Energy Systems (Chapter 6)

Warming cannot be limited to well below 2°C without rapid and deep reductions in energy system carbon dioxide (CO2) and greenhouse gas (GHG) emissions. In scenarios limiting warming to 1.5°C (>50%) with no or limited overshoot (2°C (>67%) with action starting in 2020), net energy system CO2 emissions (interquartile range) fall by 87–97% (60–79%) in 2050. In 2030, in scenarios limiting warming to 1.5°C (>50%) with no or limited overshoot, net CO2 and GHG emissions fall by 35–51% and 38–52% respectively. In scenarios limiting warming to 1.5°C (>50%) with no or limited overshoot (2°C (>67%)), net electricity sector CO2 emissions reach zero globally between 2045 and 2055 (2050 and 2080). (high confidence)

Chapter 6 - Assessing transformation pathways

Stabilizing greenhouse gas (GHG) concentrations at any level will require deep reductions in GHG emissions. Net global CO2 emissions, in particular, must eventually be brought to or below zero. Emissions reductions of this magnitude will require large-scale transformations in human societies, from the way that we produce and consume energy to how we use the land surface. The more ambitious the stabilization goal, the more rapid this transformation must occur. A natural question in this context is what will be the transformation pathway toward stabilization; that is, how do we get from here to there? The topic of this chapter is transformation pathways. The chapter is motivated primarily by three questions. First, what are the near-term and future choices that define transformation pathways including, for example, the goal itself, the emissions pathway to the goal, the technologies used for and sectors contributing to mitigation, the nature of international coordination, and mitigation policies? Second, what are the key decision making outcomes of different transformation pathways, including the magnitude and international distribution of economic costs and the implications for other policy objectives such as those associated with sustainable development? Third, how will actions taken today influence the options that might be available in the future? Two concepts are particularly important for framing any answers to these questions. The first is that there is no single pathway to stabilization of GHG concentrations at any level. Instead, the literature elucidates a wide range of transformation pathways. Choices will govern which pathway is followed. These choices include, among other things, the long-term stabilization goal, the emissions pathway to meet that goal, the degree to which concentrations might temporarily overshoot the goal, the technologies that will be deployed to reduce emissions, the degree to which mitigation is coordinated across countries, the policy approaches used to achieve these goals within and across countries, the treatment of land use, and the manner in which mitigation is meshed with other policy objectives such as sustainable development. The second concept is that transformation pathways can be distinguished from one another in important ways. Weighing the characteristics of different pathways is the way in which deliberative decisions about transformation pathways would be made. Although measures of aggregate economic implications have often been put forward as key deliberative decision making factors, these are far from the only characteristics that matter for making good decisions. Transformation pathways inherently involve a range of tradeoffs that link to other national and policy objectives such as energy and food security, the distribution of economic costs, local air pollution, other environmental factors associated with different technology solutions (e.g., nuclear power, coal-fired carbon dioxide capture and storage (CCS)), and economic competitiveness. Many of these fall under the umbrella of sustainable development. A question that is often raised about particular stabilization goals and transformation pathways to those goals is whether the goals or pathways are "feasible". In many circumstances, there are clear physical constraints that can render particular long-term goals physically impossible. For example, if additinional mitigation beyond that of today is delayed to a large enough degree and carbon dioxide removal (CDR) options are not available (see Section 6.9), a goal of reaching 450 ppm CO2eq by the end of the 21st century can be physically impossible. However, in many cases, statements about feasibility are bound up in subjective assessments of the degree to which other characteristics of particular transformation pathways might influence the ability or desire of human societies to follow them. Important characteristics include economic implications, social acceptance of new technologies that underpin particular transformation pathways, the rapidity at which social and technological systems would need to change to follow particular pathways, political feasibility, and linkages to other national objectives. A primary goal of this chapter is to illuminate these characteristics of transformation pathways

Technological Change in Economic Models of Environmental Policy: A Survey

This paper provides an overview of the treatment of technological change in economic models of environmental policy. Numerous economic modeling studies have confirmed the sensitivity of mid- and long-run climate change mitigation cost and benefit projections to assumptions about technology costs. In general, technical progress is considered to be a noneconomic, exogenous variable in global climate change modeling. However, there is overwhelming evidence that technological change is not an exogenous variable but to an important degree endogenous, induced by needs and pressures. Hence, some environmenteconomy models treat technological change as endogenous, responding to socio-economic variables. Three main elements in models of technological innovation are: (i) corporate investment in research and development, (ii) spillovers from R&D, and (iii) technology learning, especially learning-by-doing. The incorporation of induced technological change in different types of environmental-economic models tends to reduce the costs of environmental policy, accelerates abatement and may lead to positive spillover and negative leakage

Delegation and coordination with multiple threshold public goods: experimental evidence

When multiple charities, social programs and community projects simultaneously vie for funding, donors risk mis-coordinating their contributions leading to an inefficient distribution of funding across projects. Community chests and other intermediary organizations facilitate coordination among donors and reduce such risks. To study this, we extend a threshold public goods framework to allow donors to contribute through an intermediary rather than directly to the public goods. Through a series of experiments, we show that the presence of an intermediary increases public good success and subjects’ earnings only when the intermediary is formally committed to direct donations to socially beneficial goods. Without such a restriction, the presence of an intermediary has a negative impact, complicating the donation environment, decreasing contributions and public good success.When multiple charities, social programs and community projects simultaneously vie for funding, donors risk mis-coordinating their contributions leading to an inefficient distribution of funding across projects. Community chests and other intermediary organizations facilitate coordination among donors and reduce such risks. To study this, we extend a threshold public goods framework to allow donors to contribute through an intermediary rather than directly to the public goods. Through a series of experiments, we show that the presence of an intermediary increases public good success and subjects’ earnings only when the intermediary is formally committed to direct donations to socially beneficial goods. Without such a restriction, the presence of an intermediary has a negative impact, complicating the donation environment, decreasing contributions and public good success

Impure Public Goods and Technological Interdependencies

Impure public goods represent an important group of goods. Almost every public good exerts not only effects which are public to all but also effects which are private to the producer of this good. What is often omitted in the analysis of impure public goods is the fact that – regularly – these private effects can also be generated independently of the public good. In our analysis we focus on the effects alternative technologies – independently generating the private effects of the public good – may have on the provision of impure public goods. After the investigation in an analytical impure public good model, we numerically simulate the effects of alternative technologies in a parameterized model for climate policy in Germany

China’s emissions trading takes steps towards big ambitions

China recently announced its national emissions trading scheme, advancing market-based approaches to cutting greenhouse gas emissions. Its evolution over coming years will determine whether it becomes an effective part of China’s portfolio of climate policies