Economic and Structural Database for the MEDPRO Project. MEDPRO Report No. 5, May 2013

This report presents the economic and structural database compiled for the MEDPRO project. The database includes governance, infrastructure, finance, environment, energy, agricultural data and development indicators for the 11 southern and eastern Mediterranean countries (SEMCs) studied in the MEDPRO project. The report further details the data and the methods used for the construction of social accounting, bilateral trade, consumption and investment matrices for each of the SEMCs

Impact of low oil prices on the EU economy

The report describes the importance of oil for the EU economy and analyses the potential economic effects that current low oil prices since mid-2014 may have in the EU28 economy. Further it assesses how the current oil price decrease may evolve up to 2020 and the consequences for global oil consumption. The analysis shows that a decrease of the oil price from US$100 to US$50 may lead to a GDP gain of about 0.7%, both on a global level and in the EU28, driven by private consumption and investment. The global gains are not evenly distributed. Net oil importing countries gain, whereas oil exporting countries lose. The analysis mainly focuses on the EU28 and it shows that the more oil-intensive countries and sectors gain more than the rest of the economy. A 50% decrease of the oil price may generate up to 3 million additional jobs (1.3% of the total labour force). Interestingly, oil-intensive sectors do not necessarily improve their competitiveness vis-à-vis their competitors in other regions, as non-EU producers may be less energy efficient and therefore benefit more from low oil prices.JRC.J.1-Economics of Climate Change, Energy and Transpor

Economic impacts of EU clean air policies assessed in a CGE framework

This paper assesses the macroeconomic and sectoral impacts of the “Clean Air Policy Package” proposed by the European Commission in December 2013. The analysis incorporates both the expenditures necessary to implement the policy by 2030 and the resulting positive feedback effects on human health and crop production. A decomposition analysis identifies the important drivers of the macroeconomic impacts. We show that while expenditure on pollution abatement is a cost for the abating sectors, it also generates an increased demand for the sectors that produce the goods required for pollution abatement. Moreover, we find that positive feedback effects, particularly those related to health can offset the resource costs associated to the clean air policy and result in positive macroeconomic impacts for the economy of the European Union

Economy-wide effects of coastal flooding due to sea level rise: A multi-model simultaneous treatment of mitigation, adaptation, and residual impacts

This article presents a multi-model assessment of the macroeconomic impacts of coastal flooding due to sea level rise and the respective economy-wide implications of adaptation measures for two greenhouse gas (GHG) concentration targets, namely the Representative Concentration Pathways (RCP)2.6 and RCP4.5, and subsequent temperature increases. We combine our analysis, focusing on the global level, as well as on individual G20 countries, with the corresponding stylized RCP mitigation efforts in order to understand the implications of interactions across mitigation, adaptation and sea level rise on a macroeconomic level. Our global results indicate that until the middle of this century, differences in macroeconomic impacts between the two climatic scenarios are small, but increase substantially towards the end of the century. Moreover, direct economic impacts can be partially absorbed by substitution effects in production processes and via international trade effects until 2050. By 2100 however, we find that this dynamic no longer holds and economy-wide effects become even larger than direct impacts. The disturbances of mitigation efforts to the overall economy may in some regions and for some scenarios lead to a counterintuitive result, namely to GDP losses that are higher in RCP26 than in RCP45, despite higher direct coastal damages in the latter scenario. Within the G20, our results indicate that China, India and Canada will experience the highest macroeconomic impacts, in line with the respective direct climatic impacts, with the two first large economies undertaking the highest mitigation efforts in a cost-efficient global climate action. A sensitivity analysis of varying socioeconomic assumptions highlights the role of climate-resilient development as a crucial complement to mitigation and adaptation efforts

Reducing stranded assets through early action in the Indian power sector

Cost-effective achievement of the Paris Agreement's long-term goals requires the unanimous phase-out of coal power generation by mid-century. However, continued investments in coal power plants will make this transition difficult. India is one of the major countries with significant under construction and planned increase in coal power capacity. To ascertain the likelihood and consequences of the continued expansion of coal power for India's future mitigation options, we use harmonised scenario results from national and global models along with projections from various government reports. Both these approaches estimate that coal capacity is expected to increase until 2030, along with rapid developments in wind and solar power. However, coal capacity stranding of the order of 133–237 GW needs to occur after 2030 if India were to pursue an ambitious climate policy in line with a well-below 2 °C target. Earlier policy strengthening starting after 2020 can reduce stranded assets (14–159 GW) but brings with it political economy and renewable expansion challenges. We conclude that a policy limiting coal plants to those under construction combined with higher solar targets could be politically feasible, prevent significant stranded capacity, and allow higher mitigation ambition in the future

Reducing stranded assets through early action in the Indian power sector

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Energy system developments and investments in the decisive decade for the Paris Agreement goals

The Paris Agreement does not only stipulate to limit the global average temperature increase to well below 2 °C, it also calls for 'making finance flows consistent with a pathway towards low greenhouse gas emissions'. Consequently, there is an urgent need to understand the implications of climate targets for energy systems and quantify the associated investment requirements in the coming decade. A meaningful analysis must however consider the near-term mitigation requirements to avoid the overshoot of a temperature goal. It must also include the recently observed fast technological progress in key mitigation options. Here, we use a new and unique scenario ensemble that limit peak warming by construction and that stems from seven up-to-date integrated assessment models. This allows us to study the near-term implications of different limits to peak temperature increase under a consistent and up-to-date set of assumptions. We find that ambitious immediate action allows for limiting median warming outcomes to well below 2 °C in all models. By contrast, current nationally determined contributions for 2030 would add around 0.2 °C of peak warming, leading to an unavoidable transgression of 1.5 °C in all models, and 2 °C in some. In contrast to the incremental changes as foreseen by current plans, ambitious peak warming targets require decisive emission cuts until 2030, with the most substantial contribution to decarbonization coming from the power sector. Therefore, investments into low-carbon power generation need to increase beyond current levels to meet the Paris goals, especially for solar and wind technologies and related system enhancements for electricity transmission, distribution and storage. Estimates on absolute investment levels, up-scaling of other low-carbon power generation technologies and investment shares in less ambitious scenarios vary considerably across models. In scenarios limiting peak warming to below 2 °C, while coal is phased out quickly, oil and gas are still being used significantly until 2030, albeit at lower than current levels. This requires continued investments into existing oil and gas infrastructure, but investments into new fields in such scenarios might not be needed. The results show that credible and effective policy action is essential for ensuring efficient allocation of investments aligned with medium-term climate targets

Taking stock of national climate policies to evaluate implementation of the Paris Agreement

Many countries have implemented national climate policies to accomplish pledged Nationally Determined Contributions and to contribute to the temperature objectives of the Paris Agreement on climate change. In 2023, the global stocktake will assess the combined effort of countries. Here, based on a public policy database and a multi-model scenario analysis, we show that implementation of current policies leaves a median emission gap of 22.4 to 28.2 GtCO2eq by 2030 with the optimal pathways to implement the well below 2 °C and 1.5 °C Paris goals. If Nationally Determined Contributions would be fully implemented, this gap would be reduced by a third. Interestingly, the countries evaluated were found to not achieve their pledged contributions with implemented policies (implementation gap), or to have an ambition gap with optimal pathways towards well below 2 °C. This shows that all countries would need to accelerate the implementation of policies for renewable technologies, while efficiency improvements are especially important in emerging countries and fossil-fuel-dependent countries

Cost and attainability of meeting stringent climate targets without overshoot

Global emissions scenarios play a critical role in the assessment of strategies to mitigate climate change. The current scenarios, however, are criticized because they feature strategies with pronounced overshoot of the global temperature goal, requiring a long-term repair phase to draw temperatures down again through net-negative emissions. Some impacts might not be reversible. Hence, we explore a new set of net-zero CO2 emissions scenarios with limited overshoot. We show that upfront investments are needed in the near term for limiting temperature overshoot but that these would bring long-term economic gains. Our study further identifies alternative configurations of net-zero CO2 emissions systems and the roles of different sectors and regions for balancing sources and sinks. Even without net-negative emissions, CO2 removal is important for accelerating near-term reductions and for providing an anthropogenic sink that can offset the residual emissions in sectors that are hard to abate

Energy system developments and investments in the decisive decade for the Paris Agreement goals

The Paris Agreement does not only stipulate to limit the global average temperature increase to well below 2 °C, it also calls for 'making finance flows consistent with a pathway towards low greenhouse gas emissions'. Consequently, there is an urgent need to understand the implications of climate targets for energy systems and quantify the associated investment requirements in the coming decade. A meaningful analysis must however consider the near-term mitigation requirements to avoid the overshoot of a temperature goal. It must also include the recently observed fast technological progress in key mitigation options. Here, we use a new and unique scenario ensemble that limit peak warming by construction and that stems from seven up-to-date integrated assessment models. This allows us to study the near-term implications of different limits to peak temperature increase under a consistent and up-to-date set of assumptions. We find that ambitious immediate action allows for limiting median warming outcomes to well below 2 °C in all models. By contrast, current nationally determined contributions for 2030 would add around 0.2 °C of peak warming, leading to an unavoidable transgression of 1.5 °C in all models, and 2 °C in some. In contrast to the incremental changes as foreseen by current plans, ambitious peak warming targets require decisive emission cuts until 2030, with the most substantial contribution to decarbonization coming from the power sector. Therefore, investments into low-carbon power generation need to increase beyond current levels to meet the Paris goals, especially for solar and wind technologies and related system enhancements for electricity transmission, distribution and storage. Estimates on absolute investment levels, up-scaling of other low-carbon power generation technologies and investment shares in less ambitious scenarios vary considerably across models. In scenarios limiting peak warming to below 2 °C, while coal is phased out quickly, oil and gas are still being used significantly until 2030, albeit at lower than current levels. This requires continued investments into existing oil and gas infrastructure, but investments into new fields in such scenarios might not be needed. The results show that credible and effective policy action is essential for ensuring efficient allocation of investments aligned with medium-term climate targets