At the COP21, about 160 countries proposed the so-called INDCs that define GHG abatement objectives by 2030. While encouraging, these commitments are not ambitious enough to achieve the 2°C threshold by 2100, and further negotiations are needed. There is, therefore, a necessity to assess the economic consequence of a pathway to 2°C and the fair sharing of this burden. In this paper, we use a game theoretic approach for the design of fair agreements concerning additional abatements up to 2050. The simulations performed with our model confirm the weakness of INDC pledges but show that, with political determination, an equitable burden-sharing agreement can be achieved with very reasonable costs for all nations of approximately 0.8% of total discounted household consumption. With a more ambitious 1.5°C target, global cost is multiplied by a factor of four revealing the stringency of such an objective. Numerical results also show that the implementation of an international carbon market and participation of all countries in the game are crucial elements for reaching equitable burden-sharing among countries. For example, considering a reduced G20 coalition, welfare losses are multiplied by a factor of three for coalition members. Our simulations also permit a first evaluation of the possible impacts of the recently announced USA withdrawal from the Paris agreement.
Keywords: Climate negotiations, Burden sharing, COP21, Meta-game, Fair agreement, Computable general equilibrium, USA withdrawal
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Energy Transition Pathways to a low-carbon Europe in 2050: the degree of cooperation and the level of decentralization
In the framework of the Paris Agreement, the European Union (EU) will have to firmly set decarbonization targets to 2050. However, the viability on these targets is an ongoing discussion. The European Commission has made several propositions for energy and climate “roadmaps”. In this regard, this paper contributes by analyzing alternative pathways derived in a unique modelling process. As part of the SET-Nav project, we defined four pathways to a clean, secure and efficient energy system—taking different routes. Two key uncertainties shape the SET-Nav pathways: the level of cooperation (i.e. cooperation versus entrenchment) and the level of decentralization (i.e. decentralization versus path dependency). All four pathways achieve an 85-95% emissions reduction by 2050. We include a broad portfolio of options under distinct framework conditions by comprehensively analyzing all energy-consuming and energy-providing sectors as well as the general economic conditions. We do this by applying a unique suite of linked models developed in the SET-Nav project. By linking more than ten models, we overcome the traditional limitation of models that cover one single sector while at the same time having access to detail sectoral data and expertise. In this paper, we focus on the implications for the energy demand sectors (buildings, transport, and industry) and the electricity supply mix in Europe and compare our insights of the electricity sector to the scenarios of the recent European Commission (2018a) report “A clean Planet for all”.
Facing the Energy Transition: An Introduction
To reconcile sustainable economic growth and climate change mitigation, it is necessary to re-think the current energy model. The commitments of the Paris Climate
Agreement and the Sustainable Development Goals will not be achieved unless
energy systems around the world are fundamentally transformed. The energy architecture of the future requires an appropriate framework to cope with different
strategies of how this transformation might be approached. The special issue aims
to shed light on the role of markets and networks for the energy transition and
analyses the appropriate economic, regulatory and policy framework to enable
highly integrated, flexible, clean, and efficient energy systems. It is related to the VI
International Academic Symposium “Facing the Energy Transition: Markets and
Networks” organized in February 2018 by the Chair of Energy Sustainability at
the University of Barcelona
Evaluation of the Winter Pollution Mitigation Policy in China
Rapid industrialization in China has come with substantial increases in local air pollution. This paper quantifies the health benefits of the Winter Pollution Mitigation Policy of 2017. We estimate that this policy caused an 18% reduction in fine particulate concentration levels, resulting in 19,400 deaths avoided in 2017 due to pollution exposure in Beijing, Tianjin,…
Book Reviews
Are energy performance certificates a strong predictor of actual energy use? Evidence from high-frequency thermostat panel data
This paper examines the extent with which Energy Performance Certificates (EPCs) reflect observed energy used for heating. We use high-frequency smart thermostat panel data in combination with building characteristics and hourly weather information. We exploit variations in boiler operation in the neighborhood of a steady state indoor temperature to elicit the predictive power of an…
The Texas Deep Freeze of February 2021: What Happened and Lessons Learned?
Although various factors were blamed for the extended power outage on the ERCOT electricity grid in February 2021, no single problem fully explains the calamity. All forms of generation experienced capacity deratings, but failure to identify and address risks along fuel supply chains was a major contributor. Moreover, most proposed remedies do not fundamentally address…
OPEC’s Pursuit of Market Stability
We investigate attempts by the Organization of Petroleum Exporting Countries (OPEC) to stabilize the price of oil during the past fifty years. We first develop a novel decomposition of shifts in global demand and non-OPEC supply. This decomposition provides a fresh perspective on the debate over the relative importance of demand versus supply factors as…
Resource Adequacy with Increasing Shares of Wind and Solar Power: A Comparison of European and U.S. Electricity Market Designs
We raise the question if improvements to current energy-only markets are sufficient to maintain resource adequacy in electricity markets or whether the rapid increase in wind and solar power gives stronger arguments for additional capacity mechanisms. A comparative analysis between Europe and the United States reveals some fundamental differences, but also many similarities in electricity…
Shale Gas and Oil Development: A Review of the Local Environmental, Fiscal, and Social Impacts
In the early 2000s, advances in horizontal drilling and hydraulic fracturing technologies led to a veritable boom in the extraction of natural gas and oil from shale plays. In this review article, we discuss the local, state, and federal regulatory context in which this shale gas and oil production occurs and review how it affects…