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Assessing Early Investments In Low Carbon Technologies Under Uncertainty
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Book Synopsis Assessing Early Investments in Low Carbon Technologies Under Uncertainty by : Eleanor Charlotte Ereira
Download or read book Assessing Early Investments in Low Carbon Technologies Under Uncertainty written by Eleanor Charlotte Ereira and published by . This book was released on 2010 with total page 122 pages. Available in PDF, EPUB and Kindle. Book excerpt: Climate change is a threat that could be mitigated by introducing new energy technologies into the electricity market that emit fewer greenhouse gas (GHG) emissions. We face many uncertainties that would affect the demand for each of these technologies in the future. The costs of these technologies decrease due to learning-by-doing as their capacity is built out. Given that we face uncertainties over future energy demands for particular technologies, and that costs reduce with experience, an important question that arises is whether policy makers should encourage early investments in technologies before they are economically competitive, so that they could be available in the future at lower cost should they be needed. If society benefits from early investments when future demands are uncertain, then there is an option value to investing today. This question of whether option values exist is investigated by focusing on Coal-fired Power Plants with Carbon Capture and Storage (CCS) as a case study of a new high-cost energy technology that has not yet been deployed at commercial scale. A decision analytic framework is applied to the MIT Emissions Prediction Policy Analysis (EPPA) model, a computable general equilibrium model that captures the feedback effects across different sectors of the economy, and measures the costs of meeting emissions targets. Three uncertainties are considered in constructing a decision framework: the future stringency of the US GHG emissions policy, the size of the US gas resource, and the cost of electricity from Coal with CCS. The decision modeled is whether to begin an annual investment schedule in Coal with CCS technology for 35 years. Each scenario in the decision framework is modeled in EPPA, and the output measure of welfare is used to compare the welfare loss to society of meeting the emissions target for each case. The decision framework is used to find which choice today, whether to invest in CCS or not, gives the smallest welfare cost and is therefore optimal for society. Sensitivity analysis on the probabilities of the three uncertainties is carried out to determine the conditions under which CCS investment is beneficial, and when it is not. The study finds that there are conditions, specified by ranges in probabilities for the uncertainties, where early investment in CCS does benefit society. The results of the decision analysis demonstrate that the benefits of CCS investment are realized in the latter part of the century, and so the resulting optimal decision depends on the choice of discount rate. The higher the rate, the smaller the benefit from investment until a threshold is reached where choosing to invest becomes the more costly decision. The decision of whether to invest is more sensitive to some uncertainties investigated than others. Specifically, the size of the US gas resource has the least impact, whereas the stringency of the future US GHG emissions policy has the greatest impact. This thesis presents a new framework for considering investments in energy technologies before they are economically competitive. If we can make educated assumptions as to the real probabilities we face, then extending this framework to technologies beyond CCS and expanding the decision analysis, would allow policymakers to induce investment in energy technologies that would enable us to meet our emissions targets at the lowest cost possible to society.
Book Synopsis Policy Uncertainty and Investment in Low-carbon Technology by : Silvia Albrizio
Download or read book Policy Uncertainty and Investment in Low-carbon Technology written by Silvia Albrizio and published by . This book was released on 2013 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the context of an emission trading scheme (ETS), we study how uncertainty over the environmental policy affectsfirms' investment in low-carbon technologies. We develop a three period sequential model that combines the industry and the electricity sectors and encompasses both irreversible and reversible investment possibilities for the firms. Additionally, we explicitly model the policy uncertainty in the regulator's objective function as well as the market interactions that give rise to an endogenous price of permits. We find that uncertainty reduces irreversible investment and that the availability of both reversible and irreversible technologies partially eliminates the positive effect of policy uncertainty on reversible technology found in previous literature. Furthermore, we provide a framework that allows to assess the efficiency of different implementations of the scheme.
Book Synopsis Innovation under Uncertainty by : Valentina Bosetti
Download or read book Innovation under Uncertainty written by Valentina Bosetti and published by Edward Elgar Publishing. This book was released on 2015-02-27 with total page 187 pages. Available in PDF, EPUB and Kindle. Book excerpt: Innovation under Uncertainty presents original research and insights on innovation in carbon-free energy technologies. Valentina Bosetti and Michela Catenacci provide a complete and informative assessment of the current potentials and limits and offer
Book Synopsis Policy Uncertainty and Investment in Low-carbon Technology by : Silvia Albrizio
Download or read book Policy Uncertainty and Investment in Low-carbon Technology written by Silvia Albrizio and published by . This book was released on 2012 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the context of an emission trading scheme (ETS), we study how uncertainty over the environmental policy affectsfirms' investment in low-carbon technologies. We develop a three period sequential model that combines the industry and the electricity sectors and encompasses both irreversible and reversible investment possibilities for the firms. Additionally, we explicitly model the policy uncertainty in the regulator's objective function as well as the market interactions that give rise to an endogenous price of permits. We find that uncertainty reduces irreversible investment and that the availability of both reversible and irreversible technologies partially eliminates the positive effect of policy uncertainty on reversible technology found in previous literature. Furthermore, we provide a framework that allows to assess the efficiency of different implementations of the scheme.
Book Synopsis Analysis of the Impact of Technological Change on the Cost of Achieving Climate Change Mitigation Targets by : Robert W. Barron
Download or read book Analysis of the Impact of Technological Change on the Cost of Achieving Climate Change Mitigation Targets written by Robert W. Barron and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: There is widespread consensus that low carbon energy technologies will play a key role in the future global energy system. Many of the low-carbon technologies under consideration are not yet commercially available, and their ultimate value depends on a host of deeply uncertain socioeconomic, environmental, and technological considerations. While it is clear that significant investment in the energy system is needed, the optimal allocation of these investments is unclear. This dissertation develops a methodology for (1) analyzing the impact of low carbon energy technologies on the cost of meeting emission reduction targets (policy cost) and (2) using this information to develop optimal R&D investment portfolios. We then apply this methodology to analyze the value of low carbon energy R&D across two key dimensions of uncertainty and two theoretical models. In the first part we apply a set of expert-elicitation derived future technology scenarios to the Global Change Assessment Model and conduct a large ensemble of model runs. We then use the results of these runs to develop our methodology for analyzing the impact of technological change in low carbon energy technologies on policy cost. The second part builds on the methodology of part one by adding probabilistic information to the analysis. This allows us to not only measure the impact of technological change on policy costs, but also to derive optimal R&D investment portfolios. We conduct a sensitivity analysis of our results across assumptions about the structure of the demand side of the energy system. In the third part we consider the influence of model choice on our results. We apply harmonized input assumptions to two different integrated assessment models and examine how the model outputs differ. We find that although the impacts of low carbon energy technologies vary widely across different scenarios of socioeconomic and technological development, as well as across the models used for the analysis, the optimal R&D investment portfolios are surprisingly robust. We also find that return to R&D investment is sharply decreasing.
Book Synopsis Adoption of Renewable Energy Technologies Under Uncertainty by : Kiran Torani
Download or read book Adoption of Renewable Energy Technologies Under Uncertainty written by Kiran Torani and published by . This book was released on 2014 with total page 115 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract Adoption of Renewable Energy Technologies under Uncertainty by Kiran Nari Torani Doctor of Philosophy in Agricultural and Resource Economics University of California, Berkeley Professor Gordon Rausser, Chair This dissertation presents both a theoretical and empirical examination of the optimal allocation of public R & D investments in combination with downstream policy instruments across emerging renewable technologies. The central issue remains how best to enable technological change, and accelerate innovation and widespread adoption of new energy technologies and move towards a more sustainable energy system. The first essay presents a stochastic dynamic real options model of the adoption of solar PV in the residential and commercial sector, evaluating the threshold and timing of the consumer's optimal investment decision given two sources of uncertainty. Analytic results regarding the threshold of adoption under alternative regimes of R & D funding and technological change, electricity prices, subsidies and carbon taxes are derived. And we simulate the model to obtain a cumulative likelihood and timing of substitution amongst energy resources and towards solar PV under plausible rates of technological change, electricity prices, subsidies and carbon taxes. The results indicate that there will be a displacement of incumbent technologies and a widespread shift towards solar PV in the residential and commercial sector in under 30 years, under plausible parameter assumptions - and that crucially, this can occur independent of consumer subsidies and carbon pricing policies (at $21/ton CO2, $65/ton CO2 and $150/ton CO2). In general, results across all scenarios consistently indicate that average historic consumer subsidies and carbon pricing policies up to $150/ton CO2 have a modest effect in accelerating adoption, and may not be an effective part of climate policy in this regard. Instead, we find that R & D support and further technological change is the crucial determinant and main driver of widespread adoption of solar PV - suggesting that subsidies and taxes don't make a substantial difference in a technology that's not viable, while research does. This further suggests that optimal policies may change over time, however current continued R & D support and technological advancement is the crucial determinant of widespread transition to solar and plausibly other backstop technologies - and that it should play a key role in policy measures intended to combat climate change. The results do not imply that carbon pricing shouldn't play a role in climate policy in general. Carbon pricing may be effective in reducing emissions and encouraging the transition towards other clean technologies - however it has a decidedly modest impact in accelerating adoption of solar PV at levels up to $150/ton CO2. The second essay examines the role of technology features in policy design, and provides a broader discussion and context to the results from the first essay. It examines the key role of the technology innovation cycle and changing optimal policies at every stage of the technology in the transition towards renewable energy technologies. And it examines the stages of the technology innovation process and the role of policy incentives at every stage - including the timing, sequencing, and role of investments in public R & D, in deployment polices, and in CO2 taxes. We examine the notion that that optimal policies will change over time, driven primarily by the characteristics of the technology, and its stage in the innovation cycle - and that this will crucially determine the impact, gains and tradeoffs between alternate policy measures such as R & D policies, deployment policies, and carbon pricing policies. We find that technology and policies must be deployed in a coordinated manner such that emission reduction benefits are achieved at an acceptable cost. And we find that targeted policy should consider every stage of the technology innovation cycle - from R & D to commercialization in overcoming barriers to the development and widespread adoption of nascent technologies. Based on our analysis and results we find that there is a pressing need for the reallocation of public resources from consumer subsidies towards public R & D budgets in emerging energy technologies such as solar PV, and plausibly other backstop technologies. We argue for an expanded role of aggressive R & D policies and increased public R & D funding - and contend that there is an imbalance in resources allocated towards adoption and commercialization subsidies relative to R & D investments for a technology such as solar PV. We contend that increased and aggressive R & D investments will be the key policy initiative in enabling the transition towards clean energy technologies such as solar PV in a sustainable manner. When deployment policies are justified, the appropriate timing and sequencing in the technology development stage is crucial. Investments in commercialization and deployment subsidies before sufficient R & D investments and breakthroughs have occurred will be ineffective and unsustainable, or alternatively will need to be very high to have any significant impact (Torani, Rausser, and Zilberman, 2014). Widespread adoption and commercialization of emerging and unproven technologies and systems will be unlikely to occur unless sufficient major technological discoveries and improvements have taken place - which will need to be driven by appropriate and sufficient R & D investments. The logical sequence of policies necessitates first making sufficient investments and allocating resources towards R & D and the necessary technological discoveries, which can then be followed by downstream investments to enhance adoption, experience and LBD. In general, we find that the appropriate emphasis and sequencing of R & D and learning investments is a pertinent issue, and optimal timing and allocation between the two depends in part on the characteristics of the technology itself. In addition, while almost all economic studies find a case for imposing immediate restraints on GHG emissions, e.g. with initially low carbon taxes, we find that reasonable and plausible levels of CO2 taxes may not be effective in encouraging technology adoption and reducing emissions while clean technologies are not commercially viable as yet. To be effective in encouraging technology adoption at an early stage of technological innovation, we contend that a large CO2 tax may be needed, far larger than suggested at reasonable levels - with significant implications on distributional effects and political feasibility. We emphasize that technology and policies must be deployed in a coordinated manner such that the emission reduction benefits are achieved at an acceptable cost (Williams et al., 2012). Our results suggest that the first and most important stage does not lie in imposing CO2 taxes, but rather in investing in R & D and technological advancements. Once clean technologies are sufficiently ready, reasonably priced carbon taxes will bite to a larger extent and be more effective at plausible levels. We find that one plausible strategy would be either to introduce high CO2 taxes or to subsidize R & D first, followed by deployment and LBD policies, and then to impose reasonable carbon taxes - in which case scientific advances and technological changes would make CO2 emissions abatement less costly, and CO2 pricing would be effective at reasonable levels. The third essay provides a precursor and basis for the other two chapters. The paper outlines an analytical framework to determine the optimal combination of renewable energy public R & D investment in combination with downstream policy instruments across the emerging technologies as an ex-ante portfolio analysis of public and private R & D under risk and uncertainty. Our framework is based on the estimation of probability distributions for potential future cost reductions resulting from R & D investments from the public and private sectors. To date, the government lacks coordinated support of renewable energy technologies across upstream R & D investments and downstream policy instruments. Without an objective, ex-ante guide for renewable energy investment, governments are likely to promote technologies based on the effectiveness of political economic efforts. The government's policies should however depend on the technology's probability distribution of cost breakthroughs for each technology and on the environmental impact. In this paper we outline an analytical framework to develop a portfolio analysis of R & D investments in renewable energy technologies, with the subsequent analysis designed to allocate R & D investments across renewable energy technologies in a manner that minimizes the risk for a specified level of expected returns, taking into account both the expected reductions in cost and the variance of the expectations of cost reductions, and thus providing an objective benchmark for efficient allocation of resources across renewable energy technologies. Special emphasis is placed on the estimation of probability distributions based on elicitation from experts in each field of technology in terms of the mean and standard deviation - on which we base the characterization of the underlying probability distributions on cost and productivity measures, and which forms the basis for executing a portfolio analysis of renewable energy technologies.
Book Synopsis Energy System Transformation by : Ashley E. Finan
Download or read book Energy System Transformation written by Ashley E. Finan and published by . This book was released on 2012 with total page 337 pages. Available in PDF, EPUB and Kindle. Book excerpt: The U.S. government and others around the world have been exploring strategies to respond to climate change for nearly two decades. Consideration of these efforts as well as the 2010 oil spill in the Gulf of Mexico, the 2011 nuclear accident at Fukushima Daichi, and improved shale gas recovery methods are spurring debate on energy policy options. An important focus of this debate is the role of innovation in reducing carbon emissions while also maintaining the affordability of energy supplies. The scale of the required transition to a low-carbon energy system is large. A simple calculation scheme based on the Kaya identity is used to evaluate this transition and to estimate the magnitude of the changes that would be required. The recent performance of the U.S. economy with respect to decarbonization and energy intensity is shown to fall far short of future needs in low-carbon scenarios. The MARKAL model is used to estimate the magnitude of the capital investment required to transform the U.S. electric power sector. A comprehensive treatment of the innovation process must consider not only research and development but also the 'downstream' stages of demonstration, early adoption, and evolutionary post-commercialization improvements. Under greenhouse gas reduction scenarios, investments will be needed in low-carbon technologies when there is still considerable uncertainty and risk associated with their performance, and when they may not be competitive with incumbent energy systems. No less than investments in research and development, these are investments in innovation. A two-stage model of the innovation process is used to estimate the investment needed to bring a new technology to a competitive cost level. The model is used to explore the contributions of early-stage and later-stage investments in innovation, and illustrates the importance of the technological learning process. A case study of innovation in the nuclear energy industry is used to evaluate the effectiveness of alternative policies for driving investment in energy technologies more generally. The case study reveals a pattern of erratic policy that discouraged private investment. The use of technology-push rather than market-pull policy tools is found to have encouraged technology lock-in and discouraged market-driven innovation.
Book Synopsis Should We Give Up After Solyndra? by : Mort David Webster
Download or read book Should We Give Up After Solyndra? written by Mort David Webster and published by . This book was released on 2015 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: Global climate change and other environmental challenges require the development of new energy technologies with lower emissions. In the near-term, R & D investments, either by government or the private sector, can bring down the costs of these lower emission technologies. However, the results of R & D are uncertain, and there are many potential technologies that may turn out to play an effective role in the future energy mix. In this paper, we address the problem of allocating R & D across technologies under uncertainty. Specifically, given two technologies, one with lower costs at present, but the other with greater uncertainty in the returns to R & D, how should one allocate the R & D budget? We develop a multi-stage stochastic dynamic programming version of an integrated assessment model of climate and economy that represents endogenous technological change through R & D decisions for two substitutable non-carbon backstop technologies. Using the model, we demonstrate that near-term R & D into the higher cost technology is justified, and that the amount of R & D into the high cost technology increases with both the variance in the uncertainty in returns to R & D and with the skewness of the uncertainty. We also present an illustrative case study of wind and solar photovoltaic technologies, and show that poor R & D results in early periods do not necessarily mean that investment should not continue.
Book Synopsis Climate Policy Uncertainty and Investment Risk by : William Blyth
Download or read book Climate Policy Uncertainty and Investment Risk written by William Blyth and published by OECD Publishing. This book was released on 2007 with total page 152 pages. Available in PDF, EPUB and Kindle. Book excerpt: This publication examines how uncertainty in climate change policy may affect investment behaviour in the power sector and how the costs of transition to a low-carbon economy may be addressed. For power companies, where capital stock is intensive and long-lived, those risks rank among the biggest and can create an incentive to delay investment. The analysis show that the risk premiums of climate change uncertainty can add 40 per cent of construction costs of the plant for power investors, and 10 per cent of price surcharges for the electricity end-users. It also looks at the sensitivity of different power sector investment decisions to different risks and considers the implications for policy development and design.
Book Synopsis Rediscovering Sustainability by : A.R.G. Heesterman
Download or read book Rediscovering Sustainability written by A.R.G. Heesterman and published by Routledge. This book was released on 2016-04-08 with total page 338 pages. Available in PDF, EPUB and Kindle. Book excerpt: Drawing on historical and current data, this thought-provoking book summarises the pathways to the present predicament and maps out strategies to develop financial and economic systems for a sustainable world. The content is arranged in three parts addressing 'Stylised Market Equilibrium', 'The Real Market Economy', and 'Present Affluence Versus the Future'. In Rediscovering Sustainability the authors help bridge the gap in understanding between scientists and the green movement on the one side and many economists on the other. Greens worry about catastrophic climate change and anthropocene mass extinction. Economists express reservations about spending substantial amounts of money on preventing environmental degradation. Aart and Wiebina Heesterman argue that there are inherent limitations in standard economics which cause blind spots in its environmental economics sub-field, as well as issues to do with simple lack of knowledge. In this timely book, the limitations of the neoclassical economics framework are examined. The authors explore the relationship between Keynesian aggregate economics and financial sustainability, as well as that between scale economies, locational economics and the understated cost of fuel for transport. The impact of economic theory on practice is examined. Conventional economic theory and political compromise bear unhelpfully on an energy market constrained by emissions targets. Rediscovering Sustainability is an invaluable aid to understanding for those teaching, studying, campaigning, policy-making, or involved with the science or politics of environmental and sustainability issues. It is also a book for those concerned with the application of economic theory in any context.
Book Synopsis Transition to a Low Carbon Electricity System by : Jinxi Yang
Download or read book Transition to a Low Carbon Electricity System written by Jinxi Yang and published by . This book was released on 2021 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Climate Adaptation Engineering by : Emilio Bastidas-Arteaga
Download or read book Climate Adaptation Engineering written by Emilio Bastidas-Arteaga and published by Butterworth-Heinemann. This book was released on 2019-03-16 with total page 387 pages. Available in PDF, EPUB and Kindle. Book excerpt: Climate Adaptation Engineering defines the measures taken to reduce vulnerability and increase the resiliency of built infrastructure. This includes enhancement of design standards, structural strengthening, utilisation of new materials, and changes to inspection and maintenance regimes, etc. The book examines the known effects and relationships of climate change variables on infrastructure and risk-management policies. Rich with case studies, this resource will enable engineers to develop a long-term, self-sustained assessment capacity and more effective risk-management strategies. The book's authors also take a long-term view, dealing with several aspects of climate change. The text has been written in a style accessible to technical and non-technical readers with a focus on practical decision outcomes. Provides climate scenarios and their likelihoods, hazard modelling (wind, flood, heatwaves, etc.), infrastructure vulnerability, resilience or exposure (likelihood and extent of damage) Introduces the key concepts needed to assess the risks, costs and benefits of future proofing infrastructures in a changing climate Includes case studies authored by experts from around the world
Book Synopsis Characterizing and Responding to Uncertainty in Climate Change by : Derek Mark Lemoine
Download or read book Characterizing and Responding to Uncertainty in Climate Change written by Derek Mark Lemoine and published by . This book was released on 2011 with total page 390 pages. Available in PDF, EPUB and Kindle. Book excerpt: The development and analysis of climate policy proposals intertwine with the structure of knowledge and the possibility for changing it. Key questions concern the long-term interaction between policy, technology, infrastructure, and the earth system, but each of these components is deeply uncertain. This dissertation advances the description of knowledge about the climate system, the assessment of economic responses to climatic possibilities, and the development of policy that positions society to achieve long-term climate goals. It offers new paths to describing understanding of complex systems and to modeling optimal management under structural uncertainty. The first chapter formalizes uncertainty about equilibrium climate change. Its hierarchical Bayes framework allows climate models to be incomplete and to share biases, and it shows how prior beliefs about models' completeness and independence interact with models' estimates of feedback strength to determine distributions for temperature change. When models might share biases, the results of additional models might tell us more about models' common structure than about the real-world processes they aim to represent. The most valuable information would then come not from related models but from alternate estimates that should carry a different set of unobservable biases. The possibility that models are wrong in common ways limits the degree to which models' estimates can narrow the probability distribution for feedback strength, which also limits our ability to rule out extreme climatic outcomes. The second chapter empirically estimates a feedback that is especially difficult to model. Climate-carbon feedbacks (or carbon cycle feedbacks) describe the effect of temperature on carbon dioxide (CO2). If they are positive, then not only does anthropogenic CO2 cause warming via the greenhouse effect and earth system feedbacks, but this warming itself increases CO2 and so causes further warming. Previous empirical work estimated a stronger feedback than did coupled climate-carbon cycle models. However, those empirical estimates were probably biased upwards while coupled models' estimates were primarily driven by a few ill-constrained parameters. This chapter attempts to obtain an unbiased estimate of climate-carbon feedback strength by using variations in summer radiation in the Arctic (i.e., variations in orbital forcing) to identify the effect of temperature on CO2 in 800 ky ice core records. It finds a range for climate-carbon feedbacks that is closer to coupled models' estimates than to previous empirical work. Since climate-carbon feedbacks are probably positive, temperature change projections tend to underestimate an emission path's consequences if they do not allow the carbon cycle to respond to changing temperatures. The next three chapters assess economic responses to climate change in a policy-optimizing integrated assessment model, in games with long-lived investments into abatement capital, and in a cost-effectiveness model with multiple policy options stretching over long time horizons. The first of these chapters extends a well-known integrated assessment model to include the possibility of abrupt shifts in the climate system. It also changes the model's structure to make the decision-maker aware of uncertainty and of the possibility for learning over time, and it generalizes the welfare evaluation to reflect that uncertainty about temperature change is qualitatively unlike uncertainty about climate thresholds. It finds that tipping points can increase the near-term social cost of carbon by more than 50% when they raise climate sensitivity or make damages more convex. They have less of an effect when they increase the atmospheric lifetime of CO2 or the quantity of non-CO2 greenhouse gases. Allowing the policymaker to be differentially averse to consumption fluctuations over time and over risk increases the near-term social cost of carbon by 150%, with tipping point possibilities then increasing it by another 50%. The possibility of tipping points is more important for the social cost of carbon than is the ambiguity attitude the decision-maker uses in evaluating them. The second of these climate economics chapters models the optimal emission tax when firms can adopt low-pollution technology that reduces abatement cost. The regulator anticipates this adoption but must set the tax before firms invest. In many cases, a linear emission tax cannot obtain both socially optimal investment and socially optimal emissions because the regulator either will set it inefficiently high to stimulate investment or will set it at an ex post optimal level that obtains inefficiently low investment. The difficulty is that an emission tax fixes both the incentive to invest and the incentive to abate, but these two goals rarely align perfectly when investment is lumpy. In contrast, tradable permits policies do not suffer this tension because the permit price responds automatically to realized investment. A numerical model then considers the ability of the regulator to select not only the level but also the duration of the tax. It shows that outcomes are still often socially inefficient. Further, the regulator will occasionally use a longer tax to obtain investment when firms expect their investments to lower the tax in the next period, but the cost of not being able to adjust the next period's tax limits the parameter space in which the longer tax is employed. The fifth chapter constructs cost-effective dynamic policy portfolios of abatement, research and development (R & D), and negative emission technology deployment in order to achieve 21st century climate targets. It includes two types of stochastic technological change in a stylized numerical model and allows each type of technology to respond both to public R & D and to abatement policies. It compares worlds where negative emission technologies are and are not available, and it compares a world where the century's cumulative net emissions are constrained with a world in which threshold possibilities lead policy to constrain cumulative net emissions in each year during the century. It finds that R & D options are valuable and exercised but do not substitute for near-term abatement. The type of R & D undertaken depends on long-term emission goals because those determine the magnitude of future abatement. When the cumulative emission constraint is stringent, negative emission technologies substitute for near-term abatement and affect the type of R & D undertaken, but if threshold considerations eliminate the freedom to temporarily overshoot emission targets, negative emission technologies become less valuable. The availability of negative emission technologies provides a valuable option to partially undo previous emissions, but abatement also gains option value from increasing future flexibility to forgo reliance on negative emission technologies if the technology or climate prove problematic in the interim. The concluding chapter directly connects uncertainty about climate change to uncertainty about the cost of achieving CO2 targets. It shows how beliefs about technology, temperature, and damages interact to affect the cost-effectiveness of climate targets. It finds that the speed with which damages increase at higher temperatures is the most important of these factors. Both 450 parts per million (ppm) and 550 ppm CO2 targets provide net benefits for quadratic damage functions that reduce annual output by less than the 1-2% estimated for 2.5°C of warming. Cubic damage functions support both CO2 targets even if 2.5°C of warming only reduces output by 0.2% or less. More convex damage functions also reduce the importance of abatement cost uncertainty. significantly increase the range of damage functions that support these targets and decrease the importance of abatement cost uncertainty. In addition, because extreme feedback outcomes have little effect over the next decades, a thinner-tailed temperature distribution (resulting from optimistic prior beliefs about climate models' independence and biases) supports CO2 targets under slightly less severe damages than does the thicker-tailed distribution (resulting from skepticism about climate models' independence and biases). Emission reductions hedge against greater societal sensitivity to temperature increases while exposing society to the upside of positive technology surprises. The epistemology of complex systems in an out-of-sample world is a key motif. This dissertation advances knowledge of climate change and understanding of policy design in settings with limited ability to predict future changes or responses. Further work should seek a more unified framework for describing and acting on knowledge of evolving complex systems.
Book Synopsis Environmental Fiscal Reform and Unemployment by : Carlo Carraro
Download or read book Environmental Fiscal Reform and Unemployment written by Carlo Carraro and published by Springer Science & Business Media. This book was released on 2013-03-14 with total page 286 pages. Available in PDF, EPUB and Kindle. Book excerpt: The European Union faces several interlinked challenges: how to protect the environment and favour sustainability; how to reduce unemployment and foster competitiveness in a context of growing globalization; how to reduce regional disparities among and within me mb er countries. The recent policy debate has clarified that the above objectives are not a trade off if jointly tackled. In particular, win-win policy options are available to the European Union by an appropriate integration of regulation, macro policy, social policy, fiscal policy and environmental policy. Evidence shows that optimising on each single policy will not meet the needs of the European Union. On the contrary, an integrated approach will make it possible to reach the various objectives, as stated in the Treaty on European Union, in the 5th Environmental Action Programme, in the White Paper on Growth, Competitiveness and Employment. This integrated approach would im plement a genuine sustainable development policy.
Author :National Academies of Sciences, Engineering, and Medicine Publisher :National Academies Press ISBN 13 :0309483360 Total Pages :257 pages Book Rating :4.3/5 (94 download)
Book Synopsis Gaseous Carbon Waste Streams Utilization by : National Academies of Sciences, Engineering, and Medicine
Download or read book Gaseous Carbon Waste Streams Utilization written by National Academies of Sciences, Engineering, and Medicine and published by National Academies Press. This book was released on 2019-02-22 with total page 257 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the quest to mitigate the buildup of greenhouse gases in Earth's atmosphere, researchers and policymakers have increasingly turned their attention to techniques for capturing greenhouse gases such as carbon dioxide and methane, either from the locations where they are emitted or directly from the atmosphere. Once captured, these gases can be stored or put to use. While both carbon storage and carbon utilization have costs, utilization offers the opportunity to recover some of the cost and even generate economic value. While current carbon utilization projects operate at a relatively small scale, some estimates suggest the market for waste carbon-derived products could grow to hundreds of billions of dollars within a few decades, utilizing several thousand teragrams of waste carbon gases per year. Gaseous Carbon Waste Streams Utilization: Status and Research Needs assesses research and development needs relevant to understanding and improving the commercial viability of waste carbon utilization technologies and defines a research agenda to address key challenges. The report is intended to help inform decision making surrounding the development and deployment of waste carbon utilization technologies under a variety of circumstances, whether motivated by a goal to improve processes for making carbon-based products, to generate revenue, or to achieve environmental goals.
Book Synopsis Low-Carbon Development by : Raffaello Cervigni
Download or read book Low-Carbon Development written by Raffaello Cervigni and published by World Bank Publications. This book was released on 2013-08-05 with total page 189 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Federal Government of Nigeria has adopted an ambitious strategy to make Nigeria the world’s 20th largest economy by 2020. Sustaining such a pace of growth will entail rapid expansion of the level of activity in key carbon-emitting sectors, such as power, oil and gas, agriculture and transport. In the absence of policies to accompany economic growth with a reduced carbon foot-print, emissions of greenhouse gases could more than double in the next two decades. This study finds that there are several options for Nigeria to achieve the development objectives of vision 20:2020 and beyond, but stabilizing emissions at 2010 levels, and with domestic benefits in the order of 2 percent of GDP. These benefits include cheaper and more diversified electricity sources; more efficient operation of the oil and gas industry; more productive and climate –resilient agriculture; and better transport services, resulting in fuel economies, better air quality, and reduced congestion. The study outlines several actions that the Federal Government could undertake to facilitate the transition towards a low carbon economy, including enhanced governance for climate action, integration of climate consideration in the Agriculture Transformation Agenda, promotion of energy efficiency programs, scale-up of low carbon technologies in power generation (such as renewables an combined cycle gas turbines), and enhance vehicle fuel efficiency.
Book Synopsis Macroeconomic and Financial Policies for Climate Change Mitigation: A Review of the Literature by : Signe Krogstrup
Download or read book Macroeconomic and Financial Policies for Climate Change Mitigation: A Review of the Literature written by Signe Krogstrup and published by International Monetary Fund. This book was released on 2019-09-04 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: Climate change is one of the greatest challenges of this century. Mitigation requires a large-scale transition to a low-carbon economy. This paper provides an overview of the rapidly growing literature on the role of macroeconomic and financial policy tools in enabling this transition. The literature provides a menu of policy tools for mitigation. A key conclusion is that fiscal tools are first in line and central, but can and may need to be complemented by financial and monetary policy instruments. Some tools and policies raise unanswered questions about policy tool assignment and mandates, which we describe. The literature is scarce, however, on the most effective policy mix and the role of mitigation tools and goals in the overall policy framework.
