouse gas emissions, depending on the number of terms served by a Trump Administration.

     

Projection of economic impacts of climate change in sectors of Europe based on bottom up analysis: human health

This paper scopes a number of the health impacts of climate change in Europe (EU-27) quantitatively, using physical and monetary metrics. Temperature-related mortality effects, salmonellosis and coastal flooding-induced mental health impacts resulting from climate change are isolated from the effects of socio-economic change for the 2011–2040 and 2071–2100 time periods. The temperature-induced mortality effects of climate change include both positive and negative effects, for winter (cold) and summer (heat) effects, respectively, and have welfare costs (and benefits) of up to 100 billion Euro annually by the later time-period, though these are unevenly distributed across countries. The role of uncertainty in quantifying these effects is explored through sensitivity analysis on key parameters. This investigates climate model output, climate scenario, impact function, the existence and extent of acclimatisation, and the choice of physical and monetary metrics. While all of these lead to major differences in reported results, acclimatisation is particularly important in determining the size of the health impacts, and could influence the scale and form of public adaptation at the EU and national level. The welfare costs for salmonellosis from climate change are estimated at potentially several hundred million Euro annually by the period 2071–2100. Finally, a scoping assessment of the health costs of climate change from coastal flooding, focusing on mental health problems such as depression, are estimated at up to 1.5 billion Euro annually by the period 2071–2100.     

UNFCCC before and after Paris – what's necessary for an effective climate regime?

What can reasonably be expected from the UNFCCC process and the climate conference in Paris 2015? To achieve transformative change, prevailing unsustainable routines embedded in socio-economic systems have to be translated into new and sustainable ones. This article conceptualizes the UNFCCC and the associated policy processes as a catalyst for this translation by applying a structurational regime model. This model provides an analytical distinction of rules (norms and shared meaning) and resources (economic resources as well as authoritative and allocative power) and allows us to conceptualize agency on various levels, including beyond nation states. The analysis concludes that the UNFCCC's narrow focus on emission targets, which essentially is a focus on resources, has proven ineffective. In addition, the static division of industrialized and developing countries in the Convention's annexes and the consensus-based decision-making rules have impeded ambitious climate protection. The article concludes that the UNFCCC is much better equipped to provide rules for climate protection activities and should consciously expand this feature to improve its impact.

Policy relevance

The international community is negotiating a new global climate agreement, to be adopted at the Conference of the Parties (COP 21) in December 2015 in Paris and to be applicable from 2020. This article analyses the successes and limitations the UNFCCC has had so far in combating climate change and it develops recommendations on how to enhance efforts within and beyond the framework of the Convention. From our analysis we derive two main recommendations for an effective and structurationally balanced treaty: First, multidimensional mitigation contributions going beyond emission targets could strongly improve countries’ abilities to tailor their contributions around national political discourses. Second, the UNFCCC regime should be complemented with another treaty outside of the UNFCCC framework. This ‘Alliance of the Ambitious’ would allow the pioneers of climate protection to move ahead and enjoy the benefits of cooperation. The dynamics generated through such a club approach could be fed back into the UNFCCC, leading to increased ambition by others in future commitment cycles.     

Reconciling global sustainability targets and local action for food production and climate change mitigation

The Sustainable Development Goals (SDGs) imply country-led implementation. Yet, their achievement depends on sustainability targets compatible across different sectors and scales. Our study examines how the GHG emission intensity of agriculture (EIA) should evolve globally, regionally (Western Europe) and nationally (The Netherlands) under different socioeconomic pathways, so that two major aims of SDGs 2 and 13 (i.e. sufficient food production and climate change mitigation) are achieved simultaneously. Results show that, by 2050, relative to 2010 values, EIA should decrease at all three levels when measured on a product basis (GHG emissions per ton dry matter) and on a land basis (GHG emissions per ha). This indicates that, globally, agriculture should be intensified per unit area, while in Western Europe and even more so in the Netherlands additional emission reductions require increased production efficiency and lower production volumes. Projected reductions in methane and nitrous oxide emissions from enteric fermentation, manure management and fertilizer application in Dutch agriculture are much higher than what would be achieved through the extrapolation of current trends. Given the high costs of increasing production efficiency further, our analysis indicates the need for significantly more ambitious policy targets and systemic changes, including reduced consumption of animal-sourced food. Besides shedding light on the interaction between climate and agricultural strategies, our analysis illustrates the application of cross-scale thinking in the operationalization of the SDG agenda and underscores the need for concerted action amongst countries.     

Air quality planning in California’s changing climate

California is home to some of the worst air quality in the nation and ninety percent of the state’s population lives in areas that are out of attainment with at least one of the National Ambient Air Quality Standards. Increasing temperatures associated with climate change will make meeting air quality standards more difficult. Under a changing climate, additional emission reductions will be needed to achieve clean air standards. These additional emission reductions and associated costs are called the “climate penalty.” Air quality planning is the process of assessing the emission reductions needed to meet air quality standards and outlining the programs and policies that will be implemented to achieve these emission reductions. This paper reviews the challenges that a changing climate will pose for air quality planning in California and identifies opportunities for adaptation. While state air quality regulators in California are taking enormous strides to address global warming, less work is happening at the regional, air district level. Air districts are the agencies responsible for developing air quality improvement plans. An important first step for regional air quality regulators will be to quantify the climate penalty and understand their region’s vulnerability to climate change. Limitations in regulatory authority could impede measures to improve preparedness. Regional agencies will likely need to look to state and federal agencies for additional emission reductions.     

Temperature control,emission abatement and costs: key EMF 27 results from Environment Canada’s Integrated Assessment Model

This paper investigates the potential impacts of alternative international climate change scenarios based on different policies and technological circumstances on future emission pathways and abatement costs. It also examines if these hypothetical scenarios could result in significant emission reductions required to control the global temperature from rising to no more than 2.5 °C above preindustrial level. Using an integrated assessment model, this paper examines these issues under 12 scenarios derived from four policy perspectives and three technology dimensions. Results show that the no-policy-change baseline scenarios lead to high global average temperatures in the future. To control the temperature efficiently, every global region will be required to undertake considerable abatement efforts. Current country pledges alone, even if fully implemented, cannot control the global temperature in the future to within a comfortable zone. There will still be large gap between the reductions needed to meet the 2.5 degree objective, associated with 550 ppm and the reductions associated with existing abatement efforts. Further stringent policies together with favourable technological conditions may lead to the desired level of temperature control. Participation by only a subset of nations not only makes achieving the temperature goal difficult but also costly. To achieve temperature control efficiently, global coordination and full participation by all regions are necessary and global participation may reduce global abatement costs. It is worth noting that abatement costs vary widely across regions under different policy and technology scenarios.     

Adaptation financing in a global agreement: is the adaptation levy appropriate?

The climate negotiations recognize that adequate and additional funds are needed to assist adaptation in developing countries. This article analyses whether a future 2% or any higher adaptation levy (AL) can achieve this, whether it causes – as it is a tax on the Clean Development Mechanism (CDM) – a significant excess burden, and how it alters the relation between adaptation financing and mitigation. While former studies have focused on single AL levels, this article determines the transfers from the CDM and the AL for a range of emission reduction targets and AL levels with a partial equilibrium model based on marginal abatement cost estimates for 2020. Revenues from a 2% AL are negligible and remain inadequate for ambitious emission reductions and an AL that maximizes transfers (e.g. US$15 billion for 30% reduction target). Revenues are mostly subtracted from CDM transfers, so little additional funds are raised (e.g. less than $2.4 billion for 30% reduction target). Adaptation financing increases disproportionally with more stringent reduction targets for a rising levy, and the share of Annex I country expenditures devoted to transfers increases slightly. Both effects are only small. The excess burden is larger than 85% of the additional funds.

Policy relevance

Financing adaptation in developing countries has become a cornerstone of a global climate agreement. The mechanism for raising additional funds has not yet been determined. This article assesses the potential of upscaling one option that is already in place under the Kyoto Protocol: the 2% AL on the CDM. It is estimated that even a much higher AL does not generate substantial additional funds, mainly redistributes transfers within non-Annex I countries, does so at social costs in the same order of magnitude as additional funds, and increases the share of Annex I country expenditures devoted to transfers. It is unwise to link mitigation and adaptation as CDM and AL jointly do, since this taxes a beneficial activity. Financial instruments with transfers that decrease with or are independent from climate protection would be preferable.     

Impacts of Climate Change on the Global Forest Sector

The path and magnitude of future anthropogenic emissions of carbon dioxide will likely influence changes in climate that may impact the global forest sector. These responses in the global forest sector may have implications for international efforts to stabilize the atmospheric concentration of carbon dioxide. This study takes a step toward including the role of global forest sector in integrated assessments of the global carbon cycle by linking global models of climate dynamics, ecosystem processes and forest economics to assess the potential responses of the global forest sector to different levels of greenhouse gas emissions. We utilize three climate scenarios and two economic scenarios to represent a range of greenhouse gas emissions and economic behavior. At the end of the analysis period (2040), the potential responses in regional forest growing stock simulated by the global ecosystem model range from decreases and increases for the low emissions climate scenario to increases in all regions for the high emissions climate scenario. The changes in vegetation are used to adjust timber supply in the softwood and hardwood sectors of the economic model. In general, the global changes in welfare are positive, but small across all scenarios. At the regional level, the changes in welfare can be large and either negative or positive. Markets and trade in forest products play important roles in whether a region realizes any gains associated with climate change. In general, regions with the lowest wood fiber production cost are able to expand harvests. Trade in forest products leads to lower prices elsewhere. The low-cost regions expand market shares and force higher-cost regions to decrease their harvests. Trade produces different economic gains and losses across the globe even though, globally, economic welfare increases. The results of this study indicate that assumptions within alternative climate scenarios and about trade in forest products are important factors that strongly influence the effects of climate change on the global forest sector.     

Global impact of a climate treaty if the Human Development Index replaces GDP as a welfare proxy

This study explores the implications of shifting the narrative of climate policy evaluation from one of costs/benefits or economic growth to a message of improving social welfare. Focusing on the costs of mitigation and the associated impacts on gross domestic product (GDP) may translate into a widespread concern that a climate agreement will be very costly. This article considers the well-known Human Development Index (HDI) as an alternative criterion for judging the welfare effects of climate policy. We estimate what the maximum possible annual average increase in HDI welfare per tons of CO₂ would be within the carbon budget associated with limiting warming to 2°C over the period 2015–2050. Emission pathways are determined by a policy that allows the HDI of poor countries and their emissions to increase under a business-as-usual development path, while countries with a high HDI value (>0.8) have to restrain their emissions to ensure that the global temperature rise does not exceed 2°C. For comparison, the well-known multi-regional RICE model is used to assess GDP growth under the same climate change policy goals.

Policy relevance

This is the first study that shifts the narrative of climate policy evaluation from one of GDP growth to a message of improving social welfare, as captured by the HDI. This could make it easier for political leaders and climate negotiators to publicly commit themselves to ambitious carbon emission reduction goals, such as limiting global warming to 2°C, as in the (non-binding) agreement made at COP 21 in Paris in 2015. We find that if impacts are framed in terms of growth in HDI per t CO₂ emission per capita instead of in GDP, the HDI of poor countries and their emissions are allowed to increase under a business-as-usual development path, whereas countries with a high HDI (>0.8) must control emissions so that global temperature rise remains within 2°C. Importantly, a climate agreement is more attractive for rich countries under the HDI than the GDP frame. This is good news, as these countries have to make the major contribution to emissions reductions.