ALBERT

Description: We present two solution algorithms for a large-scale integrated assessment model of climate change mitigation: the well known Negishi algorithm and a newly developed Nash algorithm. The algorithms are used to calculate the Pareto-optimum and competitive equilibrium, respectively, for the global model that includes trade in a number of goods as an interaction between regions. We demonstrate that in the absence of externalities both algorithms deliver the same solution. The Nash algorithm is computationally much more effective, and scales more favorably with the number of regions. In the presence of externalities between regions the two solutions differ, which we demonstrate by the inclusion of global spillovers from learning-by-doing in the energy sector. The non-cooperative treatment of the spillover externality in the Nash algorithm leads to a delay in the expansion of renewable energy installations compared to the cooperative solution derived using the Negishi algorithm.

Description: We use the flexible model coupling technology known as the bespoke framework generator to link established existing modules representing dynamics in the global economy (GEMINI_E3), the energy system (TIAM-WORLD), the global and regional climate system (MAGICC6, PLASIM-ENTS and ClimGEN), the agricultural system, the hydrological system and ecosystems (LPJmL), together in a single integrated assessment modelling (IAM) framework, building on the pre-existing framework of the Community Integrated Assessment System. Next, we demonstrate the application of the framework to produce policy-relevant scientific information. We use it to show that when using carbon price mechanisms to induce a transition from a high-carbon to a low-carbon economy, prices can be minimised if policy action is taken early, if burden sharing regimes are used, and if agriculture is intensified. Some of the coupled models have been made available for use at a secure and user-friendly web portal.

Description: Global GDP projections for the 21st century are needed for the exploration of long-term global environmental problems, in particular climate change. Greenhouse gas emissions as well as climate change mitigation and adaption capacities strongly depend on growth of per capita income. However, long-term economic projections are highly uncertain. This paper provides five new long-term economic scenarios as part of the newly developed shared socio-economic pathways (SSPs) which represent a set of widely diverging narratives. A method of GDP scenario building is presented that is based on assumptions about technological progress, and human and physical capital formation as major drivers of long-term GDP per capita growth. The impact of these drivers differs significantly between different shared socio-economic pathways and is traced back to the underlying narratives and the associated population and education scenarios. In a highly fragmented world, technological and knowledge spillovers are low. Hence, the growth impact of technological progress and human capital is comparatively low, and per capita income diverges between world regions. These factors play a much larger role in globalization scenarios, leading to higher economic growth and stronger convergence between world regions. At the global average, per capita GDP is projected to grow annually in a range between 1.0% (SSP3) and 2.8% (SSP5) from 2010 to 2100. While this covers a large portion of variety in future global economic growth projections, plausible lower and higher growth projections may still be conceivable. The GDP projections are put into the context of historic patterns of economic growth (stylized facts), and their sensitivity to key assumptions is explored.

Description: Ambitious climate policy increases the cost of energy and therefore has important interactions with the prospects of development in the countries of Sub-Saharan Africa. These interactions include the potential for gain for the continent in the form of new trade opportunities and climate finance. In this paper we quantify the costs and benefits of climate policy in Sub-Saharan Africa. Using an Integrated Assessment Model, we consider key characteristics of the continent, including the favorable conditions for renewable energy. A newly designed scenario analysis allows identifying the main drivers of the results. We show that Sub-Saharan Africa could implement climate policy in line with the 2 °C target at roughly net zero costs if the international community follows up on its commitment towards supporting developing countries as declared in the Paris Agreement. Sub-Saharan Africa could become an important supplier of energy from biomass and could thus even benefit from more ambitious climate policy due to higher demand for this source of energy. The absence of a painful trade-off between short-term development and long-term climate stabilization could provide policy-makers with a much richer policy option space than previously considered. One such option is to link climate policy with poverty reduction through, for example, the provision of clean electricity.

Description: We analyze the burden sharing of climate stabilization under socio-economic scenario uncertainty and for various burden-sharing regimes. For this purpose, we quantify mitigation efforts in terms of emission reductions and mitigation costs for a number of major world regions, considering scenarios with and without climate finance. The influence of socio-economic drivers on the burden sharing is crucial, but it has not yet been studied in the context of the most recent scenario framework—the shared socio-economic pathway scenarios (SSPs). Here, we show that sustainable development as represented by the SSP1 scenario reduces the challenges of burden sharing and makes it easier to achieve equitable climate policies. In contrast, in a scenario with fossil-fueled development (SSP5), the risk of political infeasibility—measured by the variation of mitigation costs across regions and the amount of implied international transfers—increases with most burden-sharing regimes.

Description: This paper presents a set of energy and resource intensive scenarios based on the concept of Shared Socio-Economic Pathways (SSPs). The scenario family is characterized by rapid and fossil-fueled development with high socio-economic challenges to mitigation and low socio-economic challenges to adaptation (SSP5). A special focus is placed on the SSP5 marker scenario developed by the REMIND-MAgPIE integrated assessment modeling framework. The SSP5 baseline scenarios exhibit very high levels of fossil fuel use, up to a doubling of global food demand, and up to a tripling of energy demand and greenhouse gas emissions over the course of the century, marking the upper end of the scenario literature in several dimensions. These scenarios are currently the only SSP scenarios that result in a radiative forcing pathway as high as the highest Representative Concentration Pathway (RCP8.5). This paper further investigates the direct impact of mitigation policies on the SSP5 energy, land and emissions dynamics confirming high socio-economic challenges to mitigation in SSP5. Nonetheless, mitigation policies reaching climate forcing levels as low as in the lowest Representative Concentration Pathway (RCP2.6) are accessible in SSP5. The SSP5 scenarios presented in this paper aim to provide useful reference points for future climate change, climate impact, adaption and mitigation analysis, and broader questions of sustainable development.

Description: Research on low-carbon transformation pathways has focused on carbon pricing as a means for climate stabilization. By contrast, technology policies remain the more prominent national climate policy instruments today: renewable energy subsidies amount to more than US$100 billion per year globally – more than twice the value of priced carbon in 2016. Given technology spillovers and global learning effects, it remains unclear how technology policies can be coordinated internationally as part of climate stabilization policy. Our study is the first to derive optimal technology and climate policy for the 2∘C target using an energy-economy-climate model. We show an economic rationale to include an international technology protocol alongside carbon pricing: Cumulative low-carbon subsidies of more than US$1 trillion from 2020 until the end of the century mainly support solar power as well as electric- and hydrogen-powered passenger vehicles. Higher carbon pricing could replace subsidies at very low cost, but mitigation cost increases from delayed carbon pricing can be reduced only somewhat by stepping up subsidies. Our study suggests that existing low-carbon subsidies must be complemented by full carbon pricing to achieve 2∘C cost-efficiently: Alongside the optimal carbon price, low-carbon subsidies should amount to no more than ∼6% of the value of priced carbon.

Description: Despite increasing empirical evidence of strong links between climate and economic growth, there is no established model to describe the dynamics of how different types of climate shocks affect growth patterns. Here we present the first comprehensive, comparative analysis of the long-term dynamics of one-time, temporary climate shocks on production factors, and factor productivity, respectively, in a Ramsey-type growth model. Damages acting directly on production factors allow us to study dynamic effects on factor allocation, savings and economic growth. We find that the persistence of impacts on economic activity is smallest for climate shocks directly impacting output, and successively increases for direct damages on capital, loss of labor and productivity shocks, related to different responses in savings rates and factor-specific growth. Recurring shocks lead to large welfare effects and long-term growth effects, directly linked to the persistence of individual shocks. Endogenous savings and shock anticipation both have adaptive effects but do not eliminate differences between impact channels or significantly lower the dissipation time. Accounting for endogenous growth mechanisms increases the effects. We also find strong effects on income shares, important for distributional implications. This work fosters conceptual understanding of impact dynamics in growth models, opening options for links to empirics.