America's bottom-up climate change mitigation policy

Many diverse actions can be taken to reduce greenhouse gas (GHG) emissions. Increasingly in the United States, policy-makers at sub-national levels are setting emission targets and implementing plans for sector-specific GHG reductions. In this paper, local, state, and regional policy actions in the US are inventoried and analyzed as to their potential effect on national emissions. The realization of all existing sub-national initiatives, as of September 2007, could stabilize US emissions at 2010 levels by the year 2020. The scale of these many decentralized mitigation actions, and their tendency to follow consistent steps, provide a counterpoint to oft-cited drawbacks of decentralized environmental policy. It also indicates that the US has been more committed to climate change mitigation than is generally acknowledged.     

ECLIPSE: An integrated energy-economy model for climate policy and scenario analysis

This paper describes the development of the Energy and Climate Policy and Scenario Evaluation (ECLIPSE) model—a flexible integrated assessment tool for energy and climate change policy and scenario assessment. This tool builds on earlier efforts to link top-down and bottom-up models, and combines a macroeconomic energy demand model and a consumer-budget transport demand model with the technology-rich bottom-up energy and transport system model Energy Research and Investment Strategy (ERIS), and solves the models iteratively. Compared to previous efforts, ECLIPSE includes many new features, such as a more disaggregated production function, improved calibration and parameterization and separate modeling of passenger transport demand. The separate modeling of transportation makes ECLIPSE particularly well-suited to analyzing interactions between the transport sector and the broader energy market and economy. This paper presents results illustrating some features of the integrated model, compares technology deployment results with ECLIPSE and the bottom-up ERIS model, and briefly describes illustrative baseline and greenhouse gas mitigation scenarios to highlight some of the features of the framework outlined in this paper. A number of modeling and policy insights arising from this scenario analysis are discussed.     

A multi-criteria evaluation method for climate change mitigation policy instruments

This paper presents an integrated multi-criteria analysis method for the quantitative evaluation of climate change mitigation policy instruments. The method consists of: (i) a set of criteria supported by sub-criteria, all of which describe the complex framework under which these instruments are selected by policy makers and implemented, (ii) an Analytical Hierarchy Process (AHP) process for defining weight coefficients for criteria and sub-criteria according to the preferences of three stakeholders groups and (iii) a Multi-Attribute Theory (MAUT)/Simple Multi-Attribute Ranking Technique (SMART) process for assigning grades to each instrument that is evaluated for its performance under a specific sub-criterion. Arguments for the selected combination of these standard methods and definitions for criteria/sub-criteria are quoted. Consistency and robustness tests are performed. The functionality of the proposed method is tested by assessing the aggregate performances of the EU emission trading scheme at Denmark, Germany, Greece, Italy, Netherlands, Portugal, Sweden and United Kingdom. Conclusions are discussed.     

Climate policy impacts on the competitiveness of energy-intensive manufacturing sectors

This study examines the impacts of energy price changes resulting from different carbon-pricing policies on the competitiveness of selected US energy-intensive industries. It further examines possible industry responses, and identifies and provides a preliminary evaluation of potential opportunities to mitigate these impacts. The industry sectors investigated – steel, aluminum, chemicals and paper – are among the largest industrial users of fossil fuels in the US economy. The results of this examination show that climate policies that put a price on carbon could have substantial impacts on the competitiveness of US energy-intensive manufacturing sectors over the next two decades, if climate regulations are applied only in the United States, and no action is taken to invest in advanced low- and no-carbon technologies. The extent of these impacts will vary across industries, depending on their energy intensities, the mix of energy sources they rely on and how energy is used in production activities (heat and power, feedstock). Of relevance is also the speed and rigor with which industries adopt new technologies and retire (or replace) old ones. Other factors affecting these impacts include an industry's vulnerability to foreign imports and its ability to pass through cost increases to its customers in the face of international market competition.     

Analysis of the EU policy package on climate change and renewables

In 2009 the EU decided to reduce greenhouse gas emissions at least by 20% in 2020 compared to 1990 and to supply 20% of energy needs by 2020 from renewable energy sources. This paper uses an energy model coupled with a non-CO₂ greenhouse gas model to assess the range of policy options that were debated to meet both targets. Policy options include trading of renewable targets, carbon trading in power plants and industry and the use of the Clean Development Mechanism to improve cost-efficiency. The models also examined fairness by analysing the distribution of emission reduction in the non-emission trading sector, the distribution of CO₂ allowances in the emission trading sector and the reallocation of renewable targets across Member States. The overall costs of meeting both targets range from 0.4% to 0.6% of GDP in 2020 for the EU as a whole. The redistribution mechanisms employed significantly improve fairness compared to a cost-effective solution.     

Directed technical change and differentiation of climate policy

This paper studies the cost effectiveness of climate policy if there are technology externalities. For this purpose, we develop a forward looking model that captures empirical links between CO₂ emissions associated with energy use, directed technical change and the economy. We find our most cost effective climate policy to include a combination of R&D subsidies and CO₂ emission constraints, although R&D subsidies raise the shadow value of the CO₂ constraint (i.e. CO₂ price) because of a strong rebound effect from stimulating innovation. Furthermore, we find that cost effectiveness of climate policy improves if it is differentiated between technologies. Even our rudimentary distinction between CO₂ intensive technologies and non-CO₂ intensive technologies lead to this result. Such differentiated climate policy encourages growth in the non-CO₂ intensive sectors and discourages growth in CO₂ intensive sectors by harnessing positive effects of technology externalities on total factor productivity in the former and letting the latter bear relatively more of the abatement burden. This result is robust to whether emission constraints, R&D subsidies or combinations of both are used as climate policy instruments.     

The role of nuclear energy in Lithuania under various post-Kyoto climate change mitigation regimes

The article aims to evaluate the potential role of nuclear energy in Lithuania under various post-Kyoto climate change mitigation regimes. Seeking to achieve this target the analysis of possible energy sector development scenarios in Lithuania was performed and CO₂ emission projections for these scenarios were developed. The analysis of post-Kyoto climate change mitigation architectures was performed and the requirements of these possible climate change mitigation regimes for greenhouse gas (GHG) emission reduction in Lithuania were assessed. Based on these assessments the potential role of new nuclear power in Lithuania was identified under various future climate change mitigation regimes.     

Greenhouse gas mitigation policies and the transportation sector: The role of feedback effects on policy effectiveness

The US transportation sector is a major contributor to global greenhouse gas (GHG) emissions. As such, policymakers and stakeholder groups have proposed a number of policy instruments aimed at reducing these emissions. In order to fully evaluate the effectiveness of these policies, policymakers must consider both the direct responses associated with policy actions, and the indirect responses that occur through complex relationships within socioeconomic systems. In cases where multiple policy instruments are employed, these indirect effects create policy interactions that are either complementary or competing; policymakers need to understand these interactions in order to leverage policy synergies and manage policy conflicts. Analysis of these indirect effects is particularly difficult in the transportation sector, where system boundaries are uncertain and feedback among systems components can be complicated. This paper begins to address this problem by applying systems dynamics tools (in particular causal loop diagrams) to help identify and understand the role of feedback effects on transportation-related GHG reduction policies. Policymakers can use this framework to qualitatively explore the impacts of various policy instruments, as well as identify important relationships that can be later included in quantitative modeling approaches.     

Update of indicators for climate change mitigation in Greece

This paper analyses the factors affecting greenhouse gas (GHG) emissions in Greece, (i.e. the drivers of pressures on climate change), using environmental indicators related to energy, demographics and economic growth. The analysis is based on the data of 2008 and considers types of fuel and sectors. The Kaya identity is used to identify the relationship between drivers and pressures, using annual time series data of National GHG emissions, population, energy consumption and gross domestic product. The analysis shows that over the period 2000–2008, GHG emissions show a slight variation, but they are almost stabilised, with a total increase of 1.6%. Despite the economic growth over that period, this stabilisation may be considered as a combination of reductions in the energy intensity of GDP and the carbon intensity of energy, which are affected by improvements in energy efficiency and introduction of “cleaner” fuels, such as natural gas and renewables in the energy mixture of the country.     

The European climate change program: An evaluation of stakeholder involvement and policy achievements

In order to step up its efforts in reducing climate change, the European Commission (hereafter: the Commission) has launched in June 2000 its European climate change program (hereafter: ECCP). This wide-ranging stakeholder consultation aimed at identifying and developing all elements necessary for a European climate change strategy. The ECCP formally came to a close in April 2003.     

Modeling endogenous technological change for climate policy analysis

The approach used to model technological change in a climate policy model is a critical determinant of its results in terms of the time path of CO₂ prices and costs required to achieve various emission reduction goals. We provide an overview of the different approaches used in the literature, with an emphasis on recent developments regarding endogenous technological change, research and development, and learning. Detailed examination sheds light on the salient features of each approach, including strengths, limitations, and policy implications. Key issues include proper accounting for the opportunity costs of climate-related knowledge generation, treatment of knowledge spillovers and appropriability, and the empirical basis for parameterizing technological relationships. No single approach appears to dominate on all these dimensions, and different approaches may be preferred depending on the purpose of the analysis, be it positive or normative.     

Views on peak oil and its relation to climate change policy

Definitions of fossil fuel reserves and resources and assessed stock data are reviewed and clarified. Semantics explain a large stake of conflict between advocate and critical voices on peak oil. From a holistic sources–sinks perspective, limited carrying capacity of atmospheric sinks, not absolute scarcity in oil resources, will impose tight constraints on oil use. Eventually observed peaks in oil production in nearby years will result from politically imposed limits on carbon emissions, and not be caused by physical lack of oil resources. Peak-oil belief induces passive climate policy attitudes when suggesting carbon dioxide emissions will peak naturally linked to dwindling oil supplies. Active policies for reducing emissions and use of fossil fuels will also encompass higher energy end-use prices. Revenues obtained from higher levies on oil use can support financing energy efficiency and renewable energy options. But when oil producers charge the higher prices they can pump new oil for many decades, postponing peak oil to occur while extending carbon lock-in.     

Using biomass for climate change mitigation and oil use reduction

In this paper, we examine how an increased use of biomass could efficiently meet Swedish energy policy goals of reducing carbon dioxide (CO₂) emissions and oil use. In particular, we examine the trade-offs inherent when biomass use is intended to pursue multiple objectives. We set up four scenarios in which up to 400 PJ/year of additional biomass is prioritised to reduce CO₂ emissions, reduce oil use, simultaneously reduce both CO₂ emission and oil use, or to produce ethanol to replace gasoline. Technologies analysed for using the biomass include the production of electricity, heat, and transport fuels, and also as construction materials and other products. We find that optimising biomass use for a single objective (either CO₂ emission reduction or oil use reduction) results in high fulfilment of that single objective (17.4 Tg C/year and 350 PJ oil/year, respectively), at a monetary cost of 130–330 million €/year, but with low fulfilment of the other objective. A careful selection of biomass uses for combined benefits results in reductions of 12.6 Tg C/year and 230 PJ oil/year (72% and 67%, respectively, of the reductions achieved in the scenarios with single objectives), with a monetary benefit of 45 million €/year. Prioritising for ethanol production gives the lowest CO₂ emissions reduction, intermediate oil use reduction, and the highest monetary cost.     

Uncertainty and endogenous technical change in climate policy models

Until recently endogenous technical change and uncertainty have been modeled separately in climate policy models. In this paper, we review the emerging literature that considers both these elements together. Taken as a whole the literature indicates that explicitly including uncertainty has important quantitative and qualitative impacts on optimal climate change technology policy.     

Reducing conflicts between climate policy and energy policy in the US: The important role of the states

The absence of US national action on global climate change policy has prompted initiatives by the US Congress, cities, states, and regions toward what is likely to become a long-term, collaborative effort to harmonize national energy and climate policies. This upward evolution in the face of a reluctant administration is historically consistent with the development of national legislation on other environmental and social issues in the US. At the heart of this movement is the need to resolve conflicts between high-intensity use of low-cost fossil energy supplies, and the dominating impact of carbon dioxide emissions on global climate change. US states are among the largest carbon dioxide emitters in the world and play a critical role in supplying and transforming energy, as well as consuming it, for economic advantage. State governments are also likely to have to shoulder some of the cost of potentially extensive climate damages and bear the brunt of the cost of implementing future federal mandates. As a result, many are taking proactive stances on the development of climate mitigation policy to prepare for, accelerate, and/or guide national policy. As US states show leadership on addressing greenhouse gas emissions, they also play an important role in forging policies and measures that reduce economic conflict between energy and climate goals. A number have launched or completed greenhouse gas mitigation plans and other major policies in the past few years that address these conflicts through: (1) finding ways to reduce mitigation costs, including the use of incentive-based policy instruments; (2) promoting an open and democratic policy process that includes major stakeholders; (3) promoting equity across socioeconomic groups, regions, and generations; and (4) promoting interregional cooperation. The results are promising and suggest that the state arena for climate and energy policy is evolving quickly and constructively toward alternatives that reduce conflict. Regional efforts are also unfolding, along with greater congressional attention to the lessons learned and commitments made by sub-federal actions. In the next few years many national energy and climate conflicts are likely to be tested and addressed by states. Among these, Pennsylvania is likely to be an important player due to its high profile of energy production and potential for leadership.     

Fuel taxes: An important instrument for climate policy

This article shows that fuel taxes serve a very important role for the environment and that we risk a backlash of increased emissions if they are abolished. Fuel taxes have restrained growth in fuel demand and associated carbon emissions. Although fuel demand is large and growing, our analysis shows that it would have been much higher in the absence of domestic fuel taxes. People often assert that fuel demand is inelastic but there is strong research evidence showing the opposite. The price elasticity is in fact quite high but only in the long-run: in the short run it may be quite inelastic which has important implications for policy makers. Had Europe not followed a policy of high fuel taxation but had low US taxes, then fuel demand would have been twice as large. Hypothetical transport demand in the whole OECD area is calculated for various tax scenarios and the results show that fuel taxes are the single most powerful climate policy instrument implemented to date—yet this fact is not usually given due attention in the debate.     

Review of Taiwan's climate policy after Copenhagen

The Copenhagen Accord in 2009 initiated new opportunities for international cooperation in reducing greenhouse gas (GHG) emissions. The purpose of this study was to review Taiwan's current climate policy and, in response to the Copenhagen Accord, to deliberate this policy in the light of new strategic thinking. The study proposes a two-stage approach with a dividing line in 2020. In the first stage, from now until 2020, strategy should be based on cost constraints, with a suggested reduction cost below $60/t-CO₂, and implementation of domestic GHG emissions trading scheme and reduction strategies. In the second stage, from 2020 and beyond, action by Taiwan should, accord with international cooperative actions to link its domestic emissions trading scheme with the international carbon market.     

Production functions for climate policy modeling: An empirical analysis

Quantitative models for climate policy modeling differ in the production structure used and in the sizes of the elasticities of substitution. The empirical foundation for both is generally lacking. This paper estimates the parameters of 2-level CES production functions with capital, labour and energy as inputs, and is the first to systematically compare all nesting structures. Using industry-level data from 12 OECD countries, we find that the nesting structure where capital and labour are combined first, fits the data best, but for most countries and industries we cannot reject that all three inputs can be put into one single nest. These two nesting structures are used by most climate models. However, while several climate policy models use a Cobb–Douglas function for (part of the) production function, we reject elasticities equal to one, in favour of considerably smaller values. Finally we find evidence for factor-specific technological change. With lower elasticities and with factor-specific technological change, some climate policy models may find a bigger effect of endogenous technological change on mitigating the costs of climate policy.     

The potential impacts of climate-change policy on freshwater use in thermoelectric power generation

Climate change policy involving a price on carbon would change the mix of power plants and the amount of water they withdraw and consume to generate electricity. We analyze what these changes could entail for electricity generation in the United States under four climate policy scenarios that involve different costs for emitting CO₂ and different technology options for reducing emissions out to the year 2030. The potential impacts of the scenarios on the U.S. electric system are modeled using a modified version of the U.S. National Energy Modeling System and water-use factors for thermoelectric power plants derived from electric utility data compiled by the U.S. Energy Information Administration. Under all the climate-policy scenarios, freshwater withdrawals decline 2–14% relative to a business-as-usual (BAU) scenario of no U.S. climate policy. Furthermore, water use decreases as the price on CO₂ under the climate policies increases. At relatively high carbon prices (>$50/tonne CO₂), however, retrofitting coal plants to capture CO₂ increases freshwater consumption compared to BAU in 2030. Our analysis suggests that climate policies and a carbon price will reduce both electricity generation and freshwater withdrawals compared to BAU unless a substantial number of coal plants are retrofitted to capture CO₂.     

Climate change and energy policy: The importance of sustainability arguments

It is the stated policy of the UK government to reduce emissions of carbon dioxide by 60% by 2050. This policy, which goes far beyond commitments under the Kyoto agreement, was originally advocated by the Royal Commission on Environmental Pollution, of which the author was a member. Its acceptance was seen by many as a surprising development, possibly reflecting the strength of the underlying case. The target was developed by a three-legged argument which reflects the three components of sustainability: