Policy Implications of Stochastic Learning Using a Modified PAGE2002 Model

We consider the importance of Endogenous Technical Change (ETC) on the risk profiles for different abatement strategies using the PAGE2002 model with ETC. Three outcomes from this modelling research have significant impacts on the way we ‘optimise’ the greenhouse gas abatement path. Firstly, it was found that for most standard abatement paths there would be an initial "learning investment" required that would substantially reduce the unit costs of CO2 abatement as compared to a business as usual scenario. Secondly, optimising an abatement program where ETC has been included can lead to an increased risk profile during the time of widespread CO2 abatements due to the costs associated with learning. Finally, the inclusion of ETC leads to a slightly deferred optimised abatement path followed by a drastic abatement program that itself would seem highly impractical. Together, the results draw attention to the possibilities of uncovering uncertainty through proactive abatements

Modelling the costs of non-conventional oil: A case study of Canadian bitumen

Keywords JEL Classification High crude oil prices, uncertainties about the consequences of climate change and the eventual decline of conventional oil production raise the issue of alternative fuels, such as non-conventional oil and biofuels. This paper describes a simple probabilistic model of the costs of nonconventional oil, including the role of learning-by-doing in driving down costs. This forward-looking analysis quantifies the effects of both learning and production constraints on the costs of supplying bitumen which can then be upgraded into synthetic crude oil, a substitute to conventional oil. The results show large uncertainties in the future costs of supplying bitumen from Canadian oil sands deposits, with a 90% confidence interval of $8 to$12 in 2025, and $7 to$15 in 2050 (2005 US$). The influence of each parameter on the supply costs is examined, with the minimum supply cost, the learning rate, and the depletion curve exponent having the largest influence. Over time, the influence of the learning rate on the supply costs decreases, while the influence of the depletion curve exponent increases. Climate change; Non-conventional oil; Exhaustible resources; Technological change; Uncertainty

Calculating the Social Cost of Carbon

The paper1 discusses the determination of the social cost of carbon (SCC) using the PAGE2002 model used in the Stern Review. The SCC depends sensitively on assumptions about future economic development, the range and likelihood of economic and social damage arising from climate change at future dates and the discount rate to apply to that damage. The paper critically examines the choice of pure time preference and the weight to place on damage experienced by other countries in the distant future. Key conclusions are that the SCC rises at about 2.4% p.a. and the range of plausible estimates for the SCC is wide. The SCC is sensitive to a number of factors, significantly the equilibrium temperature rise for a doubling of CO2 concentration, the pure rate of time preference, the non-economic impact, the inequality weighting parameter and the half-life of global warming. Within the model the SCC appears surprisingly insensitive to the emissions scenario for reasons that are explained. The paper points out that methane and SF6 are also powerful GHGs whose impact can be estimated within the model

Developing the PAGE2002 Model with Endogenous Technical Change

Presented research demonstrates the inclusion of endogenous technical change into the PAGE2002 integrated assessment model of climate change. The ‘experience curve’ or learning-by-doing concept, made popular by the Boston Consulting Group during the 1960’s provides a mechanism with which to describe cost reduction through experiential learning. The implementation of learning requires both a restructuring of the way costs are modelled as well as the inclusion of an explicit learning function with initial abatement costs and learning coefficients calibrated to historical renewable energy data. The discounted values for total abatement costs are calculated for both the standard PAGE2002 model without an explicit learning function and the modified PAGE2002 model. The results were found to be of a similar magnitude, partially due to the myopic effects of discounting, though the result was found to be highly sensitive to the learning rate used, which in our case was a conservative estimate

Assessing water quality improvement schemes: The multi-attribute technique of the UK’s environment agency

The Environment Agency for England and Wales is required to take account of likely costs and benefits in carrying out its duties. Given the complex nature of environmental problems, this task requires sensitivity to issues such as uncertainty, multiple objectives and conflicting value systems. This paper describes a multi-attribute methodology used to carry out this duty in one area of the Agency’s work, the regulation of the water industry. The method includes nine attributes measuring the benefits from water quality improvement schemes, and one attribute measuring scheme costs. It is a workable method that clearly satisfies the requirements for the Environment Agency to take account of the costs and benefits of its actions. Refinements are suggested to improve the individual attribute scores, the weights used in prioritisation and the incorporation of costs

Valuing the climate change impacts of tropical deforestation

According to a footnote, this paper was commissioned by the [United Kingdom] Office of Climate Change as background work to its report 'Climate Change: Financing Global Forests' (otherwise known as the Eliasch Review). This paper discusses research valuing the impacts of tropical deforestation, and the effects of deforestation on global greenhouse gas emissions

Effect of silver content on the structure and antibacterial activity of silver-doped phosphate-based glasses

Staphylococcus aureus can cause a range of diseases, such as osteomyelitis, as well as colonize implanted medical devices. In most instances the organism forms biofilms that not only are resistant to the body's defense mechanisms but also display decreased susceptibilities to antibiotics. In the present study, we have examined the effect of increasing silver contents in phosphate-based glasses to prevent the formation of S. aureus biofilms. Silver was found to be an effective bactericidal agent against S. aureus biofilms, and the rate of silver ion release (0.42 to 1.22 µg·mm–2·h–1) from phosphate-based glass was found to account for the variation in its bactericidal effect. Analysis of biofilms by confocal microscopy indicated that they consisted of an upper layer of viable bacteria together with a layer (20 µm) of nonviable cells on the glass surface. Our results showed that regardless of the silver contents in these glasses (10, 15, or 20 mol%) the silver exists in its +1 oxidation state, which is known to be a highly effective bactericidal agent compared to that of silver in other oxidation states (+2 or +3). Analysis of the glasses by 31P nuclear magnetic resonance imaging and high-energy X-ray diffraction showed that it is the structural rearrangement of the phosphate network that is responsible for the variation in silver ion release and the associated bactericidal effectiveness. Thus, an understanding of the glass structure is important in interpreting the in vitro data and also has important clinical implications for the potential use of the phosphate-based glasses in orthopedic applications to deliver silver ions to combat S. aureus biofilm infections