Balancing Costs and Benefits: Designing effective global climate policy in an uncertain landscape

As the world continues to emit large amounts of greenhouse gas emissions, the global mean temperature has already increased by 1.1°C, and could increase to over 3°C by the end of the century if no climate policies are implemented. This would lead to unprecedented, widespread and devastating impacts of climate change. The emission of greenhouse gases needs to be reduced drastically to limit these impacts. However, determining optimal climate policy (including the level of ambition) is very challenging, mainly because climate change is a long-term problem with many uncertainties, and because damages are expected to occur unequally over regions and generations. In this thesis, we combine new estimates of the economic costs of climate change and compare those with the costs of reducing emissions through climate policies by examining various aspects of cost-optimal climate policy. To that end, the main research question of this thesis is: “How could climate policy be effectively designed on the basis of cost-benefit analysis, taking into account new insights in the costs of climate policy, the damages of climate change, and key uncertainties?” To answer this question, we have developed a new Integrated Assessment Model, called MIMOSA, which combines the geophysical aspects of climate change with the human and socio-economic aspects. This research has led to the following main conclusions. The uncertainty in climate change damage estimates is found to have a large impact on the optimal design of climate policy. Moreover, effective climate policy should consider key uncertainties when basing decisions on cost-benefit analyses. The uncertainty in climate damage estimates accounts for 50% of the uncertainty in determining the optimal temperature target, while the uncertainty in mitigation costs, the discount rate, and the damage function account in equal parts for uncertainty in the initial carbon price in cost-effectiveness setting. The benefits from avoided damages outweigh the mitigation costs required to stay well below 2°C for almost all uncertainty estimates, except when damages turn out to be very low. This provides strong economic validation of the Paris Agreement. Under medium assumptions of damages and discounting, the cost-optimal temperature is below 2°C, and for low discount rates or high damages, this drops to 1.5°C. Moreover, the Benefit-Cost Ratio is 1.5-3.9 for a well-below 2°C target. The benefits, however, occur mostly in the second half of the century and beyond, while the mitigation costs mostly happen upfront, earlier in the 21st century. These climate impacts are not equally distributed across regions. It is therefore important to also take damages into account when considering equitable distributions of mitigation effort. Finally, cost-benefit analysis using Integrated Assessment Models is a useful tool to support climate policy assessment, but requires up-to-date estimates of climate damages and mitigation costs, needs a clear and transparent incorporation of key uncertainties, and should be complemented with more specialised and detailed tools to design effective climate policies

Disutility of climate change damages warrants much stricter climate targets

Cost-benefit integrated assessment models (IAMs) inform the policy deliberation process by determining cost-optimal greenhouse gas emission reduction pathways based on economic considerations. These models seek to maximise economic utility and treat estimates of climate impacts (damages) and mitigation costs at par as GDP losses, having the same impact on utility reduction. However, prospect theory suggests that a certain level of climate damages could be valued higher by society than the same level of mitigation costs, as climate damages often occur as sudden unexpected events. In this paper, we show how this concept could be taken into account in cost-benefit IAMs and explore possible consequences on optimal mitigation pathways. Our results suggest that compared to the standard utility approach, capturing explicit aversion to climate impact incidence shows optimal pathways with earlier and deeper emission reduction, lowering both net-negative emissions and mid-century temperature peaks in line with stringent Paris Agreement targets

Disutility of climate change damages may warrant much stricter climate targets

Cost-benefit integrated assessment models (IAMs) inform the policy deliberation process by determining cost-optimal greenhouse gas emission reduction pathways based on economic considerations. These models seek to maximise economic utility and treat estimates of climate impacts (damages) and mitigation costs at par as GDP losses, having the same impact on utility reduction. However, prospect theory suggests that a certain level of climate damages could be valued higher by society than the same level of mitigation costs, as climate damages often occur as sudden unexpected events. In this paper, we show how this concept could be taken into account in cost-benefit IAMs and explore possible consequences on optimal mitigation pathways. Our results suggest that compared to the standard utility approach, capturing explicit aversion to climate impact incidence shows optimal pathways with earlier and deeper emission reduction, lowering both net-negative emissions and mid-century temperature peaks in line with stringent Paris Agreement targets

On the consensus in climate policy scenarios

Analysis of large scenario databases has become a critical tool for identifying climate mitigation strategies, as shown in the latest IPCC report. However, key elements of these strategies differ significantly among scenarios. Possible reasons include differences in climate target, models used, and assumptions on behavioral, technological and socio-economic developments. For policymaking, it is important to know which of these factors are the main cause of the spread, but quantification of this is still missing. Here, we aim to identify consensus in climate policy scenarios by analyzing how much of the variance in scenario outcomes can be explained by these factors, using Sobol decomposition. Some results, e.g. concerning future use of fossil and renewable resources, are mainly determined by climate target, while others, such as the composition of different renewables in the electricity mix and key outcomes of end-use sectors are more model dependent. Scenario aspects beyond model and climate outcome determine only a limited part of the variation, e.g., in nuclear power and hydrogen use, which suggests the need of more cross-model scenario variation. The outcomes put mitigation strategies in a new perspective by identifying which findings on the energy transition are robust and reveal key areas for future scenario development, model improvement and research

Spread in climate policy scenarios unravelled

Analysis of climate policy scenarios has become an important tool for identifying mitigation strategies, as shown in the latest Intergovernmental Panel on Climate Change Working Group III report 1. The key outcomes of these scenarios differ substantially not only because of model and climate target differences but also because of different assumptions on behavioural, technological and socio-economic developments 2-4. A comprehensive attribution of the spread in climate policy scenarios helps policymakers, stakeholders and scientists to cope with large uncertainties in this field. Here we attribute this spread to the underlying drivers using Sobol decomposition 5, yielding the importance of each driver for scenario outcomes. As expected, the climate target explains most of the spread in greenhouse gas emissions, total and sectoral fossil fuel use, total renewable energy and total carbon capture and storage in electricity generation. Unexpectedly, model differences drive variation of most other scenario outcomes, for example, in individual renewable and carbon capture and storage technologies, and energy in demand sectors, reflecting intrinsic uncertainties about long-term developments and the range of possible mitigation strategies. Only a few scenario outcomes, such as hydrogen use, are driven by other scenario assumptions, reflecting the need for more scenario differentiation. This attribution analysis distinguishes areas of consensus as well as strong model dependency, providing a crucial step in correctly interpreting scenario results for robust decision-making

Decomposition analysis of per capita emissions : a tool for assessing consumption changes and technology changes within scenarios

Recent studies show that behaviour changes can provide an essential contribution to achieving the Paris climate targets. Existing climate change mitigation scenarios primarily focus on technological change and underrepresent the possible contribution of behaviour change. This paper presents and applies a methodology to decompose the factors contributing to changes in per capita emissions in scenarios. With this approach, we determine the relative contribution to total emissions from changes in activity, the way activities are carried out, the intensity of activities, as well as fuel choice. The decomposition tool breaks down per capita emissions loosely following the Kaya Identity, allowing a comparison between the contributions of technology and consumption changes among regions and between various scenarios. We illustrate the use of the tool by applying it to three previously-published scenarios; a baseline scenario, a scenario with a selection of behaviour changes, and a 2 degrees C scenario with the same selection of behaviour changes. Within these scenarios, we explore the contribution of technology and consumption changes to total emission changes in the transport and residential sector, for a selection of both developed and developing regions. In doing so, the tool helps identify where specifically (i.e. via consumption or technology factors) different measures play a role in mitigating emissions and expose opportunities for improved representation of behaviour changes in integrated assessment models. This research shows the value of the decomposition tool and how the approach could be flexibly replicated for different global models based on available variables and aims. The application of the tool to previously-published scenarios shows substantial differences in consumption and technology changes from CO2 price and behaviour changes, in transport and residential per capita emissions and between developing and developed regions. Furthermore, the tool's application can highlight opportunities for future scenario development of a more nuanced and heterogeneous representation of behaviour and lifestyle changes in global models.Peer reviewe

The IPCC Sixth Assessment Report WGIII climate assessment of mitigation pathways: from emissions to global temperatures

While the Intergovernmental Panel on Climate Change (IPCC) physical science reports usually assess a handful of future scenarios, the Working Group III contribution on climate mitigation to the IPCC's Sixth Assessment Report (AR6 WGIII) assesses hundreds to thousands of future emissions scenarios. A key task in WGIII is to assess the global mean temperature outcomes of these scenarios in a consistent manner, given the challenge that the emissions scenarios from different integrated assessment models (IAMs) come with different sectoral and gas-to-gas coverage and cannot all be assessed consistently by complex Earth system models. In this work, we describe the "climate-assessment"workflow and its methods, including infilling of missing emissions and emissions harmonisation as applied to 1202 mitigation scenarios in AR6 WGIII. We evaluate the global mean temperature projections and effective radiative forcing (ERF) characteristics of climate emulators FaIRv1.6.2 and MAGICCv7.5.3 and use the CICERO simple climate model (CICERO-SCM) for sensitivity analysis. We discuss the implied overshoot severity of the mitigation pathways using overshoot degree years and look at emissions and temperature characteristics of scenarios compatible with one possible interpretation of the Paris Agreement. We find that the lowest class of emissions scenarios that limit global warming to "1.5 ° C (with a probability of greater than 50 %) with no or limited overshoot"includes 97 scenarios for MAGICCv7.5.3 and 203 for FaIRv1.6.2. For the MAGICCv7.5.3 results, "limited overshoot"typically implies exceedance of median temperature projections of up to about 0.1 ° C for up to a few decades before returning to below 1.5 ° C by or before the year 2100. For more than half of the scenarios in this category that comply with three criteria for being "Paris-compatible", including net-zero or net-negative greenhouse gas (GHG) emissions, median temperatures decline by about 0.3-0.4 ° C after peaking at 1.5-1.6 ° C in 2035-2055. We compare the methods applied in AR6 with the methods used for SR1.5 and discuss their implications. This article also introduces a "climate-assessment"Python package which allows for fully reproducing the IPCC AR6 WGIII temperature assessment. This work provides a community tool for assessing the temperature outcomes of emissions pathways and provides a basis for further work such as extending the workflow to include downscaling of climate characteristics to a regional level and calculating impacts

The IPCC Sixth Assessment Report WGIII climate assessment of mitigation pathways: from emissions to global temperatures

While the Intergovernmental Panel on Climate Change (IPCC) physical science reports usually assess a handful of future scenarios, the Working Group III contribution on climate mitigation to the IPCC's Sixth Assessment Report (AR6 WGIII) assesses hundreds to thousands of future emissions scenarios. A key task in WGIII is to assess the global mean temperature outcomes of these scenarios in a consistent manner, given the challenge that the emissions scenarios from different integrated assessment models (IAMs) come with different sectoral and gas-to-gas coverage and cannot all be assessed consistently by complex Earth system models. In this work, we describe the “climate-assessment” workflow and its methods, including infilling of missing emissions and emissions harmonisation as applied to 1202 mitigation scenarios in AR6 WGIII. We evaluate the global mean temperature projections and effective radiative forcing (ERF) characteristics of climate emulators FaIRv1.6.2 and MAGICCv7.5.3 and use the CICERO simple climate model (CICERO-SCM) for sensitivity analysis. We discuss the implied overshoot severity of the mitigation pathways using overshoot degree years and look at emissions and temperature characteristics of scenarios compatible with one possible interpretation of the Paris Agreement. We find that the lowest class of emissions scenarios that limit global warming to “1.5 ∘C (with a probability of greater than 50 %) with no or limited overshoot” includes 97 scenarios for MAGICCv7.5.3 and 203 for FaIRv1.6.2. For the MAGICCv7.5.3 results, “limited overshoot” typically implies exceedance of median temperature projections of up to about 0.1 ∘C for up to a few decades before returning to below 1.5 ∘C by or before the year 2100. For more than half of the scenarios in this category that comply with three criteria for being “Paris-compatible”, including net-zero or net-negative greenhouse gas (GHG) emissions, median temperatures decline by about 0.3–0.4 ∘C after peaking at 1.5–1.6 ∘C in 2035–2055. We compare the methods applied in AR6 with the methods used for SR1.5 and discuss their implications. This article also introduces a “climate-assessment” Python package which allows for fully reproducing the IPCC AR6 WGIII temperature assessment. This work provides a community tool for assessing the temperature outcomes of emissions pathways and provides a basis for further work such as extending the workflow to include downscaling of climate characteristics to a regional level and calculating impacts

The IPCC Sixth Assessment Report WGIII climate assessment of mitigation pathways: from emissions to global temperatures

While the Intergovernmental Panel on Climate Change (IPCC) physical science reports usually assess a handful of future scenarios, the Working Group III contribution on climate mitigation to the IPCC's Sixth Assessment Report (AR6 WGIII) assesses hundreds to thousands of future emissions scenarios. A key task in WGIII is to assess the global mean temperature outcomes of these scenarios in a consistent manner, given the challenge that the emissions scenarios from different integrated assessment models (IAMs) come with different sectoral and gas-to-gas coverage and cannot all be assessed consistently by complex Earth system models. In this work, we describe the “climate-assessment” workflow and its methods, including infilling of missing emissions and emissions harmonisation as applied to 1202 mitigation scenarios in AR6 WGIII. We evaluate the global mean temperature projections and effective radiative forcing (ERF) characteristics of climate emulators FaIRv1.6.2 and MAGICCv7.5.3 and use the CICERO simple climate model (CICERO-SCM) for sensitivity analysis. We discuss the implied overshoot severity of the mitigation pathways using overshoot degree years and look at emissions and temperature characteristics of scenarios compatible with one possible interpretation of the Paris Agreement. We find that the lowest class of emissions scenarios that limit global warming to “1.5 ∘C (with a probability of greater than 50 %) with no or limited overshoot” includes 97 scenarios for MAGICCv7.5.3 and 203 for FaIRv1.6.2. For the MAGICCv7.5.3 results, “limited overshoot” typically implies exceedance of median temperature projections of up to about 0.1 ∘C for up to a few decades before returning to below 1.5 ∘C by or before the year 2100. For more than half of the scenarios in this category that comply with three criteria for being “Paris-compatible”, including net-zero or net-negative greenhouse gas (GHG) emissions, median temperatures decline by about 0.3–0.4 ∘C after peaking at 1.5–1.6 ∘C in 2035–2055. We compare the methods applied in AR6 with the methods used for SR1.5 and discuss their implications. This article also introduces a “climate-assessment” Python package which allows for fully reproducing the IPCC AR6 WGIII temperature assessment. This work provides a community tool for assessing the temperature outcomes of emissions pathways and provides a basis for further work such as extending the workflow to include downscaling of climate characteristics to a regional level and calculating impacts

IPCC, 2023: Climate Change 2023: Synthesis Report, Summary for Policymakers. Contribution of Working Groups I, II and III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change [Core Writing Team, H. Lee and J. Romero (eds.)]. IPCC, Geneva, Switzerland.

This Synthesis Report (SYR) of the IPCC Sixth Assessment Report (AR6) summarises the state of knowledge of climate change, its widespread impacts and risks, and climate change mitigation and adaptation. It integrates the main findings of the Sixth Assessment Report (AR6) based on contributions from the three Working Groups1 , and the three Special Reports. The summary for Policymakers (SPM) is structured in three parts: SPM.A Current Status and Trends, SPM.B Future Climate Change, Risks, and Long-Term Responses, and SPM.C Responses in the Near Term.This report recognizes the interdependence of climate, ecosystems and biodiversity, and human societies; the value of diverse forms of knowledge; and the close linkages between climate change adaptation, mitigation, ecosystem health, human well-being and sustainable development, and reflects the increasing diversity of actors involved in climate action. Based on scientific understanding, key findings can be formulated as statements of fact or associated with an assessed level of confidence using the IPCC calibrated language