Intertemporal Accounting of Climate Change – Harmonizing Economic Efficiency and Climate Stewardship

Continuing a discussion on the intertemporal accounting of climate-change damages initiated by Nordhaus, Heal and Brown in response to the recent demonstration of Hasselmann et al. that standard exponential discounting applied uniformly to all goods and services invariably leads to a 'climate catastrophe' in cost-benefit analyses, it is argued that (1) there exists no economically satisfactory alternative to cost-benefit analysis for the determination of optimal climate protection strategies, and (2) it is essential to allow for the different long-term evolution of climate damage costs relative to mitigation costs in determining the optimal cost-benefit solution. A climate catastrophe can be avoided only if it is assumed that climate damage costs increase significantly in the long term relative to mitigation costs. Cost-benefit analysis is regarded here in the generalized sense of optimizing a social welfare function that incorporates all relevant 'quality-of-life' factors, including not only consumption and the value of the environment, but also the ethical values of equitable intertemporal and intrasocietal distribution. Thus, economic efficiency and climate stewardship are not regarded as conflicting goals, but as synonyms for a single encompassing economic optimization exercise. The same reasoning applies generally to the problem of sustainable development. To quantify the concept of sustainable development in cost-benefit analyses, the projected time evolution of the future values of natural resources and the environment (judged by the present generation, acting as representative agents of future generations) must be related to the time-evolution of all other relevant quality-of-life factors. Different ethical interpretations of the concept of sustainable development can be readily operationalized by incorporation in a generalized cost-benefit analysis in which the evolution paths of all relevant material and ethical values are explicitly specified.     

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.     

Climate agreements based on responsibility for global warming: Periodic updating,policy choices,and regional costs

It has been suggested that calculations of historical responsibility for global warming should be used to distribute mitigation requirements in future climate agreements. For a medium-term mitigation scenario, we calculate regional mitigation costs resulting from global allocation schemes based on the Brazilian Proposal that solely incorporate historical responsibility as a burden sharing criterion. We find that they are likely to violate ability-to-pay principles. In spite of less stringent abatement requirements, developing country regions experience cost burdens (as a percentage of GDP) in the same range as those of developed countries. We also assess the policy options available for calculating historical responsibility. The periodic updating of responsibility calculations over time, concerns over the robustness and availability of emissions data, and the question of whether past emissions were knowingly harmful, may lead to policy choices that increase the relative historical responsibility attributed to developing countries. This, in turn, would increase their mitigation cost burden.     

Population, uncertainty, and learning in climate change decision analysis

The prospect of learning about various uncertainties relevant to analyses of the climate change issue is important because it can affect estimates of the costs of both damages and mitigation, and it can influence the optimal timing of emissions reductions. Baseline scenarios representing future emissions in the absence of mitigation are one of the major sources of uncertainty. Here we investigate how fast we might realistically expect to learn about the outlook for long-term population growth, as one determinant of future baseline emissions. That is, we estimate how long it might take to substantially revise current estimates of the likelihood of various population size outcomes over the twenty-first century. We draw on recent work showing that, because population growth is path dependent, we can learn about the long term outlook by waiting to observe how population changes in the short term. We then explore the implications of uncertainty and of this learning potential for mitigation costs and for optimal emissions. Using a simple model, we show that uncertainty in population growth translates into an uncertainty in the optimal tax rate of about $200/tC by 2050 for a range of stabilization levels. When learning is taken into account, it allows for mitigation strategies to change in response to new information, leading to a slight reduction in the expected value of mitigation costs, and a substantial reduction in the likelihood of high cost outcomes. We also find that while learning can lead to large revisions over the next few decades in anticipated population growth, this potential does not imply large changes in near-term optimal emissions reductions. Results suggest that further work on the potential for learning about other determinants of emissions could have larger effects on expected mitigation costs.     

Delayed action and uncertain stabilisation targets. How much will the delay cost?

Despite the growing concern about actual on-going climate change, there is little consensus on the scale and timing of actions needed to stabilise the concentrations of greenhouse gases. Many countries are unwilling to implement mitigation strategies, at least in the short term, and no agreement on an ambitious global stabilisation target has yet been reached. It is thus likely that international climate policies will be characterized by a high degree of uncertainty over the stringency of the climate objective, and that some countries might delay their participation to global action. What additional economic costs will this delay in the adoption of mitigation measures imply? What would the optimal short-term strategy be given the uncertainty surrounding the climate policy to come? Is there a hedging strategy that decision makers can adopt to cope with delayed action and uncertain targets? This paper addresses these questions by quantifying the economic implications of delaying mitigation action, and by computing the optimal abatement strategy in the presence of uncertainty about a global stabilisation target (which will be agreed upon in future climate negotiations). Results point to short-term inaction as the key determinant for the economic costs of ambitious climate policies. They also indicate that there is an effective hedging strategy that could minimise the cost of climate policy uncertainty over the global stabilisation target: a short-term moderate climate policy would be a good strategy to reduce the costs of delayed action and to cope with uncertainty about the outcome of future climate negotiations. By contrast, failing to curb emissions in the short term imposes rapidly increasing additional costs of compliance.     

Renewable and low-carbon energies as mitigation options of climate change for China

This article discusses how renewable and low-carbon energies can serve as mitigation options of climate change in China’s power sector. Our study is based on scenarios developed in PowerPlan, a bottom-up model simulating a countries’ power sector and its emissions. We first adjusted the model to China’s present-day economy and power sector. We then developed different scenarios based on story lines for possible future developments in China. We simulated China’s carbon-based electricity production system of today and possible future transitions towards a low-carbon system relying on renewable and low-carbon energies. In our analysis, we compare the business-as-usual scenarios with more sustainable energy scenarios. We found that by increasing the share of renewable and nuclear energies to different levels, between 17% and 57% of all CO₂ emissions from the power sector could be avoided by 2030 compared to the business-as-usual scenario. We also found that electricity generation costs increase when more sustainable power plants are installed. As a conclusion, China has two options: choosing for high climate change mitigation and high costs or choosing for moderate climate change mitigation and moderate costs. In case high climate change mitigation will be chosen, development assistance is likely to be needed to cover the costs.     

Implications of weak near-term climate policies on long-term mitigation pathways

While the international community has agreed on the long-term target of limiting global warming to no more than 2 °C above pre-industrial levels, only a few concrete climate policies and measures to reduce greenhouse gas (GHG) emissions have been implemented. We use a set of three global integrated assessment models to analyze the implications of current climate policies on long-term mitigation targets. We define a weak-policy baseline scenario, which extrapolates the current policy environment by assuming that the global climate regime remains fragmented and that emission reduction efforts remain unambitious in most of the world’s regions. These scenarios clearly fall short of limiting warming to 2 °C. We investigate the cost and achievability of the stabilization of atmospheric GHG concentrations at 450 ppm CO₂e by 2100, if countries follow the weak policy pathway until 2020 or 2030 before pursuing the long-term mitigation target with global cooperative action. We find that after a deferral of ambitious action the 450 ppm CO₂e is only achievable with a radical up-scaling of efforts after target adoption. This has severe effects on transformation pathways and exacerbates the challenges of climate stabilization, in particular for a delay of cooperative action until 2030. Specifically, reaching the target with weak near-term action implies (a) faster and more aggressive transformations of energy systems in the medium term, (b) more stranded investments in fossil-based capacities, (c) higher long-term mitigation costs and carbon prices and (d) stronger transitional economic impacts, rendering the political feasibility of such pathways questionable.     

Climate change: long-term targets and short-term commitments

International negotiations under the UN Framework Convention on Climate Change could take several different approaches to advance future mitigation commitments. Options range from trying to reach consensus on specific long-term atmospheric concentration targets (e.g. 550 ppmv) to simply ignoring this contentious issue and focusing instead on what can be done in the nearer term. This paper argues for a strategy that lies between these two extremes. Internationally agreed threshold levels for certain categories of impacts or of risks posed by climate change could be translated into acceptable levels of atmospheric concentrations. This could help to establish a range of upper limits for global emissions in the medium term that could set the ambition level for negotiations on expanded GHG mitigation commitments. The paper thus considers how physical and socio-economic indicators of climate change impacts might be used to guide the setting of such targets. In an effort to explore the feasibility and implications of low levels of stabilisation, it also quantifies an intermediate global emission target for 2020 that keeps open the option to stabilise at 450 ppmv CO₂ If new efforts to reduce emissions are not forthcoming (e.g. the Kyoto Protocol or similar mitigation efforts fail), there is a significant chance that the option of 450 ppmv CO₂ is out of reach as of 2020. Regardless of the preferred approach to shaping new international commitments on climate change, progress will require improved information on the avoided impacts climate change at different levels of mitigation and careful assessment of mitigation costs.     

Optimal carbon emissions trajectories when damages depend on the rate or level of global warming

In this paper we extend our earlier work with the Carbon Emissions Trajectory Assessment model (CETA) to consider a number of issues relating to the nature of optimal carbon emissions trajectories. We first explore model results when warming costs are associated with the rate of temperature rise, rather than with its level, as in our earlier work. We find that optimal trajectories are more strongly affected by the degree of non-linearity in the warming cost function than by whether the cost function is driven by the warming level or the warming rate. Next we briefly explore the implications of simple uncertainty and risk aversion for optimal emissions trajectories. We find that uncertainty and risk aversion cause optimal emissions trajectories to be somewhat lower, but that the effect is not noticeable in the near term and not dramatic in the long term; the long term effect on the shadow price of carbon is more marked, however. Finally, we experiment with scaling up the warming cost functions until optimal policies are approximately the same as a policy of stabilizing emissions at the 1990 level. Based on the results of this experiment, we conclude that damages would have to be very high to justify anything like a stabilization policy; and even in this case, a policy allowing intertemporal variation in emissions would be better.This paper does not represent the position of EPRI or of its members.     

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.     

Time to act now? Assessing the costs of delaying climate measures and benefits of early action

This paper compares the results of the three state of the art climate-energy-economy models IMACLIM-R, ReMIND-R, and WITCH to assess the costs of climate change mitigation in scenarios in which the implementation of a global climate agreement is delayed or major emitters decide to participate in the agreement at a later stage only. We find that for stabilizing atmospheric GHG concentrations at 450?ppm CO₂-only, postponing a global agreement to 2020 raises global mitigation costs by at least about half and a delay to 2030 renders ambitious climate targets infeasible to achieve. In the standard policy scenario??in which allocation of emission permits is aimed at equal per-capita levels in the year 2050??regions with above average emissions (such as the EU and the US alongside the rest of Annex-I countries) incur lower mitigation costs by taking early action, even if mitigation efforts in the rest of the world experience a delay. However, regions with low per-capita emissions which are net exporters of emission permits (such as India) can possibly benefit from higher future carbon prices resulting from a delay. We illustrate the economic mechanism behind these observations and analyze how (1) lock-in of carbon intensive infrastructure, (2) differences in global carbon prices, and (3) changes in reduction commitments resulting from delayed action influence mitigation costs.     

Harmonization vs. fragmentation: overview of climate policy scenarios in EMF27

This paper synthesizes results of the multi-model Energy Modeling Forum 27 (EMF27) with a focus on climate policy scenarios. The study included two harmonized long-term climate targets of 450 ppm CO₂-e (enforced in 2100) and 550 pm CO₂-e (not-to-exceed) as well as two more fragmented policies based on national and regional emissions targets. Stabilizing atmospheric GHG concentrations at 450 and 550 ppm CO₂-e requires a dramatic reduction of carbon emissions compared to baseline levels. Mitigation pathways for the 450 CO₂-e target are largely overlapping with the 550 CO₂-e pathways in the first half of the century, and the lower level is achieved through rapid reductions in atmospheric concentrations in the second half of the century aided by negative anthropogenic carbon flows. A fragmented scenario designed to extrapolate current levels of ambition into the future falls short of the emissions reductions required under the harmonized targets. In a more aggressive scenario intended to capture a break from observed levels of stringency, emissions are still somewhat higher in the second half due to unabated emissions from non-participating countries, emphasizing that a phase-out of global emissions in the long term can only be reached with full global participation. A key finding is that a large range of energy-related CO₂ emissions can be compatible with a given long-term target, depending on assumptions about carbon cycle response, non-CO₂ and land use CO₂ emissions abatement, partly explaining the spread in mitigation costs.     

Scientific uncertainty and climate change: Part II. Uncertainty and mitigation

In public debate surrounding climate change, scientific uncertainty is often cited in connection with arguments against mitigative action. This article examines the role of uncertainty about future climate change in determining the likely success or failure of mitigative action. We show by Monte Carlo simulation that greater uncertainty translates into a greater likelihood that mitigation efforts will fail to limit global warming to a target (e.g., 2 °C). The effect of uncertainty can be reduced by limiting greenhouse gas emissions. Taken together with the fact that greater uncertainty also increases the potential damages arising from unabated emissions (Lewandowsky et al. 2014), any appeal to uncertainty implies a stronger, rather than weaker, need to cut greenhouse gas emissions than in the absence of uncertainty.     

Interpretation of IPCC AR6 on buildings北大核心CSCD

IPCC于2022年4月正式发布了第六次评估报告(AR6)第三工作组(WGⅢ)报告《气候变化2022:减缓气候变化》,该报告以已发布的第一和第二工作组报告作为基础,评估了各领域减缓气候变化的进展。报告的第九章建筑章节系统全面地评估了全球建筑领域的温室气体排放现状、趋势和驱动因素,综述并评估了建筑减缓气候变化的措施、潜力、成本和政策。报告主要结论认为,全球建筑领域有可能在2050年实现温室气体净零排放,但如果政策措施执行不力,将有可能在建筑领域形成长达几十年的高碳锁定效应。报告的主要结论将成为全球建筑领域应对气候变化行动的重要参考,对于我国建筑领域实现碳达峰、碳中和目标也有非常重要的借鉴意义。     

Climate Strategy with Co2 Capture from the Air

It is physically possible to capture CO₂ directly from the air and immobilize it in geological structures. Air capture differs from conventional mitigation in three key aspects. First, it removes emissions from any part of the economy with equal ease or difficulty, so its cost provides an absolute cap on the cost of mitigation. Second, it permits reduction in concentrations faster than the natural carbon cycle: the effects of irreversibility are thus partly alleviated. Third, because it is weakly coupled to existing energy infrastructure, air capture may offer stronger economies of scale and smaller adjustment costs than the more conventional mitigation technologies. We assess the ultimate physical limits on the amount of energy and land required for air capture and describe two systems that might achieve air capture at prices under 200 and 500 $/tC using current technology. Like geoengineering, air capture limits the cost of a worst-case climate scenario. In an optimal sequential decision framework with uncertainty, existence of air capture decreases the need for near-term precautionary abatement. The long-term effect is the opposite; assuming that marginal costs of mitigation decrease with time while marginal climate change damages increase, then air capture increases long-run abatement. Air capture produces an environmental Kuznets curve, in which concentrations are returned to preindustrial levels.     

Is it possible to limit global warming to no more than 1.5°C?

This study explores the feasibility of limiting increases in global temperature to 1.5°C above pre-industrial levels. A probabilistic simple climate model is used to identify emissions paths that offer at least a 50% chance of achieving this goal. We conclude that it is more likely than not that warming would exceed 1.5°C, at least temporarily, under plausible mitigation scenarios. We have identified three criteria of emissions paths that could meet the 1.5°C goal with a temporary overshoot of no more than 50 years: early and strong reductions in emissions, with global emissions peaking in 2015 and falling to at most 44–48 GtCO₂e in 2020; rapid reductions in annual global emissions after 2020 (of at least 3–4% per year); very low annual global emissions by 2100 (less than 2–4 GtCO₂e) and falling to zero (or below) in the 22nd century. The feasibility of these characteristics is uncertain. We conclude that the proposed date of review of the 1.5°C goal, set at 2015, may be too late to achieve the necessary scaling up of emissions cuts to achieve this goal.     

Evaluation of global warming impacts for different levels of stabilization as a step toward determination of the long-term stabilization target

In order to estimate the benefit attributable to alleviating global warming for a kind of cost–benefit analysis of global warming mitigation, global warming impacts were quantitatively evaluated for a pathway of unmitigated CO₂ emissions and three pathways to stabilize the atmospheric CO₂ concentration at different levels, keeping unchanged the assumed conditions on population and GDP growths, although the GDP losses which will be caused due to the warming mitigation for the three stabilization pathways are taken into account. The evaluation results show that global warming will reduce the world total number of deaths caused by thermal stress owing to the large decrease in the cold-related deaths; it will increase the water stress in some regions, while it will decrease the stress in other regions; reductions in CO₂ emissions will decrease the probability of THC collapse and terrestrial biodiversity loss; and it will enhance an increase in the wheat production potential.     

CO<Subscript>2</Subscript> and non-CO<Subscript>2</Subscript> radiative forcings in climate projections for twenty-first century mitigation scenarios

Climate is simulated for reference and mitigation emissions scenarios from Integrated Assessment Models using the Bern2.5CC carbon cycle–climate model. Mitigation options encompass all major radiative forcing agents. Temperature change is attributed to forcings using an impulse–response substitute of Bern2.5CC. The contribution of CO₂ to global warming increases over the century in all scenarios. Non-CO₂ mitigation measures add to the abatement of global warming. The share of mitigation carried by CO₂, however, increases when radiative forcing targets are lowered, and increases after 2000 in all mitigation scenarios. Thus, non-CO₂ mitigation is limited and net CO₂ emissions must eventually subside. Mitigation rapidly reduces the sulfate aerosol loading and associated cooling, partly masking Greenhouse Gas mitigation over the coming decades. A profound effect of mitigation on CO₂ concentration, radiative forcing, temperatures and the rate of climate change emerges in the second half of the century.     

Assessing mitigation-adaptation scenarios for reducing catastrophic climate risk

Countries can use both mitigation and adaptation strategies to protect their citizens from catastrophic risk posed by climate change (e.g., shift in the jet stream). A nation can mitigate by reducing CO₂ emissions, which reduces the probability of a catastrophic event; it can adapt by altering the infrastructure so that damages can be reduced in the event a catastrophe is realized. Herein we add to the current literature by extending the endogenous risk framework into a dynamic framework permitting analysis of both mitigation and adaptation while allowing for the dynamic process of global climate change. Our results suggest adaptation to catastrophe is a small fraction of the national climate protection budget relative to mitigation when nations cooperate fully, when damages are both continuous and catastrophic, and when nations have a short planning horizon. Adaptation becomes more important relative to mitigation when nations are unlikely to cooperate, when damages are mainly catastrophic, or when the nation’s planning horizon increases.     

The interpretation and highlights on mitigation of climate change in IPCC AR6 WGIII report北大核心CSCD

2022年4月4日,IPCC第六次评估报告第三工作组《气候变化2022:减缓气候变化》报告和决策者摘要发布。报告全面评估了2010年以来减缓气候变化领域的最新科学进展,为国际社会深度认识和理解全球温室气体排放情况、不同温升水平下的减排路径以及可持续发展背景下的气候变化减缓和适应行动等提供了重要科学依据。基于报告主要结论,围绕温室气体排放的区域差异、减缓路径分类、与土地利用相关的排放评估及CO去除技术评估等方面的亮点,文中提出在应对气候变化减缓政策行动中,中国应坚定“双碳”战略目标,在综合考虑经济发展阶段和资源禀赋差异背景下,将可持续发展、公平和消除贫困植根于社会发展愿景中实施减缓路径,并加快提升气候变化综合评估核心科学技术的研发进度,以进一步提升国际影响力和话语权。