The role of sequestration costs with a ceiling on atmospheric carbon concentration

I investigate the optimal role of carbon sequestration for mitigation in the presence of a ceiling on atmospheric carbon concentration and consider aspects that have so far only been analyzed in the context of a damage function to measure the consequences of climate change for society. I assume extraction costs to be stock-dependent, replace the proportional decay description of the global carbon cycle by a two-box model, investigate the differences resulting from linear versus convex sequestration costs, and consider oceanic instead of geological carbon storage. Using a two-box model allows the non-renewable aspects of the global carbon cycle to be accounted for and implies that carbon emissions have to decline at the ceiling due to the ongoing saturation of the ocean with respect to anthropogenic carbon. Convex sequestration costs result in a continuous use of such a technology and allow the ceiling to be reached later than without sequestration, whereas linear sequestration costs result in a discontinuous use of such a technology and earlier reaching of the ceiling. Consequently, taking into the account the uncertainties in defining an appropriate ceiling, the policy recommendations with respect to carbon sequestration differ crucially according to the underlying assumptions of sequestration costs. Furthermore, the ocean might be a storage option for captured carbon, but even though its storage capacity is probably not scarce by itself, the ongoing saturation of the complete carbon cycle has to be taken into account

Carbon capture and storage & the optimal path of the carbon tax

In the presence of rising carbon concentrations more attention should be given to the role of the oceans as a sink for atmospheric carbon. We do so by setting up a simple dynamic global carbon cycle model with two reservoirs containing atmosphere and two ocean layers. The net flux between these reservoirs is determined by the relative reservoir size and therefore constitutes a more appropriate description of the carbon cycle than a proportional decay assumption. We exploit the specific feature of our model, the mixing of the carbon reservoirs, by allowing for a special form of carbon capture and storage: The capture of CO2 from the air and the sequestration of CO2 into the deep ocean reservoir. We study the socially optimal anthropogenic intervention of the global carbon cycle using a non-renewable resource stock. We find that this kind of carbon capture and storage facilitates achieving strict stabilization targets for the atmospheric carbon content. It accelerates the slow natural flux within the carbon cycle, and because of its temporary abatement character it dampens the overshooting of the atmospheric reservoir. Furthermore, we analyze the optimal paths of the carbon tax. The carbon tax shows to be inverted u-shaped but depending on the initial sizes of the reservoirs and the speed of carbon fluxes between the reservoirs we also find the optimal tax to be increasing, decreasing or u-shaped. Finally, we suggest to link the level of the carbon tax to the declining ability of the deep ocean to absorb atmospheric carbon

Establishing a Sustainable Development Goal for Oceans and Coasts to Face the Challenges of our Future Ocean

Oceans regulate our climate, provide us with natural resources such as food, materials, substances, and energy and are essential for international trade, recreational, and cultural activities. Free access to and availability of ocean resources and services, together with human development, have put strong pressures on marine ecosystems, ranging from overfishing and reckless resource extraction to various channels of careless pollution. International cooperation and negotiations are required to protect the marine environment and use marine resources in a way that the needs of future generations will be met. For that purpose, developing and agreeing on a Sustainable Development Goal (SDG) Oceans and Coasts could be an essential element for sustainable ocean management. The SDGs will build upon the Millennium Development Goals (MDG) and replace them by 2015. Even though ensuring environmental sustainability is one of the eight MDG goals, the ocean is not explicitly included. Furthermore, the creation of a comprehensive underlying set of oceanic sustainability indicators would help assessing the current status of marine systems, diagnose on-going trends, and provide information for forward-locking and sustainable ocean governance

The rich, the clean, and the kind - a comprehensive wealth index for cities applied to the case of Germany

We develop a comprehensive wealth index for cities that measures their endowment with environmental, energy, social, human, and economic capital stocks. We apply this index to the 100 largest autonomous cities in Germany. We find that (i) a good economic performance does not need to come at the cost of environmental degradation; (ii) clear regional differences exist between West and East Germany and between North and South Germany; and (iii) social preferences reflected in the comprehensive wealth index account for roughly half of the variation in housing rents, which reflect individual willingness to pay for living in a certain city

Lässt sich die Erde künstlich kühlen?

Eigentlich ist die Mission klar: Wir müssen den weltweiten Kohlendioxidausstoß begrenzen. Doch politisch lässt sich das Ziel womöglich nicht realisieren. Könnten wir der Erderwärmung stattdessen durch gezielte Eingriffe in das Klimasystem entgegenwirken? Dass der Mensch den Strahlungshaushalt der Erde beeinflusst, ist nichts Neues. Bis vor zwei Jahrhunderten geschah das aber praktisch nur durch Veränderung der Landoberflächen, und die Auswirkungen waren so gering, dass sie sich kaum von natürlichen Klimaschwankungen abhoben. Das änderte sich jedoch mit der industriellen Revolution. Von nun an gelangte durch die zunehmende Nutzung fossiler Brennstoffe, die zur Energiegewinnung verfeuert wurden, rasch immer mehr Kohlendioxid (CO2) in die Atmosphäre. Parallel dazu kam es zu einem rapiden Bevölkerungswachstum, das mit einer Intensivierung der Landwirtschaft einherging. Durch die vermehrte Nutzviehhaltung und die künstliche Düngung stiegen vor allem die Emissionen von Methan (CH4), aber auch die von Lachgas (N2O) an. Diese Entwicklung setzt sich bis heute fort, und es gibt kaum Anzeichen für eine Trendwende. Als Folge nehmen die Konzentrationen der drei Gase in der Atmosphäre weiter zu, wo sie die Wärmestrahlung in den unteren Luftschichten zurückhalten. Dadurch heizen sie die Erde allmählich auf. Der resultierende Klimawandel ist durch Messungen der globalen Luft- und Ozeantemperatur, der Schnee- und Eisbedeckung sowie des Meeresspiegels inzwischen klar belegt

Explaining European emission allowance price dynamics: Evidence from Phase II

In 2005, the European Emission Trading Scheme (EU-ETS) established a new commodity: the right to emit a ton of CO2 (EUA). Since its launch, the corresponding price has shown rather turbulent dynamics, including nervous reactions to policy announcements and a price collapse after a visible over-allocation in Phase I. As a consequence, the question whether fundamental factors (fossil fuel prices, economic activity, weather) affect the EUA price remained partially unresolved. Today, being halfway through Phase II (2008-2012) and relying on a more mature market, we use more reliable data to investigate the extent to which allowance price dynamics can be explained by market fundamentals. We empirically test for the influence of fuel prices, economic activity, and weather variations. Fuel prices allow to test for fuel switching from coal to gas, the most important short-term abatement option for most installations in the EU-ETS. The empirical results show a significant influence of gas, coal, and oil prices, of economic activity and of some weather variations. When including the relative price of coal to gas on a forward level, we found evidence of a switching effect. Yet, on a spot level the demand effect seems to dominate. However, when including the absolute coal price the coefficient is positive, contradicting theory with respect to both the switching and the demand effect. The significant weather variations suggest that their influence on EUA prices is less driven by their effect on energy demand but more by their effect on the provision of carbon-free renewable energy. Overall, our results show that the price dynamics are much better explained by a model based on fundamentals than by a purely autoregressive model. However, the results also show that fundamentals alone cannot fully explain price dynamics and that forecasting is improved by the inclusion of time series characteristics