Control and game-theoretic assessment of climate change: Options for Joint Implementation

Abstract

The Framework Convention on Climate Change (FCCC) demands reductions in greenhouse gas emissions by the industrialized countries, while developing countries are still permitted to expand their energy consumption and greenhouse gas emissions. To identify, assess and compare options for avoiding and minimizing anthropogenic climate change, the framework of dynamic-game models (the SCX conflict model and the problem-specific TEM model) is applied to analyze the interaction between energy technologies, emission reductions and economic output with regard to energy use and the relationship between conflict and cooperation in climate policy.

Basic variables are energy production, emissions into the enviroment, the energy price and the economic output. Major control parameters are the allocation of funding with regard to various energy options and the degree of international cooperation through technology transfer and capital flow. In particular, the impact of cooperation between industrialized and developing countries is evaluated to understand the role of governments in the transition to sustainable market economies.

Simulations and numerical results are presented which can be used in a constructive way to implement a Joint-Implementation Program as an advanced market institution.