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.

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