Climate Policy

Designing climate policy mixes: Analytical and energy system modeling approaches

Highlights

  • The efficiency benefit of carbon pricing exhibits diminishing marginal returns.

  • Modest carbon pricing delivers relatively large efficiency improvements.

  • Partial reliance on clean energy standards entails a relatively small efficiency loss.

  • Policy mixes combining standards and pricing can be near-cost-optimal.

  • Policy mixes allow policy makers to leverage the distinct advantages of each policy.

 

Abstract

A matter of debate in climate policy is whether lawmakers should rely on carbon pricing or regulations, such as low-carbon standards, to reach emission reduction goals. Past research showed that pricing is more cost-effective. However, previous work studied the two policies when implemented separately, in effect comparing two policy extremes. In contrast, we explore the full spectrum of climate policy mixes that include both types of policies but vary in how much they rely on each. We do this both analytically by extending previous theory and numerically with two energy system models.

In line with past work, increasing reliance on pricing increases the cost-effectiveness of the policy mix. However, we show that this benefit exhibits diminishing marginal returns. Thus the gain in cost-effectiveness from complementing stringent standards with modest pricing is relatively large. Our results show that relying on pricing for 20% of emission reductions (and on a standard for 80%) reduces costs by 32%–57% compared to a standard-only approach. Importantly, trading off more of the standard for pricing delivers smaller and smaller gains in cost-effectiveness. For example, a policy mix that relies on each policy for 50% of emission reductions decreases costs by 60%–81%, which is already 71%–88% as cost-effective as the theoretically most cost-effective pricing-only policy.

Net Zero Emissions of Greenhouse Gases by 2050: Achievable and at What Cost?

Abstract: About 140 countries have announced or are considering net zero targets. To explore the implications of such targets, we apply an integrated earth system–economic model to investigate illustrative net zero emissions scenarios.

Given the technologies as characterized in our modeling framework, we find that with net zero targets, afforestation in earlier years and biomass energy with carbon capture and storage (BECCS) technology in later years are important negative emissions technologies, allowing continued emissions from hard-to-reduce sectors and sources.

With the entire world achieving net zero by 2050 a very rapid scale-up of BECCS is required, increasing mitigation costs through mid-century substantially, compared with a scenario where some countries achieve net zero by 2050 while others continue some emissions in the latter half of the century. The scenarios slightly overshoot 1.5 degrees C at mid-century but are at or below 1.5 degrees C by 2100 with median climate response.

Variable renewable energy deployment in low-emission scenarios: the role of technology cost and value

Highlights

  • Electricity competition in the EPPA model is modified to represent technology value.

  • Representing the value of technology alongside cost impacts VRE deployment.

  • When VRE costs are varied by ∼ 35%, VRE share spans IPCC “lower 2C” scenario range.

  • VRE costs affect the demand for electricity, final energy and primary energy.

  • Demand for fuels other than electricity is relatively insensitive to VRE assumptions.

 

Abstract: While rapid deployment of variable renewable energy (VRE) technologies, namely wind and solar PV, is often projected in 2C pathways generated by integrated assessment models, there is a wide range in projected VRE deployment by mid-century. Such differences could be the result of differences in assumptions about future technology costs and/or differences in model approaches for capturing other aspects of technology competitiveness.

Here we introduce a consistent competitiveness metric, profitability-adjusted levelized cost of electricity (or PLCOE), to an integrated assessment model (EPPA) to evaluate the representation of technology competition, including VRE, in low-emission scenarios. We show that representing the value of technology (alongside cost) may significantly impact VRE deployment relative to scenarios without such an adjustment. In addition, we show that varying VRE costs by about 35% in 2050 results in differences in VRE deployment that span much of the range in outcomes (over the same period) observed in likely 2C scenarios assessed by the IPCC, suggesting that both cost and value are key drivers of VRE deployment in such scenarios.

Given the central role that VRE technologies play in the electricity mix across most scenarios, we also find that alternative cost assumptions for VRE technologies can lead to changes in electricity prices, the associated demand for electricity, and total final and primary energy consumption. However, the demand for fuels other than electricity is relatively insensitive to VRE assumptions in the 2C scenarios considered here.

Influence of forest infrastructure on the responses of ecosystem services to climate extremes in the Midwest and Northeast United States from 1980 to 2019

Forests provide several critical ecosystem services that help to support human society. Alteration of forest infrastructure by changes in land use, atmospheric chemistry, and climate change influence the ability of forests to provide these ecosystem services and their sensitivity to existing and future extreme climate events. Here, we explore how the evolving forest infrastructure of the Midwest and Northeast United States influences carbon sequestration, biomass increment (i.e., change in vegetation carbon), biomass burning associated with fuelwood and slash removal, the creation of wood products, and runoff between 1980 and 2019 within the context of changing environmental conditions and extreme climate events using a coupled modeling and assessment framework.

For the 40-year study period, the region’s forests functioned as a net atmospheric carbon sink of 687 Tg C with similar amounts of carbon sequestered in the Midwest and the Northeast. Most of the carbon has been sequestered in vegetation (+771 Tg C) with more carbon stored in Midwestern trees than in Northeastern trees to provide a larger resource for potential wood products in the future. Runoff from forests has also provided 4,651 billion m3 of water for potential use by humans during the study period with the Northeastern forests providing about 2.4 times more water than the Midwestern forests. Our analyses indicate that climate variability, as particularly influenced by heat waves, has the dominant effect on the ability of forest ecosystems to sequester atmospheric CO2 to mitigate climate change, create new wood biomass for future fuel and wood products, and provide runoff for potential human use. Forest carbon sequestration and biomass increment appear to be more sensitive to heat waves in the Midwest than the Northeast while forest runoff appears to be more sensitive in the Northeast than the Midwest. Land-use change, driven by expanding suburban areas and cropland abandonment, has enhanced the detrimental heat-wave effects in Midwestern forests over time, but moderated these effects in Northeastern forests.

When developing climate stabilization, energy production and water security policies, it will be important to consider how evolving forest infrastructure modifies ecosystem services and their responses to extreme climate events over time.

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