A pre-Lima scorecard for evaluating which countries are doing their fair share in pledged carbon cuts
Valentina Bosetti, Jeffrey Frankel 24 November 2014
Many countries have announced emissions targets for 2020. To evaluate which countries are doing their fair share, this column proposes a ‘scorecard’ approach based on three principles of fairness in climate change mitigation: latecomer catch-up, progressivity, and cost. The authors find that most countries’ targets, including those of China and the US, are in line with what such a scorecard would suggest.
Those worried about the future of the earth’s climate are hoping that this December’s climate change convention in Lima, Peru will yield progress toward specific national commitments, looking ahead to an international agreement at the make-or-break Paris meeting to take place in December 2015.
climate change, global warming, carbon, emissions cuts, Lima Summit, Kyoto Protocol, greenhouse gases, fairness
Climate change: Lessons for our future from the distant past
David F. Hendry 27 October 2014
Climate change has been the main driver of mass extinctions over the last 500 million years. This column argues that current evidence provides a stark warning. Human activity is producing greenhouse gases, and as a consequence global temperatures and ocean heat content are rising. Such trends raise the risk of tipping points. Economic analysis offers a number of ideas, but a key problem is that distributions of climate variables can shift, invalidating stationarity-based analyses, and making action to avoid possible future shifts especially urgent.
Life on Earth has survived great changes – there are many species alive today, some of which thrived in global temperatures much higher than now, so many stable levels of climate can support abundant life. But huge numbers of species went extinct from climate change. The Earth today is about 4–5°C warmer than in the last ice age, when Manhattan was under a mile of ice, so ‘small’ changes can matter greatly. Changes in climate, rather than actual levels within bounds, are what cause problems for life – adaptation is not instantaneous, as the ‘great extinctions’ emphasise.
climate change, extinctions, mass extinctions, greenhouse gases, biodiversity, ozone layer, tipping points
Climate tipping requires precautionary accumulation of capital and an additional price for carbon emissions
Rick van der Ploeg, Aart de Zeeuw 31 July 2014
Many ecological systems feature ‘tipping points’ at which small changes can have sudden, dramatic, and irreversible effects, and scientists worry that greenhouse gas emissions could trigger climate catastrophes. This column argues that this renders the marginal cost-benefit analysis usually employed in integrated assessment models inadequate. When potential tipping points are taken into account, the social cost of carbon more than triples – largely because carbon emissions increase the risk of catastrophe.
Climate policy aims to internalise the social cost of carbon by means of a carbon tax or a system of tradable permits such as the Emissions Trading System set up in the EU. But how do we determine the social cost of carbon? Do we take everything into account that should be taken into account? Most integrated assessment models (Nordhaus 2008, Stern 2007) calculate the net present value of estimated marginal damages to economic production from emitting one extra ton of carbon caused by burning fossil fuel.
climate change, environment, global warming, social cost of carbon, regime shifts, tipping points
Rethinking African solar power for Europe
Emanuele Massetti, Elena Ricci 23 July 2014
Concentrated solar power generation in Northern African and Middle Eastern deserts could potentially supply up to 20% of European power demand. This column evaluates the technological, economic, and political feasibility of this idea. Although concentrated solar power is a proven technology that can work at scale, it is currently four or five times more expensive than fossil fuels. Concentrated solar power could play an important role in Europe’s energy mix after 2050, but only if geo-political challenges can be overcome.
The DESERTEC Foundation has suggested that up to 20% of power demand in Europe can be obtained by connecting African deserts to European cities (Figure 1). The idea is to build a large number of concentrated solar power (CSP) plants in Middle Eastern and Northern African (MENA) countries, and to transmit electricity to Europe by means of very efficient high-voltage direct-current cables.
Europe, Africa, climate change, Renewable energy, energy security, Middle East, deserts, solar, photovoltaic, wind, concentrated solar power
Climate policy targets revisited
Richard S J Tol 25 April 2014
The IPCC’s Fifth Assessment Report estimates lower costs of climate change and higher costs of abatement than the Stern Review. However, current UN negotiations focus on stabilising atmospheric concentrations of greenhouse gases at even lower levels than recommended by Stern. This column argues that, given realistic estimates of the rate at which people discount the future, the UN’s target is probably too stringent. Moreover, since real-world climate policy is far from the ideal of a uniform carbon price, the costs of emission reduction are likely to be much higher than the IPCC’s estimates.
The Stern Review of the Economics of Climate Change is the most famous economic assessment of climate policy (Stern et al. 2006). The Stern Review puts the costs of unmitigated climate change at 5–20% of GDP (now and forever), it estimates that the cost of stabilising atmospheric concentrations around 525 ppm CO2e are 1% of GDP (in 2050), and recommends that concentrations be stabilised around 500 ppm CO2e.1
climate change, emissions, externalities, greenhouse gases, pollution, carbon, cost-benefit analysis
Sustainable growth requires a long-term focus
Pascal Lamy, Ian Goldin 28 March 2014
Excessive short-termism is always a problem for policy, but the Global Crisis has brought it sharply into focus. This column introduces a report that discusses how a shift to longer-term solutions is necessary and possible. A key message is that businesses as well as governments need to take a longer-term view. The report identifies ways to overcome the current impasse in key economic, climate, trade, security, and other negotiations.
Just when we thought high-frequency trading couldn’t get any faster, a US communications company is developing a high-speed laser network between the New Jersey data centres of the New York Stock Exchange and the NASDAQ stock exchange, to shave an additional few nanoseconds off high-frequency trading times.
Environment Financial markets Global crisis International trade
growth, climate change, trade, environment, corporate governance, global crisis, high-frequency trading, short-termism, mark-to-market accounting
Nuclear expansion or phase-out? Costs and opportunities
Enrica De Cian, Samuel Carrara, Massimo Tavoni 22 December 2013
After the Fukushima incident in 2011, many countries decided to shrink their nuclear power programmes. This article presents recent research on the optimal role of nuclear power in reducing carbon emissions. Phasing out nuclear power would be costly, since it is currently the cheapest low-carbon alternative to fossil fuels. However, these costs would be largely offset by the implicit subsidy to R&D in renewables, which suffers from innovation externalities. Still, carbon pricing and explicit R&D subsidies would be a more efficient way of determining the future of nuclear power.
"We learned from Fukushima that we have to deal differently with risks… We believe we as a country can be a trailblazer for a new age of renewable energy sources… We can be the first major industrialized country that achieves the transition to renewable energy with all the opportunities – for exports, development, technology, jobs – it carries with it.” Angela Merkel (distinct quotes).
R&D, energy, climate change, environment, climate policy, carbon pricing, energy mix, nuclear power
California energy efficiency: Lessons for the rest of the world, or not?
Arik Levinson 09 August 2013
Efficiency standards appear to be at the centre of US climate policy. But is this policy effective? This column argues that, thinking laterally, evidence suggests that there are reasons to be suspicious. If the US is to focus so heavily on energy efficiency, we ought to have a better understanding of its effectiveness.
Energy-efficiency standards for buildings and appliances and vehicles appear to be a central component of climate policy in the US. New energy-efficiency regulations account for 44% of projected greenhouse gas emissions reductions from California's Global Warming Solutions Act of 2006, 36% of projected reductions from Massachusetts's 2008 Act, and about a third of the policy proposals in President Obama's June 2013 climate speech at Georgetown University.1 But do energy-efficiency standards work?
US, climate change, energy efficiency
Facing up to uncertainty in climate-change economics
Geoffrey Heal, Antony Millner 13 June 2013
Uncertainty is intrinsic in climate-change economics. This column argues that it’s here to stay. There will be no accurate predictive tool for predicting economic growth, the emergence of clean-energy technology, or economic vulnerability in light of climate change in the near future. But this is not an excuse not to think about climate economics. Research and policy would do well to be more explicit about what we don’t know. We should avoid subjective guesses, and focus more on credible forecasts from empirically sound, if uncertain, models.
Uncertainty is intrinsic in climate change economics. We know that increases in greenhouse gas concentrations are causing shifts in the climate, but not precisely how large these shifts will be, nor when and where they will occur. Neither do we understand fully the social and economic consequences of these changes, or the options that will be available for coping with them in the future. Characterising our knowledge of these uncertainties, and finding decision tools that are appropriate to our state of knowledge, is a vital part of sensible evaluations of climate-policy options.
climate change, uncertainty
Four changes to trade rules to facilitate climate change action
Aaditya Mattoo, Arvind Subramanian 04 May 2013
Global climate cooperation has collapsed but the need for action has not disappeared. This column argues that only radical technological progress can reconcile climate-change goals with development. It argues that four changes in WTO trade rules could facilitate climate-change action and technological advances without unduly damaging trade.
The research on the links between trade rules and climate-change action has mostly been concerned with how far climate-change action is constrained by current trade rules pertaining, for example, to border-tax adjustments (Horn and Mavroidis 2011), subsidies (Green 2006) and exports of natural gas (Levi 2012 and Hufbauer et al. 2013).
The research reflects – in part – the assumption that climate-change action (e.g. carbon-price increases) can be taken as a given. But our approach and proposals are predicated on:
climate change, technology, adaptation