Managing the Transition to Climate Stabilization

This paper builds upon recent work by the US Climate Change Science Program (CCSP). Among its products, the CCSP developed new emission projections for the major man-made greenhouse gases, explored the effects of emission limits on the energy system, and calculated the costs of various stabilization constraints to the economy. This paper applies one of the models used for that analysis to explore the sensitivity of the results to three potentially critical factors: the stabilization level, the policy design, and the availability and costs of low- to zero-emitting technologies. The major determinant of costs is likely to be something over which we have little control - Mother Nature. The choice of stabilization level will reflect our understanding of the science of global climate change. We have little control over many of the key bio-geophysical processes which, to a major extent, will determine what constitutes dangerous anthropogenic interference with the climate system. We consider two limits on radiative forcing, corresponding to stabilizing CO2 concentrations at approximately 450 ppmv and 550 ppmv. These levels have been chosen because of the fundamentally different nature of the challenge posed by each. In the case of the lower concentration limit, emission reductions will be required virtually immediately and annual GDP losses to the US could approach 5%. With the higher concentration limit, the pressure for a sharp reduction in near-term emissions is not as great. This offers some potential to reduce GDP losses. Indeed, we find that depending upon the concentration limit, implementing market mechanisms which take advantage of 'where' and 'when' flexibility can markedly reduce GDP losses, perhaps by as much as an order of magnitude. However, for a variety of reasons, our ability to realize such savings may be compromised. One possible impediment relates to the proximity to the target. If the limit is imminent, flexibility will be greatly reduced. The nature of the coalition and our willingness to permit 'borrowing' emission rights from the future will also affect the magnitude of the potential savings. As a result, the reduction in GDP losses from where and when flexibility may turn out to be only a small fraction of what has been previously estimated. Fortunately, the biggest opportunity for managing costs may come from something over which we do have considerable control. We find that investments in climate friendly technologies can reduce GDP losses to the US by a factor of two or more. At present, we have insufficient economically competitive substitutes for high carbon emitting technologies. The development of low- to zero-emitting alternatives will require both a sustained commitment on the part of the public sector upstream in the R&D chain and incentives for the private sector to bring the necessary technologies to the marketplace. Aside from helping to assure that environmental goals are met in an economically efficient manner, climate policy can also serve as an enabler of new technologies. By recognizing the acute shortage of low-cost substitutes, the long lead times required for development and deployment, and the market failures that impede technological progress, climate policy can play an important role in reducing the long-term costs of the transition.

Baseline projections of energy and emissions in Asia

open3Blanford, Geoffrey J; Rose, Steven K.; Tavoni, MassimoBlanford, Geoffrey J; Rose, Steven K.; Tavoni, Massim

Impact of revised CO2 growth projections for China on global stabilization goals

Recent growth in carbon dioxide emissions from China's energy sector has exceeded expectations. In a major US government study of future emissions released in 2007 (1), participating models appear to have substantially underestimated the near-term rate of increase in China's emissions. We present a recalibration of one of those models to be consistent with both current observations and historical development patterns. The implications of the new specification for the feasibility of commonly discussed stabilization targets, particularly when considering incomplete global participation, are profound. Unless China's emissions begin to depart soon from their (newly projected) business-as-usual path, stringent stabilization goals may be unattainable. The current round of global policy negotiations must engage China and other developing countries, not to the exclusion of emissions reductions in the developed world and possibly with the help of significant financial incentives, if such goals are to be achieved. It is in all nations' interests to work cooperatively to limit our interference with the global climate

Modeling Uncertainty in Climate Change: A Multi‐Model Comparison

The economics of climate change involves a vast array of uncertainties, complicating both the analysis and development of climate policy. This study presents the results of the first comprehensive study of uncertainty in climate change using multiple integrated assessment models. The study looks at model and parametric uncertainties for population, total factor productivity, and climate sensitivity. It estimates the pdfs of key output variables, including CO 2 concentrations, temperature, damages, and the social cost of carbon (SCC). One key finding is that parametric uncertainty is more important than uncertainty in model structure. Our resulting pdfs also provide insights on tail events

Emissions and Energy Impacts of the Inflation Reduction Act

If goals set under the Paris Agreement are met, the world may hold warming well below 2 C; however, parties are not on track to deliver these commitments, increasing focus on policy implementation to close the gap between ambition and action. Recently, the US government passed its most prominent piece of climate legislation to date, the Inflation Reduction Act of 2022 (IRA), designed to invest in a wide range of programs that, among other provisions, incentivize clean energy and carbon management, encourage electrification and efficiency measures, reduce methane emissions, promote domestic supply chains, and address environmental justice concerns. IRA's scope and complexity make modeling important to understand impacts on emissions and energy systems. We leverage results from nine independent, state-of-the-art models to examine potential implications of key IRA provisions, showing economy wide emissions reductions between 43-48% below 2005 by 2035

Technology Diffusion, Abatement Cost and Transboundary Pollution

This paper studies countries' incentives to develop advanced pollution abatement technology when technology may spillover across countries and pollution abatement is a global public good. We are motivated in part by the problem of global warming: a solution to this involves providing a global public good, and will surely require the development and implementation of new technologies. We show that at the Nash equilibrium of a simultaneous-move game with R&D investment and emission abatement, whether the free rider effect prevails and under-investment and excess emissions occur depends on the degree of technology spillovers and the effect of R&D on the marginal abatement costs. There are cases in which, contrary to conventional wisdom, Nash equilibrium investments in emissions reductions exceed the first-best case

Technology Transfer in the Non-Traded Sector as a Means to Combat Global Warming

The paper considers a situation where two countries - the North and the South - use a non-traded polluting input to produce the goods for final consumption. The North is more efficient in both, production and abatement processes. The study compares the effects of the transfer of abatement technology by the North to the South under autarky with the free trade situation, assuming that the North pre-commits to an international protocol to keep the global pollution under a fixed level. The conditions under which either full or partial technology is transferred in autarky are determined. It is shown that under free trade no such transfer is possible. With trade even though the North wants a complete transfer of technology, the South refuses it

Sexual Orientation and Household Decision Making: Same-Sex Couples' Balance of Power and Labor Supply Choices

I estimate how intra-household bargaining affects gay and lesbian couples' labor supplies, investigating their similarity to heterosexual decision-making, in a collective household framework. Data from the 2000 US Census show that couples of all types exhibit a significant response to bargaining power shifts, as measured by differences between partners in age or non-labor income. In gay, lesbian, and heterosexual cohabiting couples, a relatively young or rich partner has more bargaining power and hence supplies less labor, the opposite holding for his/her mate. Married couples value the older spouse instead, or the richer. No effects are found for same-sex roommates