The Influential Mechanisms of Power Actor Groups on Policy Mix Adoption: Lessons Learned from Feed-In Tariffs in the Renewable Energy Transition in Iran and Germany

The Energy transition is fiercely competitive. The incumbents of fossil-based energy are in conflict with the advocate coalitions of transition in energy policy changes. Such changes do not occur as sudden punctuation via an external shock, but rather incrementally and over time, by incorporating power insights such as lobbies, coalitions, and campaigns. This article provides a framework grounded in theoretical power theories and draws additional insights from policy mix studies. It investigates how focusing events and feedback loops shape the coalition of interest groups in policymaking through implementations of power mechanisms. Our framework is tested through two different power stories of energy transition in Iran and Germany. Our findings reveal that the centrally planned economy of Iran leaves society with a negligible or passive role in the energy transition. The passive role of society in the energy transition is mainly caused by subsidizing energy. In addition, the financial and economic crisis resulting from other macro-economic challenges, such as sanctions, may exacerbate the minor involvement of civil society in the slow expansion of renewables in Iran. By contrast, as a robust economy with a corporatist tradition, Germany has made a strong advocacy coalition of energy transition that resulted in political incentives for substantial renewable energy deployment. Regarding the theoretical question of the power dynamics in divergent countries’ energy transitions, the proposed framework based on the interest group coalitions and power mechanism offers an understanding of the social character of energy transitions

Cost-Risk Analysis Reconsidered—Value of Information on the Climate Sensitivity in the Integrated Assessment Model PRICE

Infeasible solutions or negative expected values of future climate information are undesired problems if climate policies are adopted under Cost-Effectiveness Analysis (CEA) to reach uncertain temperature targets. Cost-Risk Analysis (CRA) was developed to resolve these issues. It allows for a trade-off between expected welfare losses of mitigation and avoided risk of transgressing a climate target with a certain probability of compliance (Safety). Some of the significant contributions of this paper are: (i) It updates the Probabilistic Integrated model of Climate and the Economy (PRICE) as a probabilistic version of the latest version of the Dynamic Integrated Climate-Economy model (DICE) 2016, and it extends the model to run welfare-maximizing decision analytic frameworks readily. (ii) It highlights that the standard method of applying CRA (Old CRA) leads to an extra welfare cost. (iii) It proposes revised instruction on how to use CRA. (iv) It simulates and compares welfare-maximizing decision analytic frameworks on the level of risk, damages, and carbon prices. (v) It measures the value of information using risk-based methods and compares them with the value of information calculated using the damage-based method. (vi) It measures the carbon prices for the CRA scenarios for the first time. The results show that the choice of the disutility function governs the magnitude of the value of information. Using a damage function or Old CRA, the value of information is significantly high for new information arriving between 2020 and 2060. If the New CRA is applied, however, such benefits are negligible

The EUs gain (loss) from more emission trading flexibility—A CGE analysis with parallel emission trading systems

The EU has established the world's first and biggest emission-trading systems (ETS) covering aviation, emission-intensive sectors, and electricity (EITE). This paper employs a multi-regional multi-sectoral CGE model with two simultaneous international emission permit markets. After examining the abatement costs for the EU regions, various policy scenarios are implemented to study the welfare effects of forming an ETS covering NEIT sectors and its linking with the EITE sectors under two different baselines and four emission reduction targets. The results provide several important insights: i) Marginal abatement costs in Germany and the Eastern European Union region (EEU) are significantly lower than in the rest of the EU regions. ii) The carbon price in the emission permit market covering NEIT is significantly higher than the carbon price in the emission permit market covering EITE. iii) Germany and EEU appear as notable suppliers of emission permits in both markets. iv) There is a significant aggregate welfare gain under the scenario in which the ETS covering NEIT co-exists parallel with the ETS covering EITE. v) The aggregate welfare in the EU under the full integration of EITE and NEIT may fall below its value under the scenario with two parallel emission permit markets

Decarbonizing the Global Economy—Investigating the Role of Carbon Emission Inertia Using the Integrated Assessment Model MIND

In 2015, the 21st Conference of the Parties reaffirmed the target of keeping the global mean temperature rise below 2 °C or 1.5 °C by 2100 while finding no consensus on how to decarbonize the global economy. In this regard, the speed of decarbonization reflects the (in)flexibility of transforming the energy sector due to engineering, political, or societal constraints. Using economy–energy–climate-integrated assessment models (IAMs), the maximum absolute rate of change in carbon emission allowed from each time step to the next, so-called carbon emission inertia (CEI), governs the magnitude of emission change, affecting investment decisions and economic welfare. Employing the model of investment and endogenous technological development (MIND), we conduct a cost-effectiveness analysis and examine anthropogenic global carbon emission scenarios in line with decarbonizing the global economy while measuring the global mean temperature. We examine the role of CEI as a crucial assumption, where the CEI can vary in four scenarios from 3.7% to 12.6% p.a. We provide what-if studies on global carbon emissions, global mean temperature change, and investments in renewable energy production and show that decarbonizing the global economy might still be possible before 2100 only if the CEI is high enough. In addition, we show that climate policy scenarios with early decarbonization and without negative emissions may still comply with the 2 °C target. However, our results indicate that the 1.5 °C target is not likely to be reached without negative emission technologies. Hence, the window of opportunity is beginning to close. This work can also assist to better interpret existing publications on various climate targets when altering CEI could have played a significant role

Implication of the Paris Targets for the Middle East Through Different Cooperation Options

The core of the 36th round of Energy Modeling Forum project shows that it is more likely that major fossil-fuel exporters, such as the Middle East, are highly affected because of the decrease in fossil-fuel extractions required for the worldwide fulfillment of the Paris agreement. To analyze these general findings in-depth, we employ a multi-region, multi-sector computable general equilibrium model of global trade and energy to examine the effects of implementing the Paris agreement with a focus on the Middle East which is further disaggregated into Iran, Saudi Arabia, the rest of net fossil fuel exporting countries (XFE), and the rest of countries (XNE). After examining the abatement costs for the regions, we apply four emission reduction targets, ranging from a low ambition level to a high ambition level. We develop comprehensive scenarios covering several cooperation options within the Middle East and between the Middle East and regions outside. The results show that Iran has the lowest marginal abatement cost in the Middle East, followed by XNE, XFE, and Saudi Arabia. If the Middle East does not implement any climate policy, the welfare losses can be slightly compensated due to a carbon leakage to the Middle East. The cooperations within the Middle East are not welfare increasing for the region as a whole when Iran mostly benefits from such a cooperation whereas Saudi Arabia loses welfare. The Middle East benefits from a global cooperation and the cooperation with Europe, but the cooperation with China, India, or Russia can be welfare decreasing

Implication of the Paris Targets for the Middle East Through Different Cooperation Options

The core of the 36th round of Energy Modeling Forum project shows that it is more likely that major fossil-fuel exporters, such as the Middle East, are highly affected because of the decrease in fossil-fuel extractions required for the worldwide fulfillment of the Paris agreement. To analyze these general findings in-depth, we employ a multi-region, multi-sector computable general equilibrium model of global trade and energy to examine the effects of implementing the Paris agreement with a focus on the Middle East which is further disaggregated into Iran, Saudi Arabia, the rest of net fossil fuel exporting countries (XFE), and the rest of countries (XNE). After examining the abatement costs for the regions, we apply four emission reduction targets, ranging from a low ambition level to a high ambition level. We develop comprehensive scenarios covering several cooperation options within the Middle East and between the Middle East and regions outside. The results show that Iran has the lowest marginal abatement cost in the Middle East, followed by XNE, XFE, and Saudi Arabia. If the Middle East does not implement any climate policy, the welfare losses can be slightly compensated due to a carbon leakage to the Middle East. The cooperations within the Middle East are not welfare increasing for the region as a whole when Iran mostly benefits from such a cooperation whereas Saudi Arabia loses welfare. The Middle East benefits from a global cooperation and the cooperation with Europe, but the cooperation with China, India, or Russia can be welfare decreasing

A Scheme for Jointly Trading off Costs and Risks of Solar Radiation Management and Mitigation Under Long-Tailed Climate Sensitivity Probability Density Distributions

Side effects of “solar-radiation management” (SRM) might be perceived as an important metric when society decides on implementing SRM as a climate policy option to alleviate anthropogenic global warming. We generalize cost-risk analysis that originally trades off expected welfare loss from climate policy costs and risks from transgressing climate targets to also include risks from applying SRM. In a first step of acknowledging SRM risks, we represent global precipitation mismatch as a prominent side effect of SRM under long-tailed probabilistic knowledge about climate sensitivity. We maximize a social welfare function for the following three scenarios, considering alternative relative weights of risks: temperature-risk-only, precipitation-risk-only, and equally-weighted both-risks. Our analysis shows that in the temperature-risk-only scenario, perfect compliance with the 2 °C-temperature target is attained for all numerically represented climate sensitivities, a unique feature of SRM, but the 2 °C-compatible precipitation corridor is violated. The precipitation-risk-only scenario exhibits an approximate mirror-image of this result. In addition, under the both-risks scenario, almost 90% and perfect compliance can be achieved for the temperature and precipitation targets, respectively. Moreover, in a mitigation-only analysis, the welfare loss from mitigation cost plus residual climate risks, compared to the no-climate-policy option, is approximately 4.3% (in terms of balanced growth equivalent), while being reduced more than 90% under a joint-mitigation-SRM analysis

A Model Intercomparison of the Welfare Effects of Regional Coalitions for Ambitious Climate Mitigation Targets

This paper presents the overall and distributional welfare effects of alternative multi-regional emissions trading coalitions relative to unilateral action. It focusses on meeting Paris Agreement pledges and more emissions reduction targets consistent with 2 degrees C and 1.5 degrees C temperature pathways in 2030. The results from seven computable general equilibrium (CGE) models are compared. Across all models, welfare gains are highest with a global market and increase with the stringency of targets. All regional coalitions also show overall welfare gains, although lower gains than the global market. The models show more variability in the gains by a participant. Depending on the model, participants may benefit more from some regional arrangements than from a global market or face modest losses compared to the domestic reductions alone, due to interactions between carbon targets and fossil fuel markets. The scenario with a joint China-European Union emissions trading system in all sectors is consistently favorable for participants and provides the highest economic gains per unit of emissions abated.ISSN:2010-0078ISSN:2010-008