Mitigation Costs in a Globalized World: Climate Policy Analysis with REMIND-R

Within this paper, we present the novel hybrid model REMIND-R and its application in a climate policy context based on the EU target to avoid a warming of the Earth’s atmosphere by more than 2°C compared to the pre-industrial level. This paper aims to identify necessary long-term changes in the energy system and the magnitude of costs to attain such a climate protection target under different designs of the post-2012 climate policy regime. The regional specification of mitigation costs is analyzed in the context of globalization where regions are linked by global markets for emission permits, goods, and several resources. From simulation experiments with REMIND-R, it turns out that quite different strategies of restructuring the energy system are pursued by the regions. Furthermore, it is demonstrated that the variance of mitigation costs is higher across regions than across policy regimes. First-order impacts, in particular, reduced rents from trade in fossil resources, prevail regardless of the design of the policy regime.     

Climate change decision-support and the tolerable windows approach

The Tolerable Windows Approach (TWA) to Integrated Assessments (IA) of global warming is based on external normative specifications of tolerable sets of climate impacts as well as proposed emission quotas and policy instruments for implementation. In a subsequent step, the complete set of admissible climate protection strategies which are compatible with these normative inputs is determined by scientific analysis. In doing so, minimum requirements concerning global and national greenhouse gas emission paths can be determined. In this paper we present the basic methodological elements of TWA, discuss its relation to more conventional approaches to IA like cost–benefit analyses, and present some preliminary results obtained by a reduced-form climate model.     

Capital markets and the costs of climate policies

Environmental Economics and Policy Studies - Globalization is accompanied by increasing current account imbalances. They can undermine the positive impacts of increasing international cooperation...