Development of a risk-hedging CO2-emission policy, part I: Risks of unrestrained emissions

A rational global strategy with respect to greenhouse-gas emissions would seek to minimize total risk, which is the sum of the risk of negative impacts due to climatic change associated with a given level of emissions, and the risks associated with the process of achieving that emission level. Given the existence of reducible uncertainties in estimating these risks, and the possibility that an emission target thought to minimize total risk is later found to be not strict enough, a risk-hedging strategy is a more realistic policy objective. This paper is Part I of a two-part series in which these risks are reviewed and an interim risk-hedging emission level is proposed. Here, the risks associated with unrestrained greenhouse-gas emissions are reviewed. In particular, the carbon-cycle response to continuing CO₂ emissions; the heat trapping of projected greenhouse gas increases in comparison to other anthropogenic and natural heating or cooling perturbations; the climatic response to heating perturbations; and the impacts of projected climatic change on global agriculture, forests, coastal regions, coral reefs, water resources, terrestrial species, stratospheric and tropospheric ozone, and human comfort and welfare are critically examined. It is concluded that unrestrained emissions of greenhouse gases pose real and substantial risks to human societies and to ecosystems, and that these risks are likely to grow substantially if the climate warms beyond that associated with a CO₂ doubling. These risks clearly justify some action to limit emissions. The magnitude of emission restraint that is justified depends not only on the risks reviewed here, but also on the risks associated with measures to limit greenhouse-gas emissions, which are reviewed in Part II.     

Tax and trade: a hybrid climate policy instrument to control carbon prices and emissions

This article describes a ‘tax and trade' emission regulations system that controls both emission costs and emission quantities. Emitters are taxed at a fixed price on carbon emissions and the government uses the tax revenue to buy carbon offsets on existing emissions markets. Unlike a traditional carbon tax, regulated firms may also produce carbon credits which may be sold to the government. Thus, the government bears the compliance cost risk rather than an individual firm and has control over the number of offsets purchased and the effective emission reduction. This unusual form of hybrid has potential political advantages of creating an economic incentive on corporate choices (at the margin) substantially greater than the actual trading price, and with lower financial transfers than in most schemes.

Policy relevance

The article presents a hybrid carbon emissions system that adds to the growing discussion of hybrid policy instruments which could be implemented by policy makers, particularly in nations without current cap and trade policies.     

The marginal impacts of CO2, CH4 and SF6 emissions

Abstract

A new version of the PAGE model, PAGE2002, has been used to calculate the marginal impacts of CO₂, CH₄ and SF₆ emissions based on Scenario A2 of the IPCC. The mean marginal impact of CO₂ is found to be US$19 per tonne of carbon (or about US$5 per tonne of CO₂), for methane it is US$105 per tonne, and for SF₆ it is US$200,000 per tonne. For each gas, the range between the 5% and 95% points is about an order of magnitude. The climate change impacts of methane are a significant proportion of its market price, and for SF₆ the climate change impacts are much larger than the market price. The economics of schemes to reduce the leakage of SF₆ are transformed once the climate change impacts are properly counted.     

Slovenia's climate policy efforts: CO2 tax and implementation of EU ETS

Slovenia is required to reduce its greenhouse gas emissions to an average of 8% below the base year 1986 in the period 2008–2012, due to the ratification of the Kyoto Protocol in 2002. It was the first of the transition countries to implement a CO₂ tax in 1997. At the beginning of 2005, Slovenia joined other EU Member States by implementing the Emissions Trading Scheme. In contrast with other new EU Member States, Slovenia will be a net buyer of allowances. Therefore future movements on the emissions market will play an important role in the compliance costs of achieving the Kyoto target. The main purpose of this article is to present the establishment and characteristics of the first national allocation plan (NAP1) and to describe the main elements of the second national allocation plan (NAP2) for Slovenia within the EU Emissions Trading Scheme, the expected movements on the emissions allowances market in Slovenia, the expected compliance cost of achieving the Kyoto target and to present the main characteristics and efficiency of the CO₂ tax in Slovenia.     

Vegetation patterns in South America associated with rising CO2: uncertainties related to sea surface temperatures

Spatially precise forecasts of the impacts of climate change on the distribution of major vegetation types are essential for the implementation of effective conservation and land use policy. However, existing studies frequently omit major sources of climate variability that can significantly increase the uncertainty of projections. In this study we demonstrate how different predictions for sea surface temperature (SST) for the first half of the twenty-first century increase the uncertainty associated with forecasts of the future distribution of major ecosystems in South America. This is demonstrated through a numerical experiment using a coupled climate–vegetation model (CCM3-IBIS) for IPCC emission scenario A2 that incorporates the SST data from ten different models. The study reveals an increasing uncertainty in the ability to forecast future vegetation patterns, such that by 2050 the simulation is unable to robustly forecast the vegetation cover in an area equivalent to 28 % in South America (5?×?10⁶ km²). The future of the central and northeastern regions of Brazil is especially uncertain, with outcomes, ranging from savanna, and open shrubland to grassland. Recognizing and managing such uncertainty should be a priority for decision makers.     

Potential emissions of CO2 and methane from proved reserves of fossil fuels: An alternative analysis

Scientists have argued that no more than 275 GtC (IPCC, 2013) of the world’s reserves of fossil fuels of 746 GtC can be produced in this century if the world is to restrict anthropogenic climate change to ≤2 °C. This has raised concerns about the risk of these reserves becoming “stranded assets” and creating a dangerous “carbon bubble” with serious impacts on global financial markets, leading in turn to discussions of appropriate investor and consumer actions. However, previous studies have not always clearly distinguished between reserves and resources, nor differentiated reserves held by investor-owned and state-owned companies with the capital, infrastructure, and capacity to develop them in the short term from those held by nation-states that may or may not have such capacity. This paper analyzes the potential emissions of CO₂ and methane from the proved reserves as reported by the world's largest producers of oil, natural gas, and coal. We focus on the seventy companies and eight government-run industries that produced 63% of the world’s fossil fuels from 1750 to 2010 (Heede, 2014), and have the technological and financial capacity to develop these reserves. While any reserve analysis is subject to uncertainty, we demonstrate that production of these reported reserves will result in emissions of 440 GtC of carbon dioxide, or 160% of the remaining 275 GtC carbon budget. Of the 440 GtC total, the 42 investor-owned oil, gas, and coal companies hold reserves with potential emissions of 44 GtC (16% of the remaining carbon budget, hereafter RCB), whereas the 28 state-owned entities possess reserves of 210 GtC (76% of the RCB). This analysis suggests that what may be needed to prevent dangerous anthropogenic interference (DAI) with the climate system differs when one considers the state-owned entities vs. the investor-owned entities. For the former, there is a profound risk involved simply in the prospect of their extracting their proved reserves. For the latter, the risk arises not so much from their relatively small proved reserves, but from their on-going exploration and development of new fossil fuel resources. For preventing DAI overall, effective action must include the state-owned companies, the investor-owned companies, and governments. However, given that the majority of the world's reserves are coal resources owned by governments with little capacity to extract them in the near term, we suggest that the more immediate urgency lies with the private sector, and that investor and consumer pressure should focus on phasing out these companies’ on-going exploration programs.     

An assessment of measures of storminess: simulated changes in northern hemisphere winter due to increasing CO2

Two methods for identifying mid-latitude synoptic time scale variability have been applied to data from the first United Kingdom Meteorological Office (UKMO) coupled ocean-atmosphere model experiments with present day and gradually increasing CO₂ concentrations. In the first the standard deviation of the time filtered mean sea level pressure field is taken to identify the location of the storm track and in the second individual cyclones are identified using synoptic criteria. The results have been compared with data from a 10 year archive of UKMO analysis. In the enhanced CO₂ experiment the changes in storminess identified by the two methods have been compared with changes in mean and maximum winds with special emphasis on the North Atlantic. The relative utility of the different measures for predicting potentially damaging synoptic events is discussed. Received: 3 May 1995 / Accepted: 7 November 1995     

An assessment of measures of storminess: Simulated changes in northern hemisphere winter due to increasing CO2

Two methods for identifying mid-latitude synoptic time scale variability have been applied to data from the first United Kingdom Meteorological Office (UKMO) coupled ocean-atmosphere model experiments with present day and gradually increasing CO₂ concentrations. In the first the standard deviation of the time filtered mean sea level pressure field is taken to identify the location of the storm track and in the second individual cyclones are identified using synoptic criteria. The results have been compared with data from a 10 year archive of UKMO analysis. In the enhanced CO₂ experiment the changes in storminess identified by the two methods have been compared with changes in mean and maximum winds with special emphasis on the North Atlantic. The relative utility of the different measures for predicting potentially damaging synoptic events is discussed.     

Turbulent characteristics over a rough natural surface part II: Responses of profiles to turbulence

Instantaneous (2 sec) profiles of wind and temperature were investigated along with the turbulent fluctuations. These show that profiles dramatically change their shapes in responding to the arrival of large turbulent structures. Using conditional sampling methods, distinctly different profiles for gusts and bursts were identified. Values of the dimensionless function in the flux-profile relationships have been computed in the cases of gusts and bursts respectively. The results demonstrate that low values of the function, which lead to the breakdown of flux-profile relationships, are mainly attributed to burst events at lower levels close to the canopy.     

Interaction between CO2 emissions trading and renewable energy subsidies under uncertainty: feed-in tariffs as a safety net against over-allocation

We study the interactions between a CO₂ emissions trading system (ETS) and renewable energy subsidies under uncertainty over electricity demand and energy costs. We develop an analytical model and a numerical model applied to the European Union electricity market in which renewable energy subsidies are justified only by CO₂ abatement. We confirm that in this context, when uncertainty is small, renewable energy subsidies are not welfare-improving, but we show that when uncertainty is large enough, these subsidies increase expected welfare because they provide CO₂ abatement even in the case of over-allocation, i.e. when the cap is higher than the emissions which would have occurred without the ETS. The source of uncertainty is important when comparing the various types of renewable energy subsidies. Under uncertainty over electricity demand, renewable energy costs or gas prices, a feed-in tariff brings higher expected welfare than a feed-in premium because it provides a higher subsidy when it is actually needed i.e. when the electricity price is low. Under uncertainty over coal prices, the opposite result holds true.

Key policy insights

• Due to the possibility of over-allocation in an ETS, subsidies to renewable energies can increase expected welfare, even when climate change mitigation is the only benefit from renewables taken into account.

• In most cases studied, a feed-in tariff brings a higher expected welfare than a feed-in premium.

• The European Commission guidelines on State aid for energy, which incentivize member States to replace feed-in tariffs by feed-in premiums, should be reconsidered based on these results.

     

Attitudes toward climate change mitigation policies: a review of measures and a construct of policy attitudes

Research on policy support or public acceptability of climate change policies is proliferating. There is, however, a great diversity in how these evaluative responses have been defined, operationalized, and measured across studies. In order to shed some light on this subject, we reviewed 118 studies published over the last 15 years aiming at measurement of policy acceptability, acceptance, support, and other responses to climate change mitigation policies. We found that conceptual vagueness and weak theoretical embedding are pervasive in the field, which leads to uncertainty over what is being measured, ambiguity of policy recommendations, and difficulties in comparing empirical results. In response, we propose a construct of policy attitudes as an overarching concept comprising the diversity of measures and constructs already in use. The purpose of the construct is to serve as a common basis for operationalization and survey design. In order to inform policy makers, researchers should be clear in how they formulate surveys with a focus on questions of importance to research and policy-making.

Key policy insights

• Acceptability, acceptance, and support are defined as distinct and possibly empirically distinguishable classes of responses evaluating a policy proposal. These responses are expressions of underlying policy attitudes.

• People may respond to policies in other ways as well, including lack of interest.

• There is no popularity threshold for a policy to be safe to implement, but instead it is a matter of identifying the conditions of policy support or other responses.

• Results obtained using different measures of mitigation policy attitudes vary widely with respect to the characteristics of the policy in question and the measured response. Thus, great care must be taken when designing surveys and interpreting their results.

     

A determination of the CH4, NO x and CO2 emissions from the Prudhoe Bay,Alaska oil development

In this paper we quantify the CH₄, CO₂ and NO _x emissions during routine operations at a major oil and gas production facility, Prudhoe Bay, Alaska, using the concentrations of combustion by products measured at the NOAA-CMDL observatory at Barrow, Alaska and fuel consumption data from Prudhoe Bay. During the 1989 and 1990 measurement campaigns, 10 periods (called events) were unambiguously identified where surface winds carry the Prudhoe Bay emissions to Barrow (approximately 300 km). The events ranged in duration from 8–48 h and bring ambient air masses containing substantially elevated concentrations of CH₄, CO₂ and NO _y to Barrow. Using the slope of the observed CH₄ vs CO₂ concentrations during the events and the CO₂ emissions based on reported fuel consumption data, we calculate annual CH₄ emissions of (24+/–8)×10³ metric tons from the facility. In a similar manner, the annual NO _x emissions are calculated to be (12+/–4)×10³ metric tons, which is in agreement with an independently determined value. The calculated CH₄ emissions represent the amount released during routine operations including leakage. However this quantity would not include CH₄ released during non-routine operations, such as from venting or gas flaring.     

Estimates of global N2O emissions from cattle, pig and chicken manure, including a discussion of CH4 emissions

Humans seem to have doubled the global rate of terrestrial nitrogen fixation. Globally 50–70% (85 Tg, 1 Tg=10¹² g) of the nitrogen supplied in fertilizer (80 Tg N/a) and leguminous crops (40–80 Tg N/a) are used to feed cattle. The aim of the present study was to derive some estimates of global N₂O production from animal manure. As the parameter giving the most stable numerical basis for regional and global extrapolation we adopted the molar emission ratios of N₂O to NH₃. These ratios were measured in cattle, pig and chicken housings with different manure handling systems, in dung-heaps and in liquid manure storage tanks. Individual molar emission ratios from outside manure piles varied over two orders of magnitude, strongly dependent on the treatment of the manure. A median emission ratio of 1.6×10^-2 (n=65) was obtained in cow-sheds with slatted floors and liquid manure stored underneath and a median ratio of 24×10^-2 (n=31) was measured in a beef cattle housing with a solid manure handling system.We next extrapolated to global NH₃ emissions from those estimated for Europe, using N uptake by the animals as a scaling factor. Multiplication with observed N₂O to NH₃ ratios next provided some estimates of regional and global N₂O emissions. To account for the great variability of the emission ratios of N₂O/NH₃, we developed upper and lower case emission scenarios, based on lower and upper quartiles of measured emission ratios. The global emission from cattle and swine manure is in the range of 0.2–2.5 Tg N-N₂O/a, representing 44+-39% of the annual atmospheric accumulation rate. This N₂O emission arises from about 40 Tg N/a of cattle and pig manure stored in or at animal housings. We did not account for N₂O emissions from another 50 Tg N/a excreted by grazing cattle, goats and sheep, and application of the manure to agricultural fields. Our study makes it clear that major anthropogenic N₂O emissions may well arise from animal manure. The large uncertainty of emission ratios, which we encountered, show that much more intense research efforts are necessary to determine the factors that influence N₂O emissions from domestic animal manure both in order to derive a more reliable global estimate of N₂O release and to propose alternative waste treatment methods causing smaller N₂O releases. In our studies we found large enhancements in N₂O releases when straw was added to the manure, which is a rather common practice. In view of the ongoing discussion in Europe to re-install the traditional solid manure system (bed down cattle) for environmental and animal welfare reasons, it is noteworthy that our measurements indicate highest N₂O release from this particulary system.In a similar manner, but based on a smaller data set, we also estimated the release of CH₄ from cattle and swine manure and from liquid manure only to be about 9 Tg/year in good agreement with the estimate by the Environmental Protection Agency (1994) of 8.6+-2.6 Tg/year. A total annual methane release as high as 34 Tg/a was derived for solid and liquid cattle and pig manure from animals in housings.     

Vikings and virtues: a decade of CO2 taxation

Abstract

Experience with implementation of CO² taxes spans almost a decade in the Nordic countries, and time is ripe for an evaluation of their performance. In contrast to ex-ante forecasts, empirical research can show the extent to which such taxes deliver on the assumptions of economic theory. A survey of the existing literature shows that there are currently 20 ex-post studies of the full or partial effects of CO² taxes. Evaluations are complicated by frequent changes in tax rates, widespread exemptions and the ‘too many variables’ problem. Attempts have been made to deal with these problems by using a variety of approaches and research techniques, some more advanced than others. On balance the studies appear to show that emissions have been curbed when compared to businessas-usual forecasts, while absolute CO² reduction remains the exception. Among the Nordic countries, Denmark's scheme, which combines taxes with subsidies for energy efficiency, seems to have attained the most marked results, although the achieved reductions also reflect the higher carbon content of the Danish energy sector. The evaluations differ considerably in scope, approach and methodology. Methodological issues connected with expost evaluation are considered. An adequate evaluation of the impact of the CO² taxes, in both environmental and economic terms, will require the establishment of comprehensive panel databases of energy consumers.     

Climate sensitivity due to increased CO2: experiments with a coupled atmosphere and ocean general circulation model

A version of the National Center for Atmospheric Research community climate model — a global, spectral (R15) general circulation model — is coupled to a coarse-grid (5° latitude-] longitude, four-layer) ocean general circulation model to study the response of the climate system to increases of atmospheric carbon dioxide (CO₂). Three simulations are run: one with an instantaneous doubling of atmospheric CO₂ (from 330 to 660 ppm), another with the CO₂ concentration starting at 330 ppm and increasing linearly at a rate of 1% per year, and a third with CO₂ held constant at 330 pm. Results at the end of 30 years of simulation indicate a globally averaged surface air temperature increase of 1.6° C for the instantaneous doubling case and 0.7°C for the transient forcing case. Inherent characteristics of the coarse-grid ocean model flow sea-surface temperatures (SSTs) in the tropics and higher-than-observed SSTs and reduced sea-ice extent at higher latitudes] produce lower sensitivity in this model after 30 years than in earlier simulations with the same atmosphere coupled to a 50-m, slab-ocean mixed layer. Within the limitations of the simulated meridional overturning, the thermohaline circulation weakens in the coupled model with doubled CO₂ as the high-latitude ocean-surface layer warms and freshens and westerly wind stress is decreased. In the transient forcing case with slowly increasing CO₂ (30% increase after 30 years), the zonal mean warming of the ocean is most evident in the surface layer near 30°–50° S. Geographical plots of surface air temperature change in the transient case show patterns of regional climate anomalies that differ from those in the instantaneous CO₂ doubling case, particularly in the North Atlantic and northern European regions. This suggests that differences in CO₂ forcing in the climate system are important in CO₂ response in regard to time-dependent climate anomaly regimes. This confirms earlier studies with simple climate models that instantaneous CO₂ doubling simulations may not be analogous in all respects to simulations with slowly increasing CO₂.A portion of this study is supported by the US Department of Energy as part of its Carbon Dioxide Research Program     

Numerical prediction of an intense convective system associated with the July 1987 montreal flood. part II: A trailing stratiform rainband

Abstract

In this study, the internal circulation structures of the 14 July 1987 intense mesoscale convective system (MCS) are investigated using an improved high‐resolution version of the Canadian regional finite‐element model. It is found that although the MCS is characterized by a leading convective line followed by a trailing stratiform rainband, the associated circulation structures differ substantially from those in the classical midlatitude squall system. These include the rapid propagation and separation of the leading convection from the trailing rainband, the development of a surface‐based instead of an elevated rear‐to‐front descending flow and a shallow front‐to‐rear ascending flow associated with the stratiform precipitation, the generation of low‐ and mid‐level rather than mid‐ to upper‐level stratiform cloudiness and the development of a strong anticyclonic vorticity band at the back edge of the stratiform region. It is shown that the trailing stratiform rainband is dynamically forced by frontogenetical processes, and aided by the release of conditional symmetric instability and local orographical lifting. The intense leading and trailing circulations result from latent heat released by the convective and explicit cloud schemes, respectively. Sensitivity experiments reveal that the proper coupling of these two cloud schemes is instrumental in obtaining a realistic prediction of the above‐mentioned various mesoscale components. Vorticity budget calculations show that tilting of horizontal vorticity contributes the most to the amplification of the anticyclonic vorticity band, particularly during the squall's incipient stage. The sensitivity of the simulated squall system to other model physical parameters is also examined.     

The levelized cost of carbon: a practical,if imperfect,method to compare CO2 abatement projects*

Calculating the cost effectiveness of projects and policies with respect to reducing carbon emissions provides a simple way for local government agencies to consider the climate impacts of their actions. Yet, defining a metric for cost-effectiveness in relation to climate change is not straightforward for several reasons. In this paper, we focus primarily on dynamics, reflecting the time value of money and how the benefits of reducing carbon emissions may change over time. We define a cost-effectiveness metric called Levelized Cost of Carbon (LCC) that carefully accounts for these dynamics. We also investigate the theoretical and practical implications and limitations of using a cost-effectiveness metric as an approach to rank projects. We apply our metric to a set of transportation projects to illustrate the insights that can be gained by such a process.

Key policy insights:

• Levelized Cost of Carbon (LCC) provides a simple way for local governments to consider climate change mitigation in decision making.

• LCC is a cost-effectiveness metric that carefully accounts for the time value of money and possible changes in the value of reducing emissions through time, thus helping local governments to make better decisions.

• LCC can be used to rank projects, with some caveats, even in the absence of a specific value for the benefits of reducing GHG emissions, thus providing flexibility in the face of uncertainty and political constraints.