Efficient climate policies under technology and climate uncertainty

This article explores efficient climate policies in terms of investment streams into fossil and renewable energy technologies. The investment decisions maximise social welfare while observing a probabilistic guardrail for global mean temperature rise under uncertain technology and climate parameters. Such a guardrail constitutes a chance constraint, and the resulting optimisation problem is an instance of chance constrained programming, not stochastic programming as often employed. Our analysis of a model of economic growth and endogenous technological change, MIND, suggests that stringent mitigation strategies cannot guarantee a very high probability of limiting warming to 2 °C since preindustrial time under current uncertainty about climate sensitivity and climate response time scale. Achieving the 2 °C temperature target with a probability P? of 75% requires drastic carbon dioxide emission cuts. This holds true even though we have assumed an aggressive mitigation policy on other greenhouse gases from, e.g., the agricultural sector. The emission cuts are deeper than estimated from a deterministic calculation with climate sensitivity fixed at the P? quantile of its marginal probability distribution (3.6 °C). We show that earlier and cumulatively larger investments into the renewable sector are triggered by including uncertainty in the technology and climate response time scale parameters. This comes at an additional GWP loss of 0.3%, resulting in a total loss of 0.8% GWP for observing the chance constraint. We obtained those results with a new numerical scheme to implement constrained welfare optimisation under uncertainty as a chance constrained programming problem in standard optimisation software such as GAMS. The scheme is able to incorporate multivariate non-factorial probability measures such as given by the joint distribution of climate sensitivity and response time. We demonstrate the scheme for the case of a four-dimensional parameter space capturing uncertainty about climate and technology.     

Ocean carbon sinks and international climate policy

Terrestrial vegetation sinks have entered the Kyoto Protocol as offsets for anthropogenic greenhouse gas emissions, but ocean sinks have escaped attention. Ocean sinks are as unexplored and uncertain as were the terrestrial sinks at the time of negotiation of the Kyoto Protocol. It is not unlikely that certain countries will advocate the inclusion of ocean carbon sinks to reduce their emission reduction obligations in post-2012 negotiations. We use a simple model of the international market for carbon dioxide emissions to evaluate who would gain or loose from allowing for ocean carbon sinks. Our analysis is restricted to information on anthropogenic carbon sequestration within the exclusive economic zone of a country. We use information on the actual carbon flux and derive the human-induced uptake for the period from 1990 onwards. Like the carbon sequestration of business as usual forest management activities, natural ocean carbon sequestration applies at zero costs. The total amount of anthropogenic ocean carbon sequestration is large, also in the exclusive economic zones. As a consequence, it substantially alters the costs of emission reduction for most countries. Countries such as Australia, Denmark, France, Iceland, New Zealand, Norway and Portugal would gain substantially, and a large number of countries would benefit too. Current net exporters of carbon permits, particularly Russia, would gain less and oppose the inclusion of ocean carbon sinks.     

How policies affect international biofuel price linkages

We estimate the role of biofuel policies in determining which country is the price leader in world biofuel markets using a cointegration analysis and a Vector Error Correction (VEC) model. Weekly prices are analyzed for the EU, US, and Brazilian ethanol and biodiesel markets in the 2002–2010 and 2005–2010 time periods, respectively. The US blender's tax credit and Brazil's consumer tax exemption are found to play a role in determining the ethanol prices in other countries. For biodiesel, our results demonstrate that EU policies – the consumer tax exemption and blending target – tend to determine the world biodiesel price.     

Economy-wide impacts of biofuels in Argentina

Argentina is one of the world's largest biodiesel producers and the largest exporter, using soybeans as feedstock. Using a computable general equilibrium model that explicitly represents the biofuel industry, this study carries out several simulations on two sets of issues: (i) international markets for biofuel and feedstock, such as an increase in prices of soybean, soybean oil, and biodiesel, and (ii) domestic policies related to biofuels, such as an introduction of biofuel mandates. Both sets of issues can have important consequences to the Argentinean economy. The simulations indicate that increases in international prices of biofuels and feedstocks would increase Argentina's gross domestic product and social welfare. Increases in international prices of ethanol and corn also can benefit Argentina, but to a lesser extent. The domestic mandates for biofuels, however, would cause small losses in economic output and social welfare because they divert part of biodiesel and feedstock from exports to lower-return domestic consumption. An increase in the export tax on either feedstock or biodiesel also would lead to a reduction in gross domestic product and social welfare, although government revenue would rise.     

DICER: A tool for analyzing climate policies

Modeling the economy and the planet's climate involves a great number of variables and parameters, some of them very uncertain given the current stage of knowledge regarding technology and the science of climate. The DICER model (or DICE-Regional) is a recently constructed Integrated Assessment Model (IAM), based on the structure of the DICE family of models, which was developed as an instrument for the analysis of uncertainties in climate policy. This paper aims to describe the basic version of DICER on which future developments addressing uncertainty in climate policy analysis will be based. Our results suggest a few interesting conclusions when compared to other IAMs: (i) under a plausible set of assumptions and parameters DICER indicates that an optimal global climate policy would imply higher costs of climate change in the short run but a faster (and more expensive) decarbonization process in all regions, resulting in a faster stabilization of the climate; (ii) lower peak temperatures that occur earlier in time; (iii) considerable sensitivity of results to key parameters such as climate sensitivity, but lower than expected sensitivity to the social discount rate.     

国际电动机能效政策法规研究与分析

作为生产量大、使用面广的工业通用产品之一,电动机的节能政策自诞生起就吸引了全球的关注.分析目的地国家的电动机能效政策法规已成为我国电机生产企业在从事进出口贸易过程中必不可少的环节.通过研究和介绍了世界范围内主要电动机进出口贸易地区的能效政策法规,涵盖亚洲、欧洲、北美洲、南美洲、澳洲等五大洲共计超过10个国家,覆盖面广,实用性高,适用性强.同时分析相关政策的差异和关联性.为我国相关政策的制订和完善提供技术支持.     

Comparing climate policies to reduce carbon emissions in China

Currently, China is the largest carbon emitter mainly due to growing consumption of fossil fuels. In 2009, the Chinese government committed itself to reducing domestic carbon emissions per unit of GDP by 40–45% by 2020 compared to 2005 levels. Therefore, it is a top priority for the Chinese government to adopt efficient policy instruments to reduce its carbon intensity. Against this background, this paper develops a general equilibrium model and seeks to provide empirical contributions by comparing the potential impacts of several different policy options to reduce China's carbon emissions. The main findings are as follows. Firstly, these climate policies would affect the structure of economy and contribute to carbon emissions reduction and carbon intensity reduction. Secondly, there would be significant differences in the economic and environmental effects among different climate policies and hence, the government would trade-off among different economic objectives to overcome any potential resistances. Thirdly, there would be considerable differences in the emissions effects of absolute and intensity-based carbon emissions controls, implying that the government might adopt different climate policies for absolute or intensity-based carbon emissions controls. Looking ahead, the government should trade-off among different objectives when designing climate reforms.     

Renewable energies: climate-change mitigation and international climate policy

Global climate change, its present control and even its future reduction have been considered. Energy has been proposed as the main feed of comprehensive development. The way for meeting energy needs which certainly affects the existing energy resources will have forceful climate consequences. The purpose of this study is to explore how, in practice, the energy requirements of sustainable development can be afforded without any climate-change aggravation. Two fundamental approaches were proposed and completely discussed: the first long-term developing approach is the use of advanced energy-productive technologies instead of the existing ones and/or implementation of hybrid processes, a combination of conventional systems with a newly low energy-consumptive and emission-reductive technology in a newly installed system. The second most sustainable scheme is the development of alternative renewable energy (RE) resources. In this case, available internationally legal documents discovering the RE policies were explored and their commitment strategies were taken into original and deliberate challenges. It was concluded that the best solution to afford energy requirements is the expansion of RE sources, excluding or rarely without any sanctions reflected on the main documents of international climate policy. Since the dominant conditions of international investments have more tendencies to the short-time cost-efficient methods, the documents have only provided a limited situation for the expansion of REs. As a result, the present weak status of REs in the documents comprises their attitude towards the long-term developing scheme (the first approach) and not to the most sustainable scheme of altering the energy resources (the second approach).     

Nordic air quality co-benefits from European post-2012 climate policies

Although climate policies target primarily CO₂, they may indirectly have an impact on air pollutants and thus on air quality. Here we look specifically at the co-benefits of various European post-2012 climate policy scenarios related to air quality in the Nordic region. We analyse how caps on emissions, expansion of the European Union (EU) Emissions Trading System, carbon taxes, and Russian and non-EU Eastern Europe participation after 2012 will influence emissions, air quality, avoided abatement costs, welfare effects, the regional environment and human exposure to particulate matter in the Nordic countries. We find that stricter targets will contribute to reduced emissions of air pollutants, and benefits to ecosystems and human health, which would have required substantial abatement costs if achieved by application of ‘end-of-pipe’ measures. Due to the assumed use of the flexibility mechanisms, reductions in emissions in the Nordic countries are smaller than in other regions, but the Nordic countries benefit from reductions in emissions in nearby regions. The more sectors that are included in the emissions trading scheme, the greater the emission of air pollutants. If Eastern Europe and Russia were to abandon participation in a climate agreement, the EU and Norway would have to undertake more emission cuts at home in order to meet the same targets. This would benefit ecosystems in southern Scandinavia, but acidification would increase in the north because of increased emissions in Russia.     

Energy policies avoiding a tipping point in the climate system

Paleoclimate evidence and climate models indicate that certain elements of the climate system may exhibit thresholds, with small changes in greenhouse gas emissions resulting in non-linear and potentially irreversible regime shifts with serious consequences for socio-economic systems. Such thresholds or tipping points in the climate system are likely to depend on both the magnitude and rate of change of surface warming. The collapse of the Atlantic thermohaline circulation (THC) is one example of such a threshold. To evaluate mitigation policies that curb greenhouse gas emissions to levels that prevent such a climate threshold being reached, we use the MERGE model of Manne, Mendelsohn and Richels. Depending on assumptions on climate sensitivity and technological progress, our analysis shows that preserving the THC may require a fast and strong greenhouse gas emission reduction from today's level, with transition to nuclear and/or renewable energy, possibly combined with the use of carbon capture and sequestration systems.     

The institutionalisation of trust in the international climate regime

In the extensive literature on international environmental co-operation, trust is usually treated in terms of compliance and verification mechanisms, on the assumption that there will always be incentives for parties to international agreements to cheat or to ‘free ride’. Indeed the establishment of adequate assurances that such behaviour will be detected and punished is frequently the sine qua non of agreement in the first place. Technical and legal compliance mechanisms have developed rapidly in environmental treaty-making over the last two decades. The climate regime is no exception and its provisions in this regard are briefly described and analysed. However, it will be argued that the development of trust amongst the parties goes well beyond formal compliance and depends upon the institutionalised relationships, often amongst officials and technical experts that have grown up, since the negotiations for a climate treaty commenced in the late 1980s.     

Chinese energy and climate policies after Durban: Save the Kyoto Protocol

Nowadays, one of the urgent issues regarding global climate change is to discuss the future of the second period of the Kyoto Protocol. However, the divergence of views and opinions among parties in the last Conference of the Parties of the United Nations Framework Convention on Climate Change, held in Durban in December 2011, is still large. One of the bones of contention is whether the emerging developing countries, like China, should make commitments and legally bind themselves to a Green House Gas (GHG) reduction target in near future. As the largest GHG emitting country, China and its energy and climate policies will play an important role in global climate change and will also significantly influence the other countries’ policies and the global climate negotiation. In this paper, we review the current differences among parties in the Durban Conference, and we analyze the recent situation, barriers, and future policies in China. Finally we highlight the impact and potential effect of Clean Development Mechanisms in avoiding China's barriers regarding climate change. Results show that China is making a great effort to mitigate climate change by establishing and reforming its energy and climate policies in order to achieve a low-carbon development. At the same time, more innovation and international collaboration is needed in China to achieve this goal.     

Financial impacts of UK's energy and climate change policies on commercial and industrial businesses

This study provides a detailed case study assessment of two business sites in the UK, to understand the policy drivers of increases to their energy costs and energy bills, considering all current UK energy and climate change policies. We compare our findings to more generalised, theoretical calculations of the policy cost impact on energy costs and bills – we have found no other studies as comprehensive as ours in terms of policy coverage.We find that for one site the government has over-estimated the likely energy savings due to energy efficiency options. Such differences in estimates should be taken into account when considering the efficacy of climate change policies on future energy savings. The overall impact of energy and climate change policies on costs will be of the order 0.4% of total business costs by 2020. This provides an important metric for the near-term cost of mitigation to meet longer-term climate change goals.     

An international comparison of four polycentric approaches to climate and energy governance

Drawing from work on governance, this article explores four programs and policies that respond in some way to the challenges induced by climate change and modern energy use. Relying primarily on original data collected from research interviews and field research in seven countries along with four case studies, the article notes that polycentric approaches – those that mix scales (such as local/national or national/global), mechanisms (such as subsidies, tax credits, and mandates), and actors (such as government regulators, business stakeholders, and members of civil society) – can foster equity, inclusivity, information, accountability, organizational multiplicity, and adaptability that result in the resolution of climate and energy related problems. After explaining its case selection and research methods, defining climate and energy governance, and conceptualizing polycentrism, the study explores cases related to electricity supply in Denmark, ethanol production in Brazil, small-scale renewable energy in Bangladesh, and off-grid energy use in China. It concludes by highlighting how polycentrism may enhance effective climate and energy governance, but that further research is needed to fully substantiate that claim.     

Economy-wide estimates of energy rebound effect: Evidence from China's provinces

The ongoing debate on the magnitude of China's economy-wide energy rebound effect (RE) entails further investigations not only with more details, but also with more credible methods. In this study, a modified two-stage approach, which could avoid methodological issues regarding RE estimation, is applied to estimate macroeconomic RE with a data panel of 30 provinces in China during the period 1997–2015. In particular, in order to comprehensively measure energy efficiency, we construct a dynamic energy efficiency indicator which considers not only the static efficiency of energy use but also the technical change regarding energy usage. Using dynamic panel data models, we estimate the elasticity of energy consumption with respect to energy efficiency which directly links to the measurement of RE. The short-run and long-run estimates of RE are reported, and the 95% confidence interval was computed for each sample based on the nonparametric bootstrap method to further analyze the macroeconomic RE of different regions. Results indicate that the average RE of all provinces is 88.55% in the short run, and the average long-run RE is 77.50%; the RE in the developed eastern region continuously decreased, while RE in the western region increased to be the largest during the research period.     

Spent nuclear fuel policies in historical perspective: An international comparison

The purpose of this article is to explain why the world's nuclear power countries differ from each other with respect to their spent nuclear fuel (SNF) policies. The emergence and evolution of three principal SNF approaches are analyzed: direct disposal, reprocessing and SNF export. Five broad explanatory factors are identified and discussed in relation to the observed differences in policy outcomes: military ambitions and non-proliferation, technological culture, political culture and civil society, geological conditions, and energy policy. SNF policy outcomes can generally be seen to result from a complex interaction between these broad factors, but it is also possible to discern a number of important patterns. To the extent that the five factors may undergo far-reaching changes in the future, the historical experience of how they have shaped SNF policies also give a hint of possible future directions in SNF policymaking around the world.