Hector Pollitt

• Head of Department at Cambridge Econometrics

Enhanced weathering (EW) with agriculture uses crushed silicate rocks to drive carbon dioxide removal (CDR)1,2. If widely adopted on farmlands, it could help achieve net-zero emissions by 20502, 3–4. Here we show, with a detailed US state-specific carbon cycle analysis constrained by resource provision, that EW deployed on agricultural land could s...

Climate policymakers across the world seek inputs from the research community to determine appropriate policies to reduce greenhouse gas emissions. However, the reports of the Intergovernmental Panel on Climate Change (IPCC), which perform the largest available analytical exercise in this area, offer scarce analytics on climate policy design. Here,...

Decarbonisation plans across the globe require zero-carbon energy sources to be widely deployed by 2050 or 2060. Solar energy is the most widely available energy resource on Earth, and its economic attractiveness is improving fast in a cycle of increasing investments. Here we use data-driven conditional technology and economic forecasting modelling...

This paper analyzes the cross-border risks that could result from a decarbonization of the world economy. We develop a typology of cross-border risks and their respective channels. Our qualitative and quantitative scenario analysis suggests that the mid-transition – a period during which fossil-fuel and low-carbon energy systems co-exist and transf...

Enhanced weathering (EW) is a promising modification to current agricultural practices that uses crushed silicate rocks to drive carbon dioxide removal (CDR). If widely adopted on farmlands, it could help achieve net-zero or negative emissions by 2050. We report detailed state-level analysis indicating EW deployed on agricultural land could sequest...

The climate crisis has resulted from the interaction of multiple complex systems within our physical world and the society we have built within it. Rapid technological evolution has powered economic development and consumption, but at a pace that natural planetary systems have been unable to cope with. We must now rely on the same processes of tech...

There are parallels between the Covid-19 crisis and the climate crisis. Both crises were and are global in scope and require collective action. Their solutions rely on a combination of technological advance and behavioural change. It may be possible to address two such crises simultaneously. We test the compatibility of ‘green’ economic recovery pl...

The distribution of ownership of transition risk associated with stranded fossil-fuel assets remains poorly understood. We calculate that global stranded assets as present value of future lost profits in the upstream oil and gas sector exceed US$1 trillion under plausible changes in expectations about the effects of climate policy. We trace the equ...

We solve the binary decision model of Brock and Durlauf (2001) in time using a method reliant on the resolvent of the master operator of the stochastic process. Our solution is valid when not at equilibrium and can be used to exemplify path-dependent behaviours of the binary decision model. The solution is computationally fast and is indistinguisha...

Enhanced Rock Weathering is a proposed Carbon Dioxide Removal technology involving the application of crushed silicate rocks, such as basalt, to agricultural soils with potential co-benefits for crops and soils, and mitigation of ocean acidification. Here we address the requirement of diverse stakeholders for informative studies quantifying possibl...

Achieving national targets for net-zero carbon emissions will require atmospheric carbon dioxide removal strategies compatible with rising agricultural production. One possible method for delivering on these goals is enhanced rock weathering, which involves modifying soils with crushed silicate rocks, such as basalt. Here we use dynamic carbon budg...

Every week, the media report stories of environmental destruction. Most of this destruction has been caused either directly or indirectly by economic activity. While the media attention mainly focuses on climate change, serious issues are also emerging regarding the availability of fresh water, other resources and biodiversity. It is almost 50 year...

A key aim of climate policy is to progressively substitute renewables and energy efficiency for fossil fuel use. The associated rapid depreciation and replacement of fossil-fuel-related physical and natural capital entail a profound reorganization of industry value chains, international trade and geopolitics. Here we present evidence confirming tha...

We solve the binary decision model of Brock and Durlauf (2001) in time using methods employed in studies of stochastic complex systems. Our solution is valid when not at equilibrium and can be used to exemplify path-dependent behaviours of the binary decision model. The solution is computationally fast and is indistinguishable from Monte Carlo simu...

Only twelve years after the global financial crisis, in 2020 the world was again in economic crisis. This time around, the source of the crisis was the COVID-19 global pandemic, which has affected the economy differently than the global financial crisis. However, as they were in 2008–2009, conventional macroeconomic theory and models have once agai...

India’s capital, New Delhi, has notoriously poor air quality. While the overall cost of emission reduction is miniscule compared with the overall health and economic benefits, policymakers have been unsuccessful due to resistance from specific stakeholders. We measure the economic impact on the four states within the Delhi airshed across eight emis...

This chapter provides a detailed summary of the E3-India model used in all the chapters of the book. E3-India is a macro-econometric model covering 32 States and Union territories and 38 economic sectors in India. It is used for economy-energy-environmental impact analysis of new and existing policies, thus providing recommendations for policy-maki...

For the period since 2011, the UK has been bound by European Union (EU) legislation regarding energy reduction targets to 2020. As of 2019, the UK had reduced its final energy use by 18% against a baseline projection to 2020, on track to meet its target of 18%. Whilst the rest of the EU-27 now set their own energy reduction targets to 2030, upon le...

The climate crisis demands a strong response from policy-makers worldwide. The current global climate policy agenda requires technological change, innovation, labour markets and the financial system to be led towards an orderly and rapid low-carbon transition. Yet progress has been slow and incremental. Inadequacies of policy appraisal frameworks u...

Local perspectives can conflict with national and international climate targets. This study explores three stakeholder (community, provincial, and federal) perspectives on the Alberta oil sands as risks for a sustainability transition in Canada. In an ex-post analysis, we compared outputs from stakeholder consultations and energy-economy models. Ou...

The article discusses how and why Green Recovery could be beneficial for the Visegrad countries based on a modelling exercise using the E3ME macroeconometric model. Green Recovery is defined as including policies in recovery plans that not only target economic recovery, but also contribute to environmental targets. The paper proposes that a Green R...

We introduce a new bottom-up model for simulating Future Technology Transformations in the European residential heating sector, FTT:Heat. The model simulates the uptake and replacement of heating technologies by households in all individual Member States up to 2050, and allows to simulate the potential effect of real-world policy instruments aiming...

A key aim of climate policy is to progressively substitute renewables and energy efficiency for fossil fuel use. The associated rapid depreciation and replacement of fossil fuel-related physical and natural capital may entail a profound reorganisation of industry value chains, international trade, and geopolitics. Here, we present evidence confirmi...

Only twelve years after the global financial crisis, in 2020 the world is again facing economic crisis. This time around the source of the crisis is the Covid-19 global pandemic, which is affecting the economy differently to the global financial crisis. However, conventional macroeconomic theory and models have once again been found wanting, and ec...

Macroeconomic assessment of possible Green Recovery scenarios in Visegrad Countries.

Enhanced silicate rock weathering (ERW), deployable with croplands, has potential use for atmospheric carbon dioxide (CO2) removal (CDR), which is now necessary to mitigate anthropogenic climate change¹. ERW also has possible co-benefits for improved food and soil security, and reduced ocean acidification2–4. Here we use an integrated performance m...

The electrification of passenger road transport and household heating features prominently in current and planned policy frameworks to achieve greenhouse gas emissions reduction targets. However, since electricity generation involves using fossil fuels, it is not established where and when the replacement of fossil-fuel-based technologies by electr...

The trade liberalization of Environmental Goods (EG), through as Environmental Goods Agreement (EGA), is crucial in low carbon electricity technology diffusion. However, there is a big gap of the EG definition lists and the integrated effectiveness analysis of EGA. This paper analyses the effects of the trade liberalization of EG based on macroecon...

The Water-Energy-Food Nexus approach to the governance of natural resources seeks to identify and address the synergies and trade-offs amongst traditionally separated sectors, to capture significant feedbacks that have so far remained insufficiently understood and regulated. One key specificity of the Nexus approach is the need for intersectoral, c...

This paper provides the results of a combined qualitative and quantitative assessment of key impacts for two low-emission transition pathways for the Dutch livestock sector. These impacts or side-effects can be positive or negative. Both pathways were designed to meet a sector specific methane emission reduction target of 33 % in 2030 (relative to...

The production of basic materials accounts for around 25% of global greenhouse gas emissions. Existing measures to reduce emissions from industry are limited due to a combination of competitiveness concerns and a lack of technological options available to producers. In this paper, we assess the possibility of implementing a materials charge to redu...

Globalization of supply chains has resulted in rapid increases in emission transfers from the developing to the developed world. As outsourcing has risen, developed countries have been able to decarbonize domestically, at the expense of increased emissions in developing countries. However, the rapid improvement of carbon efficiency in developing re...

Energy and climate policies may have significant economy-wide impacts, which are regularly assessed based on quantitative energy-environment-economy models. These tend to vary in their conclusions on the scale and direction of the likely macroeconomic impacts of a low-carbon transition. This paper traces the characteristic discrepancies in models’...

The Energy-Water-Food Nexus is one of the most complex sustainability challenges faced by the world. This is particularly true in Brazil, where insufficiently understood interactions within the Nexus are contributing to large-scale deforestation and land-use change, water and energy scarcity, and increased vulnerability to climate change. The reaso...

The immediate and long-term requirements of energy policy in Germany and the wider EU are widespread. In addition to meeting decarbonisation targets to mitigate climate change, energy policy must be designed in such a way that is socioeconomically advantageous, delivering multi-policy objectives of energy security, a stable environment for energy s...

Whole-economy scenarios for limiting global warming to 1.5 °C suggest that direct carbon emissions in the buildings sector should decrease to almost zero by 2050, but leave unanswered the question how this could be achieved by real-world policies. We simulate which policy measures could induce an almost complete decarbonisation of residential heati...

Transport generates a large and growing component of global greenhouse gas emissions contributing to climate change. Effective transport emissions reduction policies are needed in order to reach a climate target well below 2 ∘C. Representations of technology evolution in current integrated assessment models (IAM) make use of systems optimisations t...

The specific objectives of the study were to: • (Chapter 3 – Task 1) Analyse the development of wholesale and retail electricity, natural gas and petroleum product prices in the EU28 and major trading partners, as well as the drivers of these prices; • (Chapter 4 – Task 2) Analyse the effect of energy prices and costs on the production costs and...

Subsidies to electricity generation from renewable energy sources (RES-E) implemented next to an emissions trading scheme (ETS) are frequently criticised for producing no additional benefit in terms of mitigating climate change and increasing the costs of emissions abatement. We re-assess the performance of this policy mix in a setting in which ele...

In the version of this Article originally published, H. Pollit’s name was incorrectly listed as H. E. Pollit (H.E.P.) throughout the paper, this has been corrected to H. Pollitt (H.P.) in the online versions of this Article.

Several major economies rely heavily on fossil fuel production and exports, yet current low-carbon technology diffusion, energy efficiency and climate policy may be substantially reducing global demand for fossil fuels1,2,3,4. This trend is inconsistent with observed investment in new fossil fuel ventures1,2, which could become stranded as a result...

The Paris Agreement aims to address the gap between existing climate policies and policies consistent with “holding the increase in global average temperature to well below 2 C”. The feasibility of meeting the target has been questioned both in terms of the possible requirement for negative emissions and ongoing debate on the sensitivity of the cli...

The Paris Agreement aims to address the gap between existing climate policies and policies consistent with ‘holding the increase in global average temperature to well below 2C’. The feasibility of meeting the target has been questioned both in terms of the possible requirement for negative emissions, and ongoing debate on the sensitivity of the cli...

In this paper we apply a model of technological diffusion, Future Technology Transformations in the Transport Sector (FTT: Transport), linked to the E3ME macroeconomic model, to study possible future technological transitions in personal passenger transport in four East Asian countries. We assess how targeted policies could impact on these transiti...

A high degree of consensus exists in the climate sciences over the role that human interference with the atmosphere is playing in changing the climate. Following the Paris Agreement, a similar consensus exists in the policy community over the urgency of policy solutions to the climate problem. The context for climate policy is thus moving from agen...

E3-India is a new state-level model of India, developed from the global E3ME macro-econometric model, linking the economic, energy and environmental emissions systems. The model is designed to assess policy through a highly empirical structure, whereby historical data is used to feed in to econometric estimations of model interactions, forming a co...

A high degree of consensus exists in the climate sciences over the role that human interference with the atmosphere is playing in changing the climate. Following the Paris Agreement, a similar consensus exists in the policy community over the urgency of policy solutions to the climate problem. The context for climate policy is thus moving from agen...

mCollaborative platforms, such as Airbnb, Blablacar and Peerby, have changed the ways in which goods and services are offered and consumed in the economy. There has been a recent growth in studies analysing the drivers, impacts and scope of the collaborative economy. Some of them point to positive environmental impacts of such platforms. However, n...

We introduce a new bottom-up model for simulating Future Technology Transformations in the European residential heating sector, FTT:Heat. The model simulates the uptake and replacement of heating tech- nologies by households in all 28 EU Member States up to 2050. It features an explicit representation of households’ technology choices, based on mar...

The Nexus concept is the interconnection between the resources energy, water, food, land and climate. Such interconnections enable to address trade-offs and seek for synergies among them. Several policy areas (e.g. bio-based economy, circular economy) increasingly consider the Nexus concept. Ignoring synergies and trade-offs between energy and natu...

The aim of this study is to investigate the macroeconomic impacts of Japan meeting its 2030 NDC GHG emission reduction target, using a carbon tax, under different assumptions about the share of nuclear in the power sector. We further investigate different ways to recycle revenues raised from carbon tax. The analysis was carried out using the global...

Whole-economy scenarios for limiting global warming to 1.5C suggest that direct carbon emissions in the buildings sector should decrease to almost zero by 2050, but leave unanswered the question how this could be achieved by real-world policies. We take a modelling-based approach for simulating which policy measures could induce an almost-complete...

This report has been prepared as part of a wider project designed to improve the understanding and macroeconomic modelling of energy and climate policies. Key topics in the project have included •the way in which technological development, and the role of policy in stimulating such development, is represented in theory and empirical modelling •the...

A high degree of consensus exists in the climate sciences over the role that human interference with the atmosphere is playing in changing the climate. Following the Paris Agreement, a similar consensus exists in the policy community over the urgency of policy solutions to the climate problem. The context for climate policy is thus moving from agen...

This article outlines a critical gap in the assessment methodology used to estimate the macroeconomic costs and benefits of climate and energy policy, which could lead to misleading information being used for policy-making. We show that the Computable General Equilibrium (CGE) models that are typically used for assessing climate policy use assumpti...

Transport generates a large and growing component of global greenhouse gas emissions contributing to climate change. Effective transport emissions reduction policies are needed in order to reach a climate target well below 2$^{\circ}$C. Representations of technology evolution in current Integrated Assessment Models (IAM) make use of systems optimis...

Assessments of industrial or environmental policy are often based on macroeconomic models which typically neglect the effects of the policies on human health. Cost Benefit Analyses can include these effects but often in a rather simplistic manner, for example neglecting lagged effects and distributional impacts. However, it has been shown that the...

See https://ec.europa.eu/energy/sites/ener/files/documents/ENER%20Macro-Energy_Innovation_D2%20Final%20%28Ares%20registered%29.pdf This report provides a review and synthesis of current knowledge regarding policy- induced energy innovation and technological change and its likely implications for the macro-economy and future low-carbon societies i...

This article proposes a fundamental methodological shift in the modelling of policy interventions for sustainability transitions in order to account for complexity (e.g. self-reinforcing mechanisms, such as technology lock-ins, arising from multi-agent interactions) and agent heterogeneity (e.g. differences in consumer and investment behaviour aris...

In this paper we analyse macroeconomic consequences of greenhouse gas emission mitigation in Latin America up to 2050 through a multi-model comparison approach undertaken in the context of the CLIMACAP-LAMP research project. We compare two carbon tax scenarios with a business-as-usual scenario of anticipated future energy demand. In the short term,...

We present a carbon-cycle–climate modelling framework using model emulation, designed for integrated assessment modelling, which introduces a new emulator of the carbon cycle (GENIEem). We demonstrate that GENIEem successfully reproduces the CO2 concentrations of the Representative Concentration Pathways when forced with the corresponding CO2 emiss...

This paper outlines a critical gap in the assessment methodology used to estimate the macroeconomic costs and benefits of climate policy. It shows that the vast majority of models used for assessing climate policy use assumptions about the financial system that sit at odds with the observed reality. In particular, the models' assumptions lead to `c...

We present a carbon cycle-climate modelling framework using model emulation, designed for integrated assessment modelling, which introduces a new emulator of the carbon cycle (GENIEem). We demonstrate that GENIEem successfully reproduces the CO2 concentrations of the Representative Concentration Pathways when forced with the corresponding CO2 emiss...

Policy-makers currently face unprecedented challenges and uncertainty when taking decisions that simultaneously affect economic development, technology and the environment. It is not clear to policy-makers how to reconcile economic policy supporting growth with climate change mitigation, and it is not clear how effective policies are likely to be....

This paper provides a model-based macroeconomic assessment of First-Mover Advantage (FMA) in environmental technologies, in which a European sector becomes world leader and captures the global market for a particular technology. The E3MG model is used to assess a set of scenarios where the FMA is established in a range of renewable technologies. Al...

Four policies might close the gap between the global GHG emissions expected for 2020 on the basis of current (2013) policies and the reduced emissions that will be needed if the long-term global temperature increase can be kept below the 2 °C internationally agreed limit. The four policies are (1) specific energy efficiency measures, (2) closure of...

‘Jobs, economic growth and investment’ is one of the new Commission’s three priorities for vitalizing the EU economy. A clear need is perceived to find new ways for promoting sustainable growth which improves the EU companies’ competitiveness and supports job creation. Therefore the Commission is interested to further investigate the possibilities...

This article gives a detailed account of part of the modelling that was carried out for the assessment of the EU's proposed energy and climate targets for 2030. Using the macro-econometric simulation model, E3ME, and drawing on results from the PRIMES energy systems model, it shows that a 40% reduction in GHG emissions (compared to 1990 levels) cou...

In this paper we consider future options for Japanese energy and climate policy. We assess the economic and environmental impacts of changing the share of electricity generated by nuclear power and varying the mid-term GHG targets. The quantitative approach we use is based on the global macro-econometric E3MG model. Our analysis reveals that the co...

The scale and nature of "green" jobs has come to the fore in political discussion in Europe at both national and international levels. Particularly in the light of the continuing recession, the idea that economic growth could be stimulated and new jobs created by activities that also meet environmental objectives is clearly attractive. Green jobs a...

Conventional economic analyses of stringent climate change mitigation have generally concluded that economic austerity would result from carbon austerity. These analyses however rely critically on the assumption of an economic equilibrium, which dismisses established notions on behavioural heterogeneity, path dependence and technology transitions....

This paper presents an analysis of possible uses of climate policy instruments for the decarbonisation of the global electricity sector in a non-equilibrium economic and technology innovation-diffusion perspective. Emissions reductions occur through changes in technology and energy consumption; in this context, investment decision-making opportunit...

This paper analyses the potential economic and environmental effects of carbon taxation in Japan using the E3MG model, a global macroeconometric model constructed by the University of Cambridge and Cambridge Econometrics. The paper approaches the issues by considering first the impacts of the carbon tax in Japan introduced in 2012 and then the meas...

This paper explores a Post Keynesian, ‘new economics’ approach to climate policy, assessing the opportunities for investment in accelerated decarbonisation of the global economy to 2020 following the Great Recession of 2008–2009. The risks associated with business-as-usual growth in greenhouse gas (GHG) concentrations in the atmosphere suggest that...

The paper discusses the distributional implications of environmental tax reform (ETR) for households, and presents new results from modelling the impacts of a major ETR for the European Union. The distributional effects arise from the new environmental taxes, any tax reductions made as part of the ETR, the wider macroeconomic impacts from the ETR,...