EP06: Energy and Climate Change
Dr Jean-Francois Mercure,
Pablo Salas,
jm801@cam.ac.uk
pas80@cam.ac.uk
Lecture 7 – Climate change mitigation policy
Lecture 7-H1: Climate policy as viewed in classical economics
- Integrated Assessment Models
- Introduction
- IAMs from Energy Models – the 70s
- Beyond price elasticity
- Some early examples of energy models
- First energy-climate modules
- IAMs in the 90s
- Connections with other climate science research
- IAMs and scenarios of climate change
- The IPCC
- IPCC and the Assessment Reports
- IPCC and the scientific knowledge
- Optimal emission trajectories
- Emission Scenarios: IS02 and SRES
- Emission Scenarios: RCPs.
- Fourth Assessment Report
- Fifth Assessment Report
Lecture 7 – Climate change mitigation policy
- Example of neoclassical modelling
- DICE
- The Stern Review
Lecture 7-H2: Technology R&D policy for climate change mitigation
- Grubb’s 3 pillars of sustainable development
- Smarter choices
- The end-use toolbox
- The innovation chain and technology policy:
- The innovation chain
- Bridging the technology valley of death
- Technology push and pull policy
- DIAM Model
- Motivation
- Mitigation Costs
- Climate Damages
- Results & Conclusions
Lecture 7-H1: Climate policy as viewed in classical economics
- Integrated Assessment Models
- Introduction
Most economic studies of climate change integrate geophysical stocks and flows with
economic stocks and flows. From the economic point of view, valuation (prices) are required
to analyse market transactions. Therefore, all the “goods” are transformed into a common unit
of account, which can be money (using “purchasing power parity” or PPP), equivalent
consumption, or utility.
Given the complexity of the problem, scientists have tried to model the interaction of the
climate and the economy using Integrated Assessment Modelling (IAM). In the third
assessment report, the IPCC defined Integrated Assessment as an “interdisciplinary process
of combining, interpreting, and communicating knowledge from diverse scientific disciplines in
such a way that the whole set of cause-effect interactions of a problem can be evaluated”*
Four approaches identified by the IPCC to IA for climate change**:
• Computer-aided modelling
• Scenario analysis
• Simulation gaming and participatory IA
• Qualitative assessment
*IPCC, (2001). Third Assessment Report. Climate Change 2001 - Working Group III. Mitigation. Technical Summary.
**Schneider, S. 2005. Integrated Assessment Modeling of Global Climate Change: Much Has Been Learned - Still a Long and Bumpy Road
Ahead. The Integrated Assessment Journal. Vol. 5 (1), pp. 41–75.
Lecture 7-H1: Climate policy as viewed in classical economics
- Integrated Assessment Models
- IAMs from Energy Models – the 70s
Integrated assessment models of climate change grew organically from energy models.
Before 1973 Energy demand determined mainly by GDP growth rate. Modelling approach:
Minimisation of energy supply costs given exogenous demand. It made sense
during 50s-70s, given the lack of abrupt discontinuities in energy prices.
After 1973 Demand trend extrapolation has proven unsatisfactory. Energy models need to
incorporate more accurate price interactions and feedback mechanisms. Rising
energy prices affect energy consumption and GDP growth. Partial equilibrium
replaces general equilibrium analysis.
Demand (willingness to pay) as
decreasing continuously
differentiable function, and supply
(incremental costs), step-function.
Demand determined statistically
Supply determined using linear
programming.
Equilibrium price maximises shaded
area (net economic benefit).
Manne, A., Richels, R., Weyant, J. 1979. “Feature Article - Energy
Policy Modeling: A Survey”. Operations Research 27(1):1-36.
Lecture 7-H1: Climate policy as viewed in classical economics
- Integrated Assessment Models
- Beyond price elasticity
The classical interaction between GDP and energy demand was represented by:
However, there are feedbacks between the energy sector and the rest of the economy. GDP
growth and energy price are interdependent.
The partial equilibrium price elasticity concept was
replaced by the “two inputs economy”:
Elasticity of substitution: at any given
point, holding output constant, the inputmix adjusts to stay in an optimal point. It
measures the substitutability between
goods.
Manne, A., Richels, R., Weyant, J. 1979. “Feature Article - Energy Policy Modeling: A Survey”.
Operations Research 27(1):1-36.
Lecture 7-H1: Climate policy as viewed in classical economics
- Integrated Assessment Models
- Some early examples of energy models
Some of the energy models of that time:
Models
PIES
Kennedy
Baughman
- Joskow
ALPS
ETA-MACRO
Policies Issues
addressed
U.S. oil
dependence
Pricing policies of
OPEC
Electricity
pricing
Commercialisation
of nuclear reactors
US economic growth
vs energy use
Number of
regions
9 U.S. Regions
Non communist
world, 6 regions
9 U.S. regions
U.S. , 1 region
U.S. , 1 region
ETA-Macro was one of the first models
to imbed an energy system in a full
economic growth model
Manne, A., Richels, R., Weyant, J. 1979. “Feature Article - Energy Policy Modeling: A Survey”. Operations Research 27(1):1-36.
Lecture 7-H1: Climate policy as viewed in classical economics
- Integrated Assessment Models
- First energy-climate modules
While scientists at that time started to identify climate change as a key long-term issue, energy
models did not explicitly included CO2 emissions or climate change in their analyses.
One of the precursors in this area was William Nordhaus, who published one of the first
energy-economic models including a climate module*.
Model “Optimizing the Energy-Environment System”*
Eq. (1) and (2) describe the energy system, eq.
(3) describes cumulative emissions, and eq. (4)
and (5) describe the mass of carbon on different
stratums.
*Nordhaus, W., 1977. “Economic Growth and Climate: The Carbon Dioxide Problem”. The American Economic Review, Vol. 67 (1), pp. 341-346
Lecture 7-H1: Climate policy as viewed in classical economics
- Integrated Assessment Models
- First climate modules (cont...)
Nordhaus, W., 1977. “Strategies for the Control of Carbon Dioxide”. Cowles Foundation Discussion Paper N. 443.
Lecture 7-H1: Climate policy as viewed in classical
economics
- Integrated Assessment Models
- IAMs in the 90s
End-to-end
characterisation
of IAMs
William Nordhaus (“Optimizing the Energy-Environment System”
model) and Alan Manne (ETA-MACRO model), where precursors
in the development if IAMs. Nordhaus’ model was the first model
that combines energy conversion, emissions and atmospheric CO2
concentration.
Key
components
of full scale
IAMs
IPCC, (1995). Second Assessment Report. Climate Change 1995 - Working Group III. Economic and Social
Dimensions of Climate Change.
Lecture 7-H1: Climate policy as viewed in classical economics
- Integrated Assessment Models
- Connections with other climate science research
Integrated Assessment Modeling Consortium (IAMC). http://www.iamconsortium.org
Lecture 7-H1: Climate policy as viewed in classical economics
- Integrated Assessment Models
- IAMs and scenarios of climate change
Moss et al. 2010. “The next generation of scenarios for climate change research and assessment”. Nature, 463, 747-756.
Lecture 7-H1: Climate policy as viewed in classical economics
- The IPCC
- IPCC and the Assessment Reports
The Intergovernmental Panel on Climate Change (IPCC) was created in 1988 by the World
Meteorological Organization (WMO) and the United Nations Environment Program
(UNEP). Its first task was to prepare a comprehensive review and recommendations with
respect to the state of knowledge of the science of climate change; the social and economic
impact of climate change, and possible response strategies and elements for inclusion in a
possible future international convention on climate.
Today the IPCC's role is as defined in Principles Governing IPCC Work, "...to assess on a
comprehensive, objective, open and transparent basis the scientific, technical and socioeconomic information relevant to understanding the scientific basis of risk of human-induced
climate change, its potential impacts and options for adaptation and mitigation. IPCC reports
should be neutral with respect to policy, although they may need to deal objectively with
scientific, technical and socio-economic factors relevant to the application of particular policies.”
Assessment Reports: 1990, 1995, 2001, 2007 and 2014
The First Assessment Report (1990) played a decisive role in leading to the creation of the
United Nations Framework Convention on Climate Change (UNFCCC), the key
international treaty to reduce global warming and cope with the consequences of climate
change. The Second Assessment Report provided important material drawn on by negotiators
in the run-up to adoption of the Kyoto Protocol in 1997.
Lecture 7-H1: Climate policy as viewed in classical economics
- The IPCC
- IPCC and the scientific knowledge
The IPCC reviews and assesses the most recent scientific, technical and socio-economic
information produced worldwide relevant to the understanding of climate change. It does not
conduct any research nor does it monitor climate related data or parameters.
IPCC, (1995). Second Assessment Report. Climate Change 1995 - Working Group III. Economic and Social Dimensions of Climate Change.
Lecture 7-H1: Climate policy as viewed in classical
economics
- The IPCC
- 1st (top right), 2nd (bottom left) and 3rd
(bottom right) AR optimal emission
trajectories.
IPCC, (1990). First Assessment Report. Climate Change 1990 – Working Group III. The IPCC Response Strategies.
IPCC, (1995). Second Assessment Report. Climate Change 1995 - Working Group III. Economic and Social Dimensions of Climate Change.
IPCC, (2001). Third Assessment Report. Climate Change 2001 - Working Group III. Mitigation. Technical Summary.
Lecture 7-H1: Climate policy as viewed in classical economics
- The IPCC
- Emission Scenarios: IS02 and SRES.
IS92: In 1992. the IPCC produced six (a-f) global and
regional greenhouse gases (GHGs) emissions scenarios
projected from 1990 through 2100 (for the 2nd
Assessment Report).
“A set of updated scenarios have been developed for
use in modelling studies which describe a wide range of
possible future emissions in the absence of a
coordinated policy response to climate change”.
SRES: In 2000, the IPCC produced four family of
scenarios, “to describe consistently the relationships
between emission driving forces and their evolution and
add context for the scenario quantification”
IPCC (1992). The 1992 IPCC Supplement: Scientific Assessment. IPCC Working Group I.
IPCC (2000). Special Report. Emission Scenarios. Summary for Policy Makers. IPCC Working Group III.
Lecture 7-H1: Climate policy as viewed in classical economics
- The IPCC
- Emission Scenarios: SRES.
A1: Globally fast economic growth and
development
A1F1: fossil intensive
A1T: non-fossil energy sources
A1B: balanced
A2: Regionally oriented economic development
B1: Global environmental sustainability
B2: Regional environmental sustainability
tech.
More Economic
A1
More
Global
B: balanced
FI: fossil intensive
T: non-fossil
A2
B1
B2
More
Regional
More Environmental
IPCC (2000). Special Report. Emission Scenarios. Summary for Policy Makers. IPCC Working Group III.
Lecture 7-H1: Climate policy as
viewed in classical economics
- The IPCC
- Emission Scenarios: RCPs.
The scientific community designed the
“representative
concentration
pathways”
(RCPs) in three phases:
1) Development of a scenario set
containing emission, concentration and
land-use trajectories
2) A parallel development phase with
climate model runs and development of
new socio-economic scenarios.
3) A final integration and dissemination
phase.
Globally
fast
economic
growth
and
tech.
development
Lecture 7-H1: Climate policy as viewed in classical economics
- The IPCC
- Fourth Assessment Report
The approach taken by the IPCC over the different assessment reports has a clear evolution.
The change relates to the increase in our knowledge and understanding of the science
behind climate change, and also to a better understanding of the human response to it.
Compared to previous assessments, the Fourth Assessment Report paid greater attention to
the integration of climate change with sustainable development policies, the relationship
between mitigation and adaptation and a consistent evaluation of uncertainty and risk.
IPCC, (2007). Fourth Assessment Report. Climate Change 2007 - Working Group III. Mitigation. Ch3. Issues related to mitigation in the long-term context, p 199
IPCC, (2007). Fourth Assessment Report. Climate Change 2007 - Working Group III. Mitigation. Technical Summary, p42
Lecture 7-H1: Climate policy as viewed in classical economics
- The IPCC
- Fifth Assessment Report
Compared to previous reports,
the, the Fifth Assessment
Report puts greater emphasis
on assessing the socioeconomic aspects of climate
change and implications for
sustainable development, risk
management and the framing
of a response through both
adaptation and mitigation.
It provides more detailed
information on regions,
including on climate phenomena
such as monsoons and El Niño.
IPCC, (2013). Fifth Assessment Report. Climate Change 2013 – Working Group I. The Physical Science Basis.
Lecture 7-H1: Climate policy as viewed in classical economics
- Example of neoclassical modelling
- DICE (Nordhaus, 1994,2007,2010)
‘The DICE (Dynamic Integrated model of Climate and the Economy) model views the
economics of climate change from the perspective of neoclassical economic growth
theory. In this approach, economies make investments in capital, education, and
technologies, thereby reducing consumption today, in order to increase consumption in
the future.
The DICE model extends this approach by including the “natural capital” of the climate
system as an additional kind of capital stock. In other words, it views concentrations of
GHGs as negative natural capital, and emissions reductions as investments that
raise the quantity of natural capital (or reduce the negative capital). By devoting output
to emissions reductions, economies reduce consumption today but prevent
economically harmful climate change and thereby increase consumption possibilities in
the future.’
neoclassical economic growth theory
• Identical and rational agents maximise their
consumption.
• Future consumption is compared to current
consumption using a discount rate ρ.
Nordhaus, W. 2011. “Integrated Economic and Climate Modeling”. Cowles Foundation Discussion Paper No. 1839
Lecture 7-H1: Climate policy as viewed in classical economics
- Example of neoclassical modelling
- DICE (cont.)
concentrations of GHGs as negative
natural capital
• Damage function (Ω<1) decreases output (Q)
emissions reductions as investments
• Abatement cost (Λ), increases proportionally
to emissions targets (μ).
By devoting output to emissions
reductions, economies reduce
consumption today
• Abatement actions (Λ, μ), have
a negative impact on output (Q).
Therefore, they decrease current
consumption (C).
Nordhaus, W. 1994. “Managing the Global Commons:
The Economics of Climate Change”. The MIT Press
Lecture 7-H1: Climate policy as viewed in classical economics
- The Stern Review (2006)
“There is still time to avoid the worst impacts of
climate change, if we take strong action now.”
First sentence of the
Summary of
Conclusions of the
Stern Review
‘The [Stern] Review first examines the evidence on the economic impacts of climate
change itself, and explores the economics of stabilising greenhouse gases in the
atmosphere. The second half of the Review considers the complex policy challenges
involved in managing the transition to a low-carbon economy and in ensuring that societies
can adapt to the consequences of climate change that can no longer be avoided’.
‘Most formal modelling in the past has used as a starting point a scenario of 2-3 ºC warming
[...] equivalent to a permanent loss of around 0-3% in global world output compared with
what could have been achieved in a world without climate change [...] However, those
earlier models were too optimistic about warming.
[...] more recent evidence indicates that temperature changes resulting from BAU trends in
emissions may exceed 2-3 ºC by the end of this century [...] With 5-6 ºC warming - which is
a real possibility for the next century - existing models [...] estimate an average 5-10% loss
in global GDP, with poor countries suffering costs in excess of 10% of GDP.’
Stern, N. (2006), Stern Review: The Economics of Climate Change.
Lecture 7-H1: Climate policy as viewed in classical economics
- The Stern Review (cont.)
‘Achieving these deep cuts in emissions will have a
cost. The Review estimates the annual costs of
stabilisation at 500-550ppm CO2e to be around
1% of GDP by 2050 - a level that is significant but
manageable’.
Estimates of the damage costs of climate change
(left panel) and the costs of emission reduction (right
panel) according to the Stern Review and according
to previous studies
Stern, N. (2006), Stern Review: The Economics of Climate Change.
Tol, R. & Yohe, G. (2006). A Review of the Stern Review
Lecture 7-H2: Technology R&D policy for climate change mitigation
- Grubb’s 3 pillars of sustainable development
- Smarter choices
- The end-use toolbox
- The innovation chain and technology policy:
- The innovation chain
- Bridging the technology valley of death
- Technology push and pull policy
- DIAM Model
- Motivation
- Mitigation Costs
- Climate Damages
- Results & Conclusions
Lecture 7-H2: Technology R&D policy for climate change mitigation
- Grubb’s 3 pillars of sustainable development
1. Introduction: Trapped?
2. The Three Domains
• Standards and engagement for smarter choice
Pillar 1
Pillar II
Pillar III
• 3: Energy and Emissions – Technologies and Systems
• 4: Why so wasteful?
• 5: Tried and Tested – Four Decades of Energy Efficiency Policy
• Markets and pricing for cleaner products and processes
• 6: Pricing Pollution – of Truth and Taxes
• 7: Cap-and-trade & offsets: from idea to practice
• 8: Who’s hit? Handling the distributional impacts of carbon pricing
• Investment and incentives for innovation and infrastructure
• 9: Pushing further, pulling deeper
• 10: Transforming systems
• 11: The dark matter of economic growth
12. Conclusions: Changing Course
Routledge/Taylor & Frances, Published March 2014
Lecture 7-H2: Technology R&D policy for climate change mitigation
- Grubb’s 3 pillars of sustainable development
Pillar 1:
Pillar 2:
Pillar 3:
Smarter choices
- Technology/practice
adoption
Markets and pricing
Innovation and institutions
- Pricing the externality, - Technology evolution
energy/carbon markets
- Behavioural Econ,
Choice modelling
- Classical Econ,
optimisation
- Evolutionary Econ,
Transitions theory
- Standards, labelling,
regulatory policy
- Carbon and energy
pricing
- Technology R&D policy:
‘Bridging the valley
of death’
Innovations systems
Lecture 7-H2: Technology R&D policy for climate change mitigation
- Grubb’s 3 pillars of sustainable development
Lecture 7-H2: Technology R&D policy for climate change mitigation
- Smarter choices: Standards and engagement
- Negative costs in the McKinsey curve
Grubb, Planetary Economics, Ch 4 p. 132 (2014)
Lecture 7-H2: Technology R&D policy for climate change mitigation
- Smarter choices: Standards and engagement
- Drivers and Barriers
Grubb, Planetary Economics, Ch 4 p. 136 (2014)
Lecture 7-H2: Technology R&D policy for climate change mitigation
- Smarter choices: Standards and engagement
- The end-use toolbox
Grubb, Planetary Economics, Ch 5. p 180 (2014)
Lecture 7-H2: Technology R&D policy for climate change mitigation
- The innovation chain and technology policy:
- The innovation chain
Grubb, Planetary Economics, Ch 9. p 325 (2014)
Lecture 7-H2: Technology R&D policy for climate change mitigation
- The innovation chain and technology policy:
- Bridging the technology valley of death
Grubb, Planetary Economics, Ch 9. pp 328-332 (2014)
Lecture 7-H2: Technology R&D policy for climate change mitigation
- The innovation chain and technology policy:
- Technology push policy: R&D and technology support
One side of the bridge:
Part of the problem lies in a schism between the modern innovator – e.g. the university
researcher – and commercialisation, which requires different skills and institutional
capabilities/capacities, and access to finance
1. The private sector is not able to bear many of the risks of innovation without very large
expected returns
2. The innovator is not able to access finance to develop working ideas
3. The government is able to pick up this risk for the sake of social benefit, thereby diversifying
government expenditure to support economic performance
Technology push mechanisms
- Intellectual property rights
Ensures ‘monopoly rights’ to the innovator in order to maintain an innovation incentive
- Incubators and technology transfer services:
Offers start-up companies connection between funding sources and research institutes.
e.g. Cambridge Enterprise with angel/venture capital investors
- Public-private partnerships
The government picking up part of the costs/risks, e.g. Carbon Trust technology accelerators
- Government market engagement
Government funded demonstration projects or deployment programmes,
e.g. in Danemark for wind power
Grubb, Planetary Economics, Ch 9. p. 335 (2014)
Lecture 7-H2: Technology R&D policy for climate change mitigation
- The innovation chain and technology policy:
- Demand pull policy
The other side of the bridge:
Part of the problem is to generate an actual market for new technologies to be adopted. Under
the promise that diffusion would yield enough cost reductions to make technologies competitive,
the creation of a market is crucial from the start.
Demand pull mechanisms (in the low carbon electricity context)
- Carbon pricing, emissions taxes
Amount paid by operators of polluting equipment proportionally to emissions
(polluter pays principle)
- Renewable obligations
Proportion of electricity produced by firms generated by renewables
- Capital cost subsidies
- Feed-in tariffs
Ensures a specific price given to renewables producers, can be fixed or re-adjusted
- Finance mechanisms
May be useful to balance revenue generating and costly policies from the government
perspective:
- Carbon pricing/taxing can generate substantial income
- Capital cost subsidies/feed-in tariffs can involve significant expenditures as diffusion takes off
- It is likely most effective to have combinations of policies
Lecture 7-H2: Technology R&D policy for climate change mitigation
- The innovation chain and technology policy:
- Porter’s hypothesis
Porter Hypothesis:
Environmental regulation can lead firms
to invest in R&D which ultimately can
lead to improved competitiveness
due to:
-
Signals companies about resource
deficiencies & new technologies
Raises corporate awareness
Reduces R&D investment uncertainty
Creates pressure for innovation
Levels the transitional playing field
Going back to van Bursik:
this could be evidence!
Van Bursik et al Environ. Res. Lett. 9 (2014) 114010
Grubb, Planetary Economics, Ch 9 p. 340 (2014)
Lecture 7-H2: Technology R&D policy for climate change mitigation
- DIAM model
- Motivation
•
Seemingly big discrepancies between different views of the urgency of climate action &
cost of delay
– Eg. IEA vs Nordhaus
•
Proposition that this is not only due to different specifications of climate damage, but
also assumed characteristics of the emission systems (particularly energy)
•
The vast majority of stylised global cost-benefit models assume a cost function in
relation to the degree of abatement from ‘reference projection’ at time t
•
This has no underlying history – no inertia or induced tech
 eg. DICE equations
Lecture 7-H2: Technology R&D policy for climate change mitigation
- DIAM model
- Mitigation Costs
Mitigation (abatement) costs defined to depend on both the degree and the rate of
abatement relative to ref projection:
– Degree of deviation from baseline is classical, DICE-like formulation
– Rate-dependent costs reflect the inertia of change – investment in changing the
underlying pathway
Each rises non-linearly: the model assumes quadratic dependence (like DICE for the
enduring cost term):
Abatement cost at time t = Ca x (degree of abatement)² + Cb x (rate of abatement)²
or more compactly:
Abatement cost C(t) = Ca . ε(t) ² + Cb . (dε/dt) ²
where ε(t) is the degree of cutback
Lecture 7-H2: Technology R&D policy for climate change mitigation
- DIAM model
- Climate Damage
Climate Damage: a simplified approach, inspired by the observation from model
ensembles finding a closely linear relationship between cumulative CO2 emissions and
global temperature change at a given point in time:
– central estimate that 500GtC cumulative emissions increases global temperature by
about 1 deg.C (some time lags of secondary importance for most practical emission
trajectories).
Generally accepted non-linear relationship between temperature change and damage
Present model assumes that global damage increases in proportion to the square of
temperature change:
Annual damage from climate change at time t,
d(t) proportional to (temperature change) ² = (E(t)/500) ²
where E(t) is the cumulative CO2 emissions (in GtC) at time t.
Lecture 7-H2: Technology R&D policy for climate change mitigation
- DIAM model
- Optimal emission trajectory
Grubb, M., Lange, R-J., Salas, P. and Mercure, J-F. (2014). “The impact of energy system adaptability and inertia on optimal climate mitigation”. Presented at to
International Association of Energy Economics, Annual Conference ,New York, 15-17 June 2014
Lecture 7-H2: Technology R&D policy for climate change mitigation
- DIAM model
- Damage function
Time profile of climate damages differs radically between models, and across DIAM runs
Grubb, M., Lange, R-J., Salas, P. and Mercure, J-F. (2014). “The impact of energy system adaptability and inertia on optimal climate mitigation”. Presented at to
International Association of Energy Economics, Annual Conference ,New York, 15-17 June 2014
Lecture 7-H2: Technology R&D policy for climate change mitigation
- DIAM model
- Damage function
Optimal cost structure for adaptive systems requires early abatement efforts compared to
traditional non-adaptive approach.
Grubb, M., Lange, R-J., Salas, P. and Mercure, J-F. (2014). “The impact of energy system adaptability and inertia on optimal climate mitigation”. Presented at to
International Association of Energy Economics, Annual Conference ,New York, 15-17 June 2014
Lecture 7-H2: Technology R&D policy for climate change mitigation
- DIAM model
- Conclusions
It is not just the assumed discount rate and scale and non-linearity of impacts that matters!
•
With any significant discount rate, the time delay between emissions and assumed
impacts is a crucial determinant.
•
Standard frameworks imply sharply rising costs – both damages and mitigation costs over the century
•
The adaptability of energy systems is also a major driver of the net benefits of early
action – will vary by specific options and would justify diversity in apparent mitigation
costs
•
The combination can lead to ‘cost benefit’ effort levels similar to a risk-averse strategy
dominated by non-linearly / threshold assumptions, may almost stabilise gross costs
Lecture 7-H2: Technology R&D policy for climate change mitigation
- DIAM model
- Mathematical Formulation
Grubb, M., Lange, R-J., Salas, P. and Mercure, J-F. (2014). “The impact of energy system adaptability and inertia on optimal climate mitigation”. Presented at to
International Association of Energy Economics, Annual Conference ,New York, 15-17 June 2014
Lecture 7: References
Grubb, M. (2014). “Pushing further, pulling deeper: bridging the technology valley of death”. Chapter 9 on Planetary Economics,
by Grubb, M., Hourcade, J-C. And Neuhoff, K. ISBN: 978-0-415-51882-6.
Grubb, M., Lange, R-J., Salas, P. and Mercure, J-F. (2014). “The impact of energy system adaptability and inertia on optimal
climate mitigation”. Presented at to International Association of Energy Economics, Annual Conference ,New York, 15-17 June
2014
IPCC, (1990). First Assessment Report. Climate Change 1990 – Working Group III. The IPCC Response Strategies.
IPCC, (1992). The 1992 IPCC Supplement: Scientific Assessment. IPCC Working Group I.
IPCC, (1995). Second Assessment Report. Climate Change 1995 - Working Group III. Economic and Social Dimensions of
Climate Change.
IPCC, (2000). Special Report. Emission Scenarios. Summary for Policy Makers. IPCC Working Group III.
IPCC, (2001). Third Assessment Report. Climate Change 2001 - Working Group III. Mitigation. Technical Summary.
IPCC, (2007). Third Assessment Report. Climate Change 2007 - Working Group III. Mitigation. Ch3. Issues related to mitigation in
the long-term context.
IPCC, (2007). Fourth Assessment Report. Climate Change 2007 - Working Group III. Mitigation. Technical Summary.
IPCC, (2013). Fifth Assessment Report. Climate Change 2013 – Working Group I. The Physical Science Basis.
Integrated Assessment Modeling Consortium (IAMC). http://www.iamconsortium.org
Manne, A., Richels, R., Weyant, J. 1979. “Feature Article - Energy Policy Modeling: A Survey”. Operations Research 27(1):1-36
Moss et al. 2010. “The next generation of scenarios for climate change research and assessment”. Nature, 463, 747-756.
Lecture 7: References (cont.)
Nordhaus, W., 1977. “Economic Growth and Climate: The Carbon Dioxide Problem”. The American Economic Review, Vol. 67
(1), pp. 341-346.
Nordhaus, W., 1977. “Strategies for the Control of Carbon Dioxide”. Cowles Foundation Discussion Paper N. 443.
Nordhaus, W. 1994. “Managing the Global Commons: The Economics of Climate Change”. The MIT Press
Nordhaus, W. 2011. “Integrated Economic and Climate Modeling”. Cowles Foundation Discussion Paper No. 1839
Schneider, S. 2005. “Integrated Assessment Modeling of Global Climate Change: Much Has Been Learned - Still a Long and
Bumpy Road Ahead”. The Integrated Assessment Journal. Vol. 5 (1), pp. 41–75.
Stern, N. (2006). Stern Review: The Economics of Climate Change.
Tol, R. & Yohe, G. (2006). A Review of the Stern Review.
Van Bursik et al (2014). Environmental Research Letters. 9, 114010