Mitigation and adaptation to climate change

Climate change produces significant social and economic impacts in most parts of the world, thus global action is needed to address climate change. In this chapter, the different possibilities of mitigation are explored from different points of view, and analyse the possibilities of adaptation to climate change. First, substantial reduction of GHG emission is needed, on the other hand adaptation action must deal with the inevitable impacts. According to the assessment of the chapter, it is essential that coordinated actions be taken at an EU level. In our argumentation, a macroeconomic model is used for the cost- benefit analysis of GHG gas emissions reduction. The GHG emission structure is analysed on European and global level. Even in the case of a successful mitigation strategy there rest the long-term effects of climate change which will need a coherent adaptation strategy to be dealt with. Although certain adaptation measures already have been taken, these initiatives are still very modest, and insufficient to deal with the economic effects of climate change properly

Climate change and agriculture in the Sudan: Impact pathways beyond changes in mean rainfall and temperature

Several environmental changes have occurred in the Sudan in the past; several are ongoing; and others are projected to happen in the future. The Sudan has witnessed increases in temperature, floods, rainfall variability, and concurrent droughts. In a country where agriculture, which is mainly rainfed, is a major contributor to gross domestic product, foreign exchange earnings, and livelihoods, these changes are especially important, requiring measurement and analysis of their impact. This study not only analyzes the economy-wide impacts of climate change, but also consults national policy plans, strategies, and environmental assessments to identify interventions which may mitigate the effects. We feed climate forcing, water demand, and macro-socioeconomic trends into a modelling suite that includes models for global hydrology, river basin management, water stress, and crop growth, all connected to the International Model for Policy Analysis of Agricultural Commodities and Trade (IMPACT). The outcomes of this part of the modeling suite are annual crop yields and global food prices under various climate change scenarios until 2050. The effects of such changes on production, consumption, macroeconomic indicators, and income distribution are assessed using a single country dynamic Computable General Equilibrium (CGE) model for the Sudan. Additionally, we introduce yield variability into the CGE model based on stochastic projections of crop yields until 2050. The results of the model simulations reveal that, while the projected mean climate changes bring some good news for the Sudan, extreme negative variability costs the Sudan cumulatively between 2018 and 2050 US$109.5 billion in total absorption and US$ 105.5 billion in GDP relative to a historical mean climate scenario without climate change

Carbon leakage in the Steel Sector Accounting for Induced Technological Change and Spillover Effects : a Theoretical Analysis

This analysis investigates the relationship between unilateral climate policy and the risk of carbon leakage in the steel sector. A simple analytical macroeconomic model is employed to highlight the various parameters influencing the magnitude of carbon leakage. An extended version of the model allows for assessing the impacts of induced technical change and technological spillover effects on the industry’s carbon leakage. A numerical illustration using sector-specific parameters shows that the leakage rate within the steel sector is 27%. Accounting for induced technological change and spillover effects reveals that higher rates of innovative activity reduce the risk of carbon leakage within the sector. In the presence of technological spillover effects under the assumption that the rate of technological change is 0.8, the carbon leakage rate reduces to 5%. The impact of induced technological change on carbon leakage in the steel industry implies that a global industrial network empowering the expansion of new technologies has the potential to decrease the industry’s overall emissions

The Climate Change Challenge: A Review of the Barriers and Solutions to Deliver a Paris Solution

Global greenhouse gas (GHG) emissions have continued to grow persistently since 1750. The United Nations Framework Convention on Climate Change (UNFCCC) entered into force in 1994 to stabilize GHG emissions. Since then, the increasingly harmful impacts of global climate change and repeated scientific warnings about future risks have not been enough to change the emissions trend and enforce policy actions. This paper synthesizes the climate change challenges and the insofar insufficient mitigation responses via an integrated literature review. The fossil industry, mainstream economic thinking, national rather than international interests, and political strive for short-term interests present key barriers to climate mitigation. A continuation of such trends is reflected in the Dice model, leading to a 3.5 °C temperature increase by 2100. Despite receiving the Nobel Prize for integrating climate change into long-run macroeconomic analysis via the Dice model, increases in global mean temperatures overshooting the 1.5 °C to 2 °C Paris targets imply an intensified disruption in the human–climate system. Past and present policy delays and climate disruption pave the way for solar radiation management (SRM) geoengineering solutions with largely unknown and potentially dangerous side effects. This paper argues against SRM geoengineering and evaluates critical mitigation solutions leading to a decrease in global temperatures without overshooting the Paris targets. The essential drivers and barriers are discussed through a unified approach to tipping points in the human–climate system. The scientific literature presents many economically and technologically viable solutions and the policy and measures required to implement them. The present paper identifies the main barriers to integrating them in a globally cooperative way, presenting an efficient, long-term, and ethical policy approach to climate change.info:eu-repo/semantics/publishedVersio

Agent-based Integrated Assessment Models: Alternative Foundations to the Environment-Energy-Economics Nexus

Climate change is a major global challenge today. To assess how policies may lead to mitigation, economists have developed Integrated Assessment Models, however, most of the equilibrium based models have faced heavy critiques. Agent-based models have recently come to the fore as an alternative macroeconomic modeling framework. In this paper, four Agent-based Integrated Assessment Models linking environment, energy and economy are reviewed. These models have several advantages over existing models in terms of their heterogeneous agents, the allocation of damages amongst the individual agents, representation of the financial system, and policy mixes. While Agent-based Integrated Assessment Models have made strong advances, there are several avenues into which research should be continued, including incorporation of natural resources and spatial dynamics, closer analysis of distributional effects and feedbacks, and multi-sectoral firm network structures

This changes everything : climate Shocks and sovereign bonds

Climate change is already a systemic risk to the global economy. While there is a large body of literature documenting economic consequences, there is scarce research on the link between climate change and sovereign risk. This paper investigates the impact of climate change vulnerability and resilience on sovereign bond yields and spreads in 98 countries over the period 1995–2017. We find that the vulnerability and resilience to climate change have a significant impact on the cost government borrowing, after controlling for conventional determinants of sovereign risk. That is, countries that are more resilient to climate change have lower bond yields and spreads relative to countries with greater vulnerability to climate change. Furthermore, partitioning the sample into country groups reveals that the magnitude and statistical significance of these effects are much greater in developing countries with weaker capacity to adapt to and mitigate the consequences of climate change.info:eu-repo/semantics/publishedVersio

Quantifying the Potential Macroeconomic Consequences of Global Climate Change: What the Literature Says

Increase of the Earth’s average surface temperature observed in the last century has affected almost all countries of the world. No state has managed to escape the effects of global warming, and scientists predict that no country will escape a further increase in temperature. However, the highest temperature increases are expected in countries with relatively colder climates. The contribution of low-income developing countries, typically located in some of the hottest geographic areas of the planet, to atmospheric greenhouse gas concentrations is negligible, both in absolute and per capita terms. This article provides a meta-analysis of quantitative estimates of the damage caused by global climate change occurring on the planet since the last century. A rise in temperature has been shown to decrease per capita production in countries with relatively high average annual temperatures, which include most low-income countries. In these countries, the negative effect has long-term nature and operates through several channels, including decrease in agricultural production and labor productivity in sectors more exposed to weather; reduction in capital accumulation and deterioration of human health. Moreover, as evidence shows, in recent years macroeconomic indicators have not become less sensitive to temperature shocks, which points at significant limitations on countries’ adaptation to climate change. Meta-analysis of climate change damage estimates documented in relevant literature will, first, provide an idea of the scale of such estimates and help to assess the current state of knowledge in this area. In addition, a meta-analysis will demonstrate sensitivity of the results of calculations regarding assessment approach, measurement errors or insufficient data, choice of sample, etc. Finally, systematization of climate damage quantitative estimates is highly likely to be of practical importance for authorities and international organizations responsible for developing measures to deal with climate change and mitigate its effects, especially for developing and poor countries, most affected by the negative effects of global warming

Developing green: A case for the Brazilian manufacturing industry

The recent IPCC Special Report on global warming of 1.5 °C emphasizes that rapid action to reduce greenhouse gas (GHG) emissions is vital to achieving the climate mitigation goals of the Paris Agreement. The most-needed substantial upscaling of investments in GHG mitigation options in all sectors, and particularly in manufacturing sectors, can be an opportunity for a green economic development leap in developing countries. Here, we use the Brazilian manufacturing sectors as an example to explore a transformation of its economy while contributing to the Paris targets. Projections of Brazil's economic futures with and without a portfolio of fiscal policies to induce low carbon investments are produced up to 2030 (end year of Brazil's Nationally Determined Contribution-NDC), by employing the large-scale macro econometric Energy-Environment-Economy Model, E3ME. Our findings highlight that the correct mix of green stimulus can help modernize and decarbonize the Brazilian manufacturing sectors and allow the country's economy to grow faster (by up to 0.42% compared to baseline) while its carbon dioxide (CO2) emissions decline (by up to 14.5% in relation to baseline). Investment levels increase, thereby strengthening exports' competitiveness and alleviating external constraints to long-term economic growth in net terms

A climate diplomacy proposal: carbon pricing consultations

The Doha climate talks in December 2012, wrapped up lines of negotiation that were begun years before in Bali. Negotiators resolved contentious questions about the future of the Kyoto Protocol and finally put the constraints of the Bali agenda behind them. Now they need turn to developing by 2015 a new agreement under the United Nations Framework Convention on Climate Change (UNFCCC) to cover the post-2020 period. In order to make concrete progress on climate policy there is a need to establish a Carbon Pricing Consultation (CPC) process, which would be a detailed, pragmatic, and ongoing discussion of the implementation details of domestic cap-and-trade and GHG taxes.Though carbon pricing generally been considered to be a national-level policy to be adopted at the discretion of individual governments the paper argues that a CPC process would provide an opportunity for negotiators, as well as the administrators of national pricing policies, to discuss how to induce, practically and efficiently, the broad economic shifts required to de-couple emissions and economic activity. This paper makes the argument for focusing on carbon pricing in the international negotiations and offers a way forward in that process

Assessing carbon dioxide emission reduction potentials of improved manufacturing processes using multiregional input output frameworks

Evaluating innovative process technologies has become highly important within the last decades. As standard tools different Life Cycle Assessment methods have been established, which are continuously improved. While those are designed for evaluating single processes they run into difficulties when it comes to assessing environmental impacts of process innovations at macroeconomic level. In this paper we develop a multi-step evaluation framework building on multi regional input–output data that allows estimating macroeconomic impacts of new process technologies, considering the network characteristics of the global economy. Our procedure is as follows: i) we measure differences in material usage of process alternatives, ii) we identify where the standard processes are located within economic networks and virtually replace those by innovative process technologies, iii) we account for changes within economic systems and evaluate impacts on emissions. Within this paper we exemplarily apply the methodology to two recently developed innovative technologies: longitudinal large diameter steel pipe welding and turning of high-temperature resistant materials. While we find the macroeconomic impacts of very specific process innovations to be small, its conclusions can significantly differ from traditional process based approaches. Furthermore, information gained from the methodology provides relevant additional insights for decision makers extending the picture gained from traditional process life cycle assessment.DFG, SFB 1026, Sustainable Manufacturing - Globale Wertschöpfung nachhaltig gestalte