Emissions Pricing to Stablize Global Climate

http://globalchange.mit.edu/research/publications/2241In the absence of significant greenhouse gas (GHG) mitigation, many analysts project that atmospheric concentrations of species identified for control in the Kyoto protocol could exceed 1000 ppm (carbon-dioxide-equivalent) by 2100 from the current levels of about 435 ppm. This could lead to global average temperature increases of between 2.5° and 6° C by the end of the century. There are risks of even greater warming given that underlying uncertainties in emissions projections and climate response are substantial. Stabilization of GHG concentrations that would have a reasonable chance of meeting temperature targets identified in international negotiations would require significant reductions in GHG emissions below “business-as-usual” levels, and indeed from present emissions levels. Nearly universal participation of countries is required, and the needed investments in efficiency and alternative energy sources would entail significant costs. Resolving how these additional costs might be shared among countries is critical to facilitating a wide participation of large-emitting countries in a climate stabilization policy. The 2°C target is very ambitious given current atmospheric concentrations and inertia in the energy and climate system. The Copenhagen pledges for 2020 still keep the 2°C target within a reach, but very aggressive actions would be needed immediately after that

The Role of China in Mitigating Climate Change

http://globalchange.mit.edu/research/publications/2265We explore short- and long-term implications of several energy scenarios of China’s role in efforts to mitigate global climate risk. The focus is on the impacts on China’s energy system and GDP growth, and on global climate indicators such as greenhouse gas concentrations, radiative forcing, and global temperature change. We employ the MIT Integrated Global System Model (IGSM) framework and its economic component, the MIT Emissions Prediction and Policy Analysis (EPPA) model. We demonstrate that China’s commitments for 2020, made during the UN climate meetings in Copenhagen and Cancun, are reachable at very modest cost. Alternative actions by China in the next 10 years do not yield any substantial changes in GHG concentrations or temperature due to inertia in the climate system. Consideration of the longer-term climate implications of the Copenhagen-type of commitments requires an assumption about policies after 2020, and the effects differ drastically depending on the case. Meeting a 2°C target is problematic unless radical GHG emission reductions are assumed in the short-term. Participation or non-participation of China in global climate architecture can lead by 2100 to a 200–280 ppm difference in atmospheric GHG concentration, which can result in a 1.1°C to 1.3°C change by the end of the century. We conclude that it is essential to engage China in GHG emissions mitigation policies, and alternative actions lead to substantial differences in climate, energy, and economic outcomes. Potential channels for engaging China can be air pollution control and involvement in sectoral trading with established emissions trading systems in developed countries

Impacts of CO2 Mandates for New Cars in the European Union

CO2 emissions mandates for new light-duty passenger vehicles have recently been adopted in the European Union (EU), which require steady reductions to 95 g CO2/km in 2021. Using a computable general equilibrium (CGE) model, we analyze the impact of the mandates on oil demand, CO2 emissions, and economic welfare, and compare the results to an emission trading scenario that achieves identical emissions reductions. We find that the mandates lower oil expenditures by about €6 billion, but at a net added cost of €12 billion in 2020. Emissions from transport are about 50MtCO2 lower with the vehicle emission standards, but with the economy-wide emission trading, lower emissions in transport allow an equal increase in emissions elsewhere in the economy. We estimate that tightening CO2 standards further after 2020 would cost the EU economy an additional €24–63 billion in 2025 compared with achieving the same reductions with an economy-wide emission trading system.The paper benefitted from comments of participants on an earlier draft of the paper presented at a workshop on the EU fuels standards held in Brussels on February 26, 2015, organized by General Motors. The MIT Joint Program on the Science and Policy of Global Change, where the authors are affiliated, is supported by the U.S. Department of Energy, Office of Science under grants DE-FG02-94ER61937, DE-FG02-08ER64597, DE-FG02-93ER61677, DE-SC0003906, DE-SC0007114, XEU-0-9920-01; the U.S. Department of Energy, Oak Ridge National Laboratory under Subcontract 4000109855; the U.S. Environmental Protection Agency under grants XA-83240101, PI-83412601-0, RD-83427901-0, XA-83505101-0, XA-83600001-1, and subcontract UTA12-000624; the U.S. National Science Foundation under grants AGS-0944121, EFRI-0835414, IIS-1028163, ECCS-1128147, ARC-1203526, EF-1137306, AGS-1216707, and SES-0825915; the U.S. National Aeronautics and Space Administration under grants NNX06AC30A, NNX07AI49G, NNX11AN72G and Sub Agreement No. 08-SFWS-209365.MIT; the U.S. Federal Aviation Administration under grants 06-C-NE-MIT, 09-C-NE-MIT, Agmt. No. 4103-30368; the U.S. Department of Transportation under grant DTRT57-10-C-10015; the Electric Power Research Institute under grant EP-P32616/C15124, EP-P8154/C4106; the U.S. Department of Agriculture under grant 58-6000-2-0099, 58-0111-9-001; and a consortium of 35 industrial and foundation sponsors (for the complete list see: http://globalchange.mit.edu/sponsors/all)

Regulatory Control of Vehicle and Power Plant Emissions: How Effective and at What Cost?

Passenger vehicles and power plants are major sources of greenhouse gas emissions. While economic analyses generally indicate that a broader market-based approach to greenhouse gas reduction would be less costly and more effective, regulatory approaches have found greater political success. Vehicle efficiency standards have a long history in the U.S and elsewhere, and the recent success of shale gas in the U.S. leads to a focus on coal–gas fuel switching as a way to reduce power sector emissions. We evaluate a global regulatory regime that replaces coal with natural gas in the electricity sector and imposes technically achievable improvements in the efficiency of personal transport vehicles. Its performance and cost are compared with other scenarios of future policy development including a no policy world, achievements under the Copenhagen accord, and a price-based policy to reduce global emissions by 50% by 2050. The assumed regulations applied globally achieve a global emissions reduction larger than projected for the Copenhagen agreements, but they do not prevent global GHG emissions from continuing to grow, and the reduction in emissions is achieved at a high cost compared to a price-based policy. Diagnosis of the reasons for the limited yet high-cost performance reveals influences including the partial coverage of emitting sectors, small or no influence on the demand for emissions-intensive products, leakage when a reduction in fossil use in the covered sectors lowers the price to others, and the partial coverage of GHGs.We thank BP for their support of this study. The MIT Integrated Global System Model (IGSM) and its economic component used in the analysis, the Emissions Prediction and Policy Analysis (EPPA model, are supported by a consortium of government, industry and foundation sponsors of the MIT Joint Program on the Science and Policy of Global Change, including U.S. Department of Energy, Office of Science (DE-FG02-94ER61937). For a complete list of sponsors see http://globalchange.mit.edu/sponsors/current.html

Annex 2 - Metrics and methodology

This annex on methods and metrics provides background information on material used in the Working Group III Contribution to the Intergovernmental Panel on Climate Change (IPCC) Fifth Assessment Report (WGIII AR5). The material presented in this annex documents metrics, methods, and common data sets that are typically used across multiple chapters of the report. The annex is composed of three parts: Part I introduces standards metrics and common definitions adopted in the report; Part II presents methods to derive or calculate certain quantities used in the report; and Part III provides more detailed background information about common data sources that go beyond what can be included in the chapters. While this structure may help readers to navigate through the annex, it is not possible in all cases to unambiguously assign a certain topic to one of these parts, naturally leading to some overlap between the parts

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

Post-2020 climate agreements in the major economies assessed in the light of global models

Integrated assessment models can help in quantifying the implications of international climate agreements and regional climate action. This paper reviews scenario results from model intercomparison projects to explore different possible outcomes of post-2020 climate negotiations, recently announced pledges and their relation to the 2 °C target. We provide key information for all the major economies, such as the year of emission peaking, regional carbon budgets and emissions allowances. We highlight the distributional consequences of climate policies, and discuss the role of carbon markets for financing clean energy investments, and achieving efficiency and equity

A Proposal for the Attribution of Market Leakage to CDM Projects

Economic models suggest that in many cases, market leakage rates of greenhouse gas abatement reach the two-digit percentage range. Consequently, the Marrakesh Accords require Clean Development Mechanism (CDM) projects to account for leakage. Despite this, most project proponents neglect market leakage for their project, because the influence of an individual project on market prices seems to be negligible. Insufficient leakage accounting is facilitated by a lack of theories and applicable proposals regarding the quantification and attribution of leakage effects. The aim of this paper is to develop a proposal for the attribution of market leakage effects to CDM projects. To this purpose, we identify the transmission mechanisms for CDM project leakage, investigate the current practice of leakage accounting, and analyse alternative attribution methods for leakage effects that are transmitted through price changes. We find that project-specific approaches must fail to take account of such leakage effects. Consequently, we propose to estimate aggregate market leakage effects and attribute them proportionally to individual projects. Our proposal is based on commodity-specific leakage factors which can be applied by project developers to any emission reductions that are associated with a project's leakage-relevant demand or supply changes. The proposal is conservative, equitable, incentive compatible and applicable at manageable costs

Energy Sprawl or Energy Efficiency: Climate Policy Impacts on Natural Habitat for the United States of America

Concern over climate change has led the U.S. to consider a cap-and-trade system to regulate emissions. Here we illustrate the land-use impact to U.S. habitat types of new energy development resulting from different U.S. energy policies. We estimated the total new land area needed by 2030 to produce energy, under current law and under various cap-and-trade policies, and then partitioned the area impacted among habitat types with geospatial data on the feasibility of production. The land-use intensity of different energy production techniques varies over three orders of magnitude, from 1.9–2.8 km2/TW hr/yr for nuclear power to 788–1000 km2/TW hr/yr for biodiesel from soy. In all scenarios, temperate deciduous forests and temperate grasslands will be most impacted by future energy development, although the magnitude of impact by wind, biomass, and coal to different habitat types is policy-specific. Regardless of the existence or structure of a cap-and-trade bill, at least 206,000 km2 will be impacted without substantial increases in energy efficiency, which saves at least 7.6 km2 per TW hr of electricity conserved annually and 27.5 km2 per TW hr of liquid fuels conserved annually. Climate policy that reduces carbon dioxide emissions may increase the areal impact of energy, although the magnitude of this potential side effect may be substantially mitigated by increases in energy efficiency. The possibility of widespread energy sprawl increases the need for energy conservation, appropriate siting, sustainable production practices, and compensatory mitigation offsets