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International CO2 emissions control: An analysis using CETA
Abstract
This paper explores issues of international cooperation in CO2 emission control. We consider three cases: ‘selfish,’ in which region 1 controls optimally given its own damage costs and region 2 does not control; ‘altruistic,’ in which region 1 controls optimally given total worldwide damage costs while region 2 does not control; and ‘optimal,’ in which regions 1 and 2 exercise jointly optimal control of emissions and region 1 pays region 2 to participate. We find that neither region gains much in the selfish case; but both regions are better off in the optimal case than in the altruistic case, though region 1's benefits are negative in both these cases.
... As Hourcade and Shukla point out, one of the most critical factors in determining the timing of emission reductions and their costs in modelling is the role of technological change. The Stanford Energy Modelling Forum has also compared the results of 6 integrated assessment models used to study stabilisation (Peck and Teisberg, 1995;Tol 1999a;Manne and Richels, 2001;Richels and Edmonds, 1995). The modelling output highlights a considerable uncertainty in cost-estimates, with differing implications for the dynamics of emission reductions. ...
... The formal analysis is based on a standard, macroeconomic demand scheme, which has been used frequently to study the cost of emissions control in general equilibrium models (see e.g., Edmonds and Barns 1992, Oliveira-Martins et al. 1992, Peck and Teisberg 1994, or Jorgenson and Wilcoxen 1994. We divide the economy of each country into two sectors, the energy sector, and production of other commodities and services, which produce the output x i (i = 1,2). ...
... In contrast, Nordhaus and Yang's (1996) work specific to global warming reducing efforts finds markedly lower global climate change control rates and significantly lower carbon tax rates under the non- cooperative case than under the cooperative case. Peck and Teisberg (1995) also found, despite having only coerced cooperation (where one region pays another region to cooperate) in their model, the cooperative case (labeled the optimal case in their model) yields an outcome that is beneficial to both regions. Finally, Table 2 also shows the extreme points for adaptation expenditures. ...
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.
... Second is the approach with a general equilibrium model. It is mostly used as the political simulation model of energy consumption and CO 2 emissions have been developed and applied (Manne et al., 1995; Peck and Teisberg, 1995; Kainuma et al., 2000). Third is the approach based on an input–output table (an interindustry table), which this study adopts. ...
China has faced serious water problems as a result of economic growth and some development projects and it is widely thought that integrated management, including socio-economic factors in each basin unit, is effective. Hence, the target of this paper is to evaluate the structures of water demand and water pollutant discharge with socio-economic activities in the City of Chongqing, the main city upstream of the Three Gorges Dam. First we have developed a methodology for estimating water demand and water pollutants (carbon, nitrogen and phosphorus) based on an inter-industry analysis model, and then applied it to the City of Chongqing. As a result, we conclude that industry is the largest source of water demand and water pollutants in the City of Chongqing and accounts for more than 50% of the total of each. Water demand from agriculture, forestry and livestock accounts for 35% of the total, and about 20% of water pollutants are discharged from agriculture, forestry and livestock. Furthermore, water pollutants from households constitute more than 20% of the total in the City of Chongqing though water demand and wastewater account for less than 15% of each total. In addition, it becomes clear that about 20% of the water demand and water pollutant discharge in the City of Chongqing is caused by other provinces and foreign countries, with most of the demand and discharge being industrial.
... Each model is designed to address different policy questions, for example, to quantify the potential costs of climate stabilisation policies such as the Kyoto protocol (Manne and Wene, 1994;Weyant, 1999), or to assess our ability to meet future energy demands (Nakicenovic, 1993) and maintain future rates of economic growth (Gerlagh and van der Zwaan, 2003). Examples include 'top-down' (or macroeconomic) models, GEMINI-E3, MERGE, CETA, DICE and RICE (Bernard and Vielle, 2003;Manne and Wene, 1994;Manne and Richels, 2004;Peck and Teisberg, 1995;Nordhaus, 1993Nordhaus, , 1994a; and 'bottom-up' (energy system) models, MESSAGE, DEMETER or FREE (Messner, 1995;Fiddaman, 1998;Gerlagh and van der Zwaan, 2003). Whether bottom-up or top-down, most share a common set of assumptions based on a neoclassical theory of economic growth applied both system dynamics (SD) and computable general equilibrium (CGE) models. ...
This paper describes the development of a forecasting model in the tradition of system dynamics. It is called Resource EXergy Services (REXS). The model simulates economic growth of the US through the 20th century and extrapolates the simulation for several decades into the next century. The REXS model differs from previous energy–economy models such as DICE and NICE [Nordhaus, W.D., 1991. The cost of slowing climate change: a survey. The Energy Journal 12 (1), 37–66] by eliminating the assumption of exogenously driven exponential growth along a so-called ‘optimal trajectory’. Instead, we suggest a simple model representing the dynamics of technological change in terms of decreasing energy (exergy) intensity and endogenously increasing efficiency of conversion of raw material and fuel inputs (exergy) to primary exergy services (‘useful work’).In our model, the traditional assumption of exogenous technological progress (total factor productivity) increasing at a constant rate is replaced by two learning processes based, respectively, on (i) cumulative economic output and (ii) cumulative energy (exergy) service (useful work) production experience. The initial results of simulation for the period 2000–2050 have significant implications for future trends in economic output. These implications are important for purposes of scenario analysis. The REXS modules are the focus of ongoing research. We discuss briefly the many possibilities for elaboration of each module to enrich the feedback dynamics, policy levers and post-scenario analyses.
... distribution of property rights matters in attaining Pareto-efficient allocations in an economy with public goods. Ž . Manne 1994 presents a multi-region computable general equilibrium model for analysis of greenhouse gas abatement in which the cost sharing rule and the optimal level of greenhouse gas abatement are determined jointly. Peck and Ž . Teisberg 1995; 1997; 1998 address these issues within a gaming framework for international negotiation over greenhouse gas reductions, considering both cooperative and competitive cases. In international negotiations of control measures to mitigate the potential effects of global climate change, it is necessary, in principle, to address the two questi ...
Two basic questions that arise in international policy debates over greenhouse gas emission reduction are: (1) How much to control? and (2) Who pays? In this paper, we investigate the interdependence between these two issues. We characterize general conditions under which the Pareto-optimal environmental control will depend on the distribution of the cost burden among nations and provide a sufficient condition under which a Pareto optimum can be implemented by a market mechanism with tradable emission permits. However, numerical results suggest that the interdependence may be weak in a hypothetical negotiation between the OECD and the ROW (the rest of the world). The approach can be applied to more realistic cases with multiple regions.
... The models classified per type, are further divided into the two above presented categories: the policy evaluation and optimisation models. Peck and Teisberg (1995) is designed to determine control policies which optimally balance the costs of control against the costs of warming. The model presents worldwide economic growth, energy consumption, energy technology choice, global warming, and global warming costs over a time horizon of more than 200 years (see also Peck and Teisberg, 1993a, b and c for previous applications) -CONNECTICUT, Yohe and Wallace, 1995 The CONNECTICUT Model, introduced by Yohe and Wallace (1995), is a global model that combines elements of the probabilistic-scenario model of Nordhaus and Yohe (1983) and the DICE model. ...
The present paper focuses on the development of an integrated assessment model that embeds the web dimension and aims at increasing
awareness in society, especially on environmental issues. The model incorporates features that make it capable of promoting
participatory planning procedures in dealing with environmental problems.
The first part of the paper presents the notion of both Integrated Assessment (IA) and Participatory Integrated Assessment
(PIA). The second part, elaborates on an indicative list of Integrated Assessment Models, while the third part presents an
outline of the expert oriented IA-LandGEM model that calculates greenhouse gas emissions. The last part contains the transformation
of the LandGEM model into a PIA Model that estimates gas emissions from household waste disposal; incorporates the web dimension
and can be used in the context of participatory planning as an increasing awareness tool. Finally, some interesting conclusions
are drawn on the use and flexibility of the constructed model.
... During the Bush administration, for example, the United States took a decidedly "economic" approach, and resisted the call for binding commitments to reduce greenhouse gases. This echoed the recommendations of many economists, who take the issue seriously yet urge governments not to overreact (Nordhaus 1994a;Manne and Richels 1991;Peck and Teisberg 1995). European nations, by contrast, have often relied on the more ecological or engineering-based perspective. ...
Economists and ecologists, in general, have offered differing opinions about the seriousness of climate change and the need for rapid reductions in greenhouse gas emissions. Economists have tended to urge caution, focusing on the potential for large-scale cutbacks to upset the economy. Ecologists have tended to focus on the potential for catastrophic losses from climate change, and have urged extensive shifts in policy. This paper uses the tools of cost benefit analysis and the decision sciences to examine why members of the two disciplines often reach different conclusions. First, economists and ecologists start from different perspectives about what is the point of reference against which policies should be judged. Second, economists and ecologists tend to apply different discount rates to future impacts of climate change. Third, economists and ecologists are likely to interpret differently the substantive findings and expressed uncertainties of formal cost-benefit analysis. Using a ...
China is the largest greenhouse gas emitter around the world, and is committed to achieving an emissions peak by 2030. Although some studies have identified methods to project the emissions trajectory, they have disregarded the effect of abatement capacity of highly successful Clean Development Mechanism (CDM) projects (i.e. abatement knowledge stock) over the past decade. In addition, the literature lacks evidence to justify results, with several questions, such as when the emissions peak will be reached and how much carbon will be emitted at the peak, remaining unaddressed. This study introduces both theoretical and empirical model for estimating the greenhouse gas emissions peak in China. The findings revealed that there is potential to reach a carbon emissions peak, estimated at 117.70 MtCO2e, by 2028. The policy implications indicated that carbon pricing and the nation-wide Emissions Trading Scheme are the most important instruments to facilitate energy transition and clean coal technology (i.e. carbon capture and storage) development. This implies that the carbon price and carbon abatement investment may need to be greater than US$32.5/tCO2e and US$57,370,000/year to meet Paris Agreement goals by 2030 in China.
Over the last 20 years, numerous studies have shown significant changes in the global climate which negatively affect life in many aspects. The perpetual problems due to climate change impacts have created the urgent need to find efficient ways to tackle them. In this frame, European countries are moving towards the creation of energy and climate policies in order to achieve specific targets and mitigate the consequences of greenhouse gas emissions. They have defined a number of scenarios comprised of different targets’ combinations and ambition levels. The targets to be achieved are defined as to the CO2 emission reduction, the improvement in energy efficiency and the increase of the share of renewable energy sources until 2030. Thus, the aim is to lead EU to counteract the increasing energy demand and its negative effects on the environment as well as to abate the fossil fuel dependency. In this context, the scope of the particular paper is to examine which of the defined scenarios could respond adequately to the European region’s profile and which could affect positively living conditions. Subsequently, the research focuses on the assessment of each alternative climate and energy policy scenario and its socioeconomic, environmental and energy impacts with the application of multi-criteria decision analysis. The method used in the herein analysis is the PROMETHEE II, which ranks the proposed scenarios based on the decision-makers’ preferences. In order to ensure the robustness of the results, a sensitivity analysis is also performed.
The evaluation of environmental practices of each country is a very interesting area which has recently gained significant attention. An analysis, which can provide results for comparisons among countries with different economies, is data envelopment analysis. In this chapter, countries’ environmental efficiency is estimated using data envelopment analysis. Applying a slack-based model under the consideration of constant returns to scale and variable returns to scale technologies, a composite index is calculated from the efficiency scores of each model. These models consider both desirable and undesirable outputs. However, especially for undesirable outputs, the data collected are not accurate and could potentially be subject to uncertainty. To handle the uncertainty in the undesirable data, a chance-constraint DEA model is applied. Results of the deterministic model show that Australia gathers high values of environmental efficiency. However, in the presence of noise in the undesirable data, the rankings of the countries change.
Energy, water, and food systems have so far mostly been studied independently. In this chapter, we argue that it is important to take an “energy-water-food nexus approach” to analyzing these three resource systems. After briefly introducing the emerging literature on the energy-water-food nexus, we inspect the interrelationship between energy and water use in the Middle East. We present results for projected power production, water withdrawal, and water consumption levels until 2050 in the Middle East under both baseline and stringent climate policy scenarios. We also analyze how the use of different cooling techniques for the main power production options in the Middle East can yield water withdrawal and consumption savings in the electricity sector in the region. We end by informing authorities responsible for the implementation of energy-water policies on the risks and uncertainties associated with the water usage of future energy systems.
The proliferation and growing variety of climate-economy models and what are known as integrated assessment models (IAMs) can make it difficult for someone interested in following the debate to place any specific model, or the discussion about the merits of one or another, into a broader context. The literature related to climate-economy modelling is already vast: apart from a very large number of models and an even larger number of applications, there already exist many good surveys comparing—inter alia—modelling frameworks, model assumptions and model results. The objective of this chapter is to provide a simple overview and organising scheme of this modelling world by delving into the characteristics of more than 60 individual IAMs towards describing the main ways in which certain classes or groups of climate-economy models differ from one another. In contrast to other more detailed or narrowly focused “overviews” and literature reviews, this analysis takes less for granted and aims at providing an initial understanding of generic model structures. After briefly discussing some principles of classification that can help organise this often daunting modelling world, the chapter offers descriptions and comparisons of the main classes of models.
A computational study was carried out of the efficiency of using solar heat supply systems for the climatic conditions in Russia considering their economic competitiveness to traditional sources of heat using organic fuel and their role in reducing emissions of greenhouse gases. Regions were found where, under certain conditions, the use of solar energy for generating low-potential heat can turn out to be expedient.
This article assesses emissions scenarios in the literature, originally documented in the scenario database that was developed more than 7 years ago. The original scenario assessment and literature review has been used, among other things, as the basis for the quantification of the Intergovernmental Panel on Climate Change (IPCC) Special Report on Emissions Scenarios (SRES) reference scenarios and the IPCC Third Assessment Report (TAR) stabilization scenarios. In the meantime, a large number of new emissions scenarios have been developed and published. We have collected the relevant information about these new scenarios with the objective to assess the more recent perspectives about future global emissions and to assess the changes in the perspectives about future emissions and their driving forces that may have occurred since the publication of SRES and TAR scenarios. Our analysis goes beyond mere comparisons of emissions ranges. In particular, we explore the underlying drivers of emissions using the so-called IPAT identity (Impacts are proportional to the product of Population, Affluence, and Technology). When IPAT analysis refers to carbon emissions it is called the Kaya identity, where carbon dioxide (CO2) emissions are assumed to correspond to the product of population, per capita income, energy intensity of gross domestic product (GDP), and CO2 intensity of energy. Comparing the recent scenario literature with the scenarios developed before TAR shows that there are strong similarities for the main underlying tendencies in many of the scenario’s driving forces and results.
The realm of literature specifically dealing with the climate change problem has rapidly widened during the past decade. In this paper, we review scenarios aiming at emissions mitigation including stabilization of GHG emissions or concentrations in the atmosphere incorporated in integrated assessment modeling studies. To characterize the scenarios, first, the literature was scanned for model and mitigation scenario descriptions in order to lay out their common features. Second, stabilization scenarios from the IPCC SRES database were used for a quantitative analysis of their key results. We conclude with key observations of scenario characteristics and relationships between baseline scenarios and policies followed in the mitigation scenarios.
This is the final report from Tyndall research project IT1.16 (Estimating future probabilities of extreme weather events; Scenario development methods for the estimation of future probabilities of extreme weather events).
Ph.D. thesis under the title ‘Decision Making Systems for Public Participation in Regional Planning’ aims at the construction of a Web Based Public Participation System (ANDREW) that gives the opportunity to stakeholders to get involved in the decision making process. A set of methods, models and techniques (integrated assessment models, qualitative data analysis, multicriteria etc.) are employed, in this respect, providing stakeholders with the required information in support of their capacity to contribute to the tasks of participatory planning process. New technologies (social networks and geo-visualization platforms) are used to embed the methods, models and techniques to ANDREW Decision Support System. More precisely, Ph.D. thesis consists of three parts, the first contains the theoretical framework of participatory planning, while in the second part tools, methods, models and new technologies that ANDREW system incorporates, are described in detail. Finally in the third part, ANDREW system, is designed and developed to work via web.
The objective of this article is to summarize a set of 40 emissions scenarios developed by five different modeling teams. The scenarios are based on an extensive assessment of the literature and shared assumptions about the main driving forces of future emissions. They were developed in collaboration with many groups and individuals over the last 3 years. The scenarios are rooted in four narrative “stories” about future worlds that describe alternative developments relevant for emissions and their driving forces. Each scenario is a quantitative interpretation of one of four future worlds developed by one of the five models. Together, the scenarios cover a wide range of the main driving forces of future emissions from demographic to social and economic developments. For example, the scenarios encompass different future developments that might influence greenhouse gas (GHG) sources and sinks, such as alternative structures of energy systems and land-use changes. By design, the scenarios cover most of the GHG emissions range in the published scenario literature. The emissions scenarios encompass all relevant species of GHGs and emissions of sulfur dioxide.
One of the central questions in climate change debates concerns fair burden-sharing, i.e. justice in the distribution of costs of undertaking climate-managing policies. In this paper it is argued that in order to distribute such costs justly, it is necessary to have a nuanced understanding of what types of burdens they represent. Climate managing policies are usually divided into responses that seek to reduce the concentration of greenhouse gases in the atmosphere (mitigation) and responses that seek to prevent harm arising from a changing climate (adaptation). Some have argued that there are normatively significant differences between mitigation and adaptation: that the two responses adhere to different logics and evoke different patterns of burden-sharing. This paper argues that the relevant distinction is instead between negative and positive climate duties, i.e. whether an agent has a duty to undertake climate-managing policies on account of the harm its excessive emissions are causing or simply on account of its ability to assist those in need. The paper offers a typology of the different mitigation and adaptation responses that can be sorted under the negative/positive distinctions. This way of conceptualizing the issue not only enables us to better address the burden-sharing question, offering a more nuanced understanding of the types of climate burdens that are ascribable to agents and pointing out the appropriate roles of contributory responsibility and ability. It also clarifies aspects of the climate negotiations, and explains why it matters whether adaptation finance transferred to vulnerable countries is portrayed as compensation for harmful emissions or simply as donor countries discharging their humanitarian duties.
The present study is an example of the potential for developing a climate change and economic growth model and policy analysis for a particular country. It develops a dynamic general equilibrium model of climate and the economy for Australia, as a non‐cooperative differential game, to address the global warming and growth concerns and issues faced in Australia. It presents the current and future forecasts and implications for climate, economic growth and policy in the Australian economy. The results show that the benefit of emission abatement is higher than its cost. As there is no such long‐horizon growth model and forecasts for the Australian economy, the results of the present model are useful in understanding the long‐term dynamics of the ecosystem and the economy.
Conventional wisdom on climate change policy is straightforward: Reducing greenhouse gas emissions will avoid the increased frequency and magnitude of climate impacts on environment and society that might occur if emissions are not controlled. The proponents of conventional wisdom widely consider energy policy to be the main policy tool available to decision makers to intentionally modulate future climate impacts. In this paper we challenge the notion that policy makers should intentionally use energy policy to modulate future climate impacts. The paper argues that policy makers may well make large changes in energy policy (and future emissions) without significantly affecting future climate impacts. In other words, even if a theoretical case could be made that energy policy could be used intentionally to modulate future climate, other factors will play a larger role in creating future impacts and are arguably more amenable to policy change. To illustrate this conclusion, the paper presents a sensitivity analysis under the assumptions of the Intergovernmental Panel on Climate Change for the case of tropical cyclones. One implication of the paper's conclusions is that policy responses to extreme weather events should be decoupled from considerations of energy policy. This decoupling is not intended to diminish either the importance of responding to climate change or of energy policy. Rather, it is to emphasise that there are many responses under the rubric of 'adaptation' that could play a much role in reducing societal vulnerability to losses. One of the implications of this change is that scientific uncertainty need not stand in the way of effective 'action' because the measures proposed make sense under any future climate scenario.
This chapter examines the validity of standard technology assumptions used in climate economy models, and explores the policy consequences of changing them to reflect actual as opposed to postulated trends. In this analysis, global oil production is determined by an augmented Hotelling model in which demand functions incorporate growth in world income and population. The equilibrium production trajectory rises in the near term, peaks, and then declines as the resource approaches depletion. Contrary to most other work, oil is replaced by an even more carbon intensive but proven energy form, such as coal or shale based synthetic fuel, for an ap[reciable length of time. At the same time, our econometric model projects energy intensity of the global economy stabilizing around the current level. This alternative arises from an analysis of historical data from the early 1970s to the present. While the scenarios explored here might be interpreted as pessimistic, we consider them highly plausible. The significant policy conclusion that emerges is the need for earlier and more aggressive climate policies than typically found in other work: the optimal control rate for carbon emissions is significantly higher. With existing and known alternative technologies significant reductions in carbon emissions are very expensive, as evidenced by the very high tax rates needed to achieve these reductions. We believe these results underli e the desirability for policies with increased emphasis on research on low cost, efficient substitutes for current technologies.
In this paper, we present a new specification of warming cost and incorporate it into an integrated assessment model of global climate change. In the new specification, warming cost is represented as the product of possible large warming related welfare losses which occur with small probabilities that depend on the amount of temperature rise. This is in contrast to the conventional representation of warming cost as a deterministic function of temperature rise. To avoid curse of dimensionality problems, we assume that losses affect the utility of consumption without directly affecting consumption itself, and that the probability of losses occurring is independent of the number of losses that may have previously occurred. The results we obtain using this new approach depend importantly on the specification of the loss probability function. Nevertheless, our results are qualitatively similar to previous results obtained using a deterministic specification of warming cost, in which cost is a cubic function of temperature rise.
Over 10 years ago the EU Commission proposed a directive on carbon taxes, but faced so much domestic resistance that agreement was not reached until last year – and after it had been considerably watered down. The aim of this paper is to look into economic reasons for the political infeasibility of extensive carbon taxes. Since opposition is believed to arise prior to the policy implementation, the cost estimates have a myopic character compared with market estimates, in the sense that sectors are presumed to take into account their own substitution opportunities, but disregard changes in other sectors as well as the macroeconomic welfare gains from a tax regime. With this myopic approach, we estimate and compare costs of emissions cuts across sectors and across countries in the EU, showing how different sectors might have anticipated the impacts from an expected carbon tax. This focus illustrates that what seems to be cost-effective and to the best for the region on paper turned out too controversial to be politically feasible.
In this paper, we use a two-region version of the CETA model to analyze international CO2 emission control policies. The policies we consider are all substantially equivalent to a policy recently proposed by the Alliance of Small Island States (AOSIS). The AOSIS proposal requires the OECD alone to reduce emissions, while the alternatives we consider achieve equivalent reductions via emission rights traded (1) between regions, (2) between time periods, or (3) both. We find that tradeable rights systems provide significant overall cost savings relative to the AOSIS proposal. Cost reductions may be roughly 60% for rights tradeable between regions, 50% for rights tradeable between time periods, and 95% for rights tradeable between regions and time periods. The benefits of these cost reductions accrue to both the OECD and the Rest of the World. Our results underscore the importance of using an efficient policy to achieve any given atmospheric concentration objective.
Energy intensity of the economy is often modeled as being determined by the combined effect of a fixed price elasticity of demand, and an exogenously specified, fixed technical change parameter denoted as the autonomous energy efficiency improvement (AEEI). Typically, the AEEI rate is set to 0.5–1.5% improvement per annum. Here, we study historic aggregate energy intensity trends for the US from 1954 to 1994. We show that the historic trends are inconsistent with an autonomous model of improved energy efficiency—especially when the model is used to inform policies that impact energy prices. As an alternative we propose a model of price-induced efficiency, π, in which aggregate energy intensity trends respond to changes in energy prices beyond price elasticity of demand ε.Our exercise reveals that the aggregate price elasticity of energy demand of the US economy has declined by roughly 15% over the past four decades. But beyond this decline, bringing our simulations and historical data into close correspondence requires π to change sign before and after 1974. Before 1974, after accounting for price elasticity of demand, the economy was growing less energy efficient. After 1974, after accounting for the price elasticity of demand, the economy was growing more energy efficient. Furthermore, since 1984, the rate of energy efficiency gain has been declining.When projections of long-term energy use are compared, those with a price-induced energy efficiency formulation generate significantly more price sensitive energy use and emissions trajectories. When in the business as usual scenario energy prices are expected to be rising, climate policies involve lower shadow carbon prices with π than with AEEI formulations. In scenarios where energy prices are relatively flat, energy intensity rises leading to CO2 emissions far higher than standard business as usual projections utilizing AEEI assumptions.
This paper concerns optimal emissions of greenhouse gases when catastrophic consequences are possible. A numerical model is presented, which takes into account both continuous climate-feedback damages as well as the possibility of a catastrophic outcome. The possibility of a climate catastrophe is a major argument for greenhouse gas abatement even in absence of continuous damage. Special attention is given to the subjective probability of a catastrophe and the pure rate of time preferences, and implicit values of these parameters are calculated if an emissions stabilisation target is assumed optimal. Finally, the expected value of perfect information about the probability of a catastrophe is estimated.
This study estimates the extent to which embodied CO2 emissions are increased or reduced when a socioeconomic structural change occurs. Embodied CO2 emissions were estimated by Input–Output models (I–O models) and a General Equilibrium model (GE model), and the respective results were compared. The embodied CO2 emissions differ greatly depending on the assumptions of the total system. The embodied CO2 emissions obtained by I–O models are much larger than those obtained by the GE model. In some cases, the total CO2 emissions increase even if less intermediate inputs are required owing to technological improvement. It is shown that taking I–O type embodied emissions alone into consideration is insufficient for the estimation of policy effects. Careful consideration is necessary to effectively reduce emissions when production and consumption are interconnected in a complex way.
This book interprets nature and the environment as a scarce resource. It offers a theoretical study of the allocation problem and describes different policy approaches to the environmental problems and describes different policy approaches to the environmental problem. The entire spectrum of the allocation issue is studied: the use of the environment in a static context, international and trade aspects of environmental allocation, regional dimensions, and environmental use over time and under uncertainty. The book incorporates a variety of economic approaches, including neoclassical analysis, the public-goods approach, benefit cost, property-rights ideas, economic policy and public-finance reasoning, international trade theory, regional science, and optimization theory including control theory and risk analysis. The different aspects of environmental allocation are studied in the context of a model that is used throughout the book. This book has chapters on the international and the regional aspects of environmental allocation, on environmental use over time, i.e. on the accumulation of pollutant, and on environmental risks.
This paper investigates the impacts of institutionalising a credit-based transfer program between developing and developed countries. Such a program is expected to become an essence of the Clean Development Mechanism in the Kyoto protocol. The provisions of financial and technological transfers are incorporated simultaneously into a dynamic game model of global stock pollution, where the efficiency in emission abatement is also described as a stock variable. Our numerical simulation indicates that a credit-based transfer program can be more beneficial for a recipient country as well as for a donor country, than a non-credit-based transfer program.
This paper addresses the relevance of the economic convergence hypotheses between the developing and the developed world in international greenhouse gas (GHG) emissions negotiations. The results are based on a two-region (the OECD and the rest of the world, ROW) neo-classical growth model with exogenous technical progress, different technological diffusion patterns, and a set of geophysical relationships that consider an environmental externality linked to GHG emissions. A game framework is taken into account in the model to capture the strategic interactions between agents. The outcome of the negotiations seems indeed to depend on the economic convergence hypotheses. Faster economic growth of the ROW countries would encourage them to further mitigate carbon emissions.
Abatement of global climate change is modeled as a two-period game between the industrialized "North" and developing "South." Using an integrated-assessment model to simulate the economic and environmental consequences of alternative abatement policies, cooperative and Nash solutions are identified. Across a wide variety of games, incorporating alternative values of physical and economic parameters, the Nash solution achieves most of the benefits of the cooperative solution, relative to the case where neither region acts to abate climate change. Similarly, when parameter values are uncertain in the first period (1990- 2010) but become known by the second period (2010-2100), the Nash solution achieves most of the benefits of global cooperation. In contrast to the results of globally aggregated analysis, in which a 20-year delay in abatement imposes small costs, most of the benefits of cooperation are lost if the regions delay cooperation until the second period.
Coal, oil and natural gas are versatile, accessible and affordable and thus dominate the world's fuel supply - but at what cost to the environment? New technologies aim to minimize the unwanted impact of fossil fuels, buying time until other fuels are available.
A simple atmosphere-Ocean model is developed to represent the 20-year 1 × C02 and 2 × C02 simulations obtained with a coupled atmosphere-ocean general circulation model for the purpose of obtaining a new estimate of the characteristic response time of the climate system that accounts for oceanic upwelling.The simple atmosphere-generalized ocean model consists of a zonally averaged energy balance climate model and a zonally averaged multilayer ocean model. The high latitudes of both hemispheres are combined into a single polar region, and the low and middle latitudes into a single nonpolar region. The atmosphere is treated as a single layer and the ocean as an arbitrary number of layers. The simple model includes the meridional transport of heat between the nonpolar and polar regions for both the atmosphere and each ocean layer. The ocean model includes the vertical advective heat transfer by the vertical velocity, the latter of which is prescribed and can vary with depth in both the polar and nonpolar regions. The unknown parameters of the simple model are the meridional heat fluxes between the nonpolar and polar regions, the coefficients of heat transfer within the ocean, the heat transfer coefficient between the ocean and atmosphere, an additional ocean-atmosphere heat transfer parameter, and the climate sensitivity parameter.The parameters of the simple model are determined from the 1 × C02 and 2 × CO2 simulations of the coupled atmosphere-ocean general circulation model. The simple atmosphere-ocean model is then used to project the response of the coupled atmosphere-ocean GCM from year 20 to year 100, and the resulting 2 × C021 × C02 differences are normalized by the estimated equilibrium temperature changes. From these projections it is estimated that the characteristic response time is between 40 and 60 years, in close agreement with the estimates of Schlesinger et al.
We present an economic growth and energy use model incorporating representations of greenhouse gas accumulation, global mean temperature rise, and the damage cost associated with this temperature rise. Under alternative assumptions about the damage cost function, we find optimal time paths of CO, emissions control and associated optimal carbon taxes. Our work indicates that with plausible assumptions, an optimal carbon tax will rise over time, in contrast to the "hump shaped" carbon taxes implied by C02 reduction policies currently being discussed. Our work also suggests that the damage cost function would have to be both high and nonlinear in order to justify the general level of CO2 control and carbon taxes implied by these policies.
Inorganic carbon in the ocean is modelled as a passive tracer advected by a three-dimensional current field computed from a dynamical global ocean circulation model. The carbon exchange between the ocean and atmosphere is determined directly from the (temperature-dependent) chemical interaction rates in the mixed layer, using a standard CO2 flux relation at the air-sea interface. The carbon cycle is closed by coupling the ocean to a one-layer, horizontally diffusive atmosphere. Biological sources and sinks are not included. In this form the ocean carbon model contains essentially no free tuning parameters. The model may be regarded as a reference for interpreting numerical experiments with extended versions of the model including biological processes in the ocean (Bacastow R and Maier-Reimer E in prep.) and on land (Esser G et al in prep.). Qualitatively, the model reproduces the principal features of the observed CO2 distribution bution in the surface ocean. However, the amplitudes of surface pCO2 are underestimated in upwelling regions by a factor of the order of 1.5 due to the missing biological pump. The model without biota may, nevertheless, be applied to compute the storage capacity of the ocean to first order for anthropogenic CO2 emissions. In the linear regime, the response of the model may be represented by an impulse response function which can be approximated by a superposition of exponentials with different amplitudes and time constants. This provides a simple reference for comparison with box models. The largest-amplitude (0.35) exponential has a time constant of 300 years. The effective storage capacity of the oceans is strongly dependent on the time history of the anthropogenic input, as found also in earlier box model studies.
For national environmental problems, appropriately designed emission taxes lead to efficient outcomes. The paper gives an analysis of the properties of an international tax on CO2 emissions. A uniform CO2 tax for all countries does not necessarily give the first best social optimum. In practice, however, a uniform tax at an appropriate level will give an allocation of emissions which is very close to the allocation in the first-best optimum. CO2 emissions affect the climate through cumulative emissions. In a dynamic game of CO2 emissions, it is shown that the tax giving a Pareto optimal solution is the same for the open loop and the perfect equilibrium, in spite of the fact that these two equilibria differ in the absence of a CO2 tax.
In this paper, we investigate the sensitivity of optimal carbon control strategies to parameters of the Carbon Emissions Trajectory Assessment (CETA) Model, and we use CETA in a simple decision tree framework to estimate the value of information about global warming uncertainties. We find that if an optimal control policy is used under uncertainty, the eventual resolution of uncertainty has high value relative to current research budgets, and resolving uncertainty about the costs of warming is nearly as important as resolving uncertainty about the extent of warming. In addition, we find that there is not a high premium on immediate resolution of uncertainty, if resolution would otherwise occur within, say, twenty years; this implies that time is available to plan and execute a carefully designed research program. On the other hand, we find that if the real world political process would result in a suboptimal control policy being chosen under uncertainty, and this choice could be prevented by early resolution of uncertainty, the benefit of early resolution may be as much as three orders of magnitude greater.
Economic analyses of efficient policies to slow climate change require combining economic and scientific approaches. The present study presents a dynamic integrated climate-economy (‘DICE’) model. This model can be used to investigate alternative approaches to slowing climate change. Evaluation of five policies suggest that a modest carbon tax would be an efficient approach to slow global warming, while rigid emissions-stabilization approaches would impose significant net economic costs.
We use a global model to compare the economic performance of three policy instruments for controlling CO2 emissions — period specific emission limits (limit policy), period specific taxes (tax policy), and a cumulative emissions limit (cumulative limit policy). With known costs and benefits of control, tax and limit policies are equivalent, and either is better than a cumulative limit policy. With uncertain benefits of emission reduction, tax and limit policies are equivalent. However, with uncertain costs of emission reduction, a tax policy may be better. A cumulative limit policy may occasionally perform well under uncertainty, but this is not generally the case.
Human activity this century has increased the concentrations of atmospheric trace gases, which in turn has elevated global surface temperatures by blocking the escape of thermal infrared radiation. Natural climate variations are masking this temperature increase, but further additions of trace gases during the next 65 years could double or even quadruple the present effects, causing the global average temperature to rise by at least 1 °C and possibly by more than 5 °C. If the rise continues into the twenty-second century, the global average temperature may reach higher values than have occurred in the past 10 million years.
The importance of non-linearities in global warming damage costs Assessing Surprises and Nonlinearities in Greenhouse Warming Resources for the FutureCO 2 emissions control: compar-ing policy instruments
- S Peck
- T Teisberg
- S Peck
- T Teisberg
Peck, S C and Teisberg, T J (1993a) 'The importance of non-linearities in global warming damage costs' in Darmstadter J and Toman, M (eds) Assessing Surprises and Nonlinearities in Greenhouse Warming Resources for the Future, Washington, DC Peck, S C and Teisberg, T J (1993b) 'CO 2 emissions control: compar-ing policy instruments' Energy Policy 21 (3) 222-230
Future global wanning from atmospheric trace gases 109-115 Energy Modeling ForumStudy design for EMFI2 global cli-mate change: energy sector impacts of greenhouse gas emission control strategies' Draft, Energy Modeling ForumEnergy from fossil fuels
- R Dickinson
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- M Sanghvi
Dickinson, R E and Cicerone, R J (1986) 'Future global wanning from atmospheric trace gases' Nature 319 (9) 109-115 Energy Modeling Forum (1991) 'Study design for EMFI2 global cli-mate change: energy sector impacts of greenhouse gas emission control strategies' Draft, Energy Modeling Forum, Stanford University, Stanford, CA Fulkerson, W, Judkins, R R and Sanghvi, M K (1990) 'Energy from fossil fuels' Scientific American September 128-135
Expert opinion on climate changeCooperation in the unbal-anced commons' Draft, Kennedy School of GovernmentCETA: a model for carbon emis-sions trajectory assessment
- W Nordhaus
- R Zeckhauser
- S Peck
- T Teisberg
Nordhaus, W D (1994) 'Expert opinion on climate change' American Scientist 82 January-February Parson, E A and Zeckhauser, R J (1992) 'Cooperation in the unbal-anced commons' Draft, Kennedy School of Government, Cambridge, MA Peck, S C and Teisberg, T J (1992) 'CETA: a model for carbon emis-sions trajectory assessment' The Energy Journal 13 ( 1 ) 55-77
A Primer on Greenhouse Gases US Department of Energy
- D Wuebbles
- J Edmonds
Wuebbles, D J and Edmonds, J (1988) A Primer on Greenhouse Gases US Department of Energy, DOE/NBB-0083, Washington, DC 308 Energy Policy 1995 Volume 23 Number 4/5
Future global warming from atmospheric trace gases
- Dickinson
Study design for EMF12 global climate change: energy sector impacts of greenhouse gas emission control strategies
- Energy Modeling Forum
Cooperation in the unbalanced commons
- Parson
CO2 emissions control: comparing policy instruments
- Peck
Contribution of different greenhouse gases to global warming: a new technique for measuring impact
- Nordhaus