Climate Policy

The mercury game: evaluating a negotiation simulation that teaches students about science-policy interactions

Environmental negotiations and policy decisions take place at the science-policy interface. While this is well known within academic literature, it is often difficult to convey how science and policy interact to students in environmental studies and sciences courses. We argue that negotiation simulations, as an experiential learning tool, are one effective way to teach students about how science and policy interact in decision-making. We developed a negotiation simulation, called the mercury game, based on the global mercury treaty negotiations. To evaluate the game, we conducted surveys before and after the game was played in university classrooms across North America. For science students, the simulation communicates how politics and economics affect environmental negotiations. For environmental studies and public policy students, the mercury simulation demonstrates how scientific uncertainty can affect decision-making. Using the mercury game as an educational tool allows students to learn about complex interactions between science and society and develop communication skills.

Markets versus Regulation: The Efficiency and Distributional Impacts of U.S. Climate Policy Proposals

Regulatory measures have proven the favored approach to climate change mitigation in the U.S., while market-based policies have gained little traction. Using a model that resolves the U.S. economy by region, income category, and sector-specific technology deployment opportunities, this paper studies the magnitude and distribution of economic impacts under regulatory versus market-based approaches. We quantify heterogeneity in the national response to regulatory policies, including a fuel economy standard and a clean or renewable electricity standard, and compare these to a cap-and-trade system targeting carbon dioxide or all greenhouse gases. We find that the regulatory policies substantially exceed the cost of a cap-and-trade system at the national level. We further show that the regulatory policies yield large cost disparities across regions and income groups, which are exaggerated by the difficulty of implementing revenue recycling provisions under regulatory policy designs.

Quantifying Regional Economic Impacts of CO2 Intensity Targets in China

To address rising energy use and CO2 emissions, China's leadership has enacted energy and CO2 intensity targets under the Twelfth Five-Year Plan (2011–2015), which are defined at both the national and provincial levels. We develop a computable general equilibrium (CGE) model with global coverage that disaggregates China's 30 provinces and includes energy system detail, and apply it to assess the impact of the current binding provincial CO2 emissions intensity targets. We compare the impact of the provincial targets approach to a single target for China that achieves the same reduction in CO2 emissions intensity at the national level. The national target assumes trading of emissions allowances across provinces, resulting in the least-cost reductions nationwide. We find that the national target results in about 20% lower welfare loss in China relative to the provincial targets approach. Given that the regional distribution of impacts has been an important consideration in the target-setting process, we focus on the changes in provincial-level CO2 emissions intensity, CO2 emissions, energy consumption, and economic welfare. We observe significant heterogeneity across provinces in terms of the energy system response as well as the magnitude of welfare impacts. We further model the current policy of fixed end-use electricity prices in China and find that national welfare losses increase. Assumptions about capital mobility have a substantial impact on national welfare loss, while changing assumptions about the future availability of domestic natural gas resources does not have a large effect.

Absolute vs. intensity-based emission caps

Cap-and-trade systems limit emissions to some pre-specified absolute quantity. Intensity-based limits, that restrict emissions to some pre-specified rate relative to input or output, are much more widely used in environmental regulation and have gained attention recently within the context of greenhouse gas (GHG) emissions trading. In this paper we provide a non-technical introduction to the differences between these two forms of emission limits. Our aim is not to advocate either form, but to elucidate the properties of each in a world where future emissions and GDP are not known with certainty. We argue that the two forms have identical effects in a world where future emissions and economic output (i.e. GDP) are known with certainty, and show that outcomes for marginal costs, abatement, emissions and welfare diverge only because of the variance of actual future GDP relative to its forecast expectation.

A recent study estimates that about 1.6 million people in China die each year—roughly 4,000 a day—from heart, lung and stroke disorders due to poor air quality. Most of the nation’s lethal air pollution, including headline-grabbing toxins such as fine particulate matter (PM2.5) and ground-level ozone (O3), is produced in its coal-dominated energy and industrial sectors.

Tackling air pollution in China
China Project

A new MIT study called "Mobility of the Future" is under way with the goals of understanding how developments in technology, fuel, infrastructure, policy and consumer preference will impact the transportation sector. To support the study, the EPPA model will be used to assess how the vehicle fleet and fuel mix will evolve in response to various transportation, energy and climate policy scenarios, and the likely costs of different policy options.

Joint Program's Input to the MIT Mobility of the Future Study
The Impact of Oil Prices on Bioenergy, Emissions and Land Use

We evaluate how alternative future oil prices will influence the penetration of biofuels, energy production, greenhouse gas (GHG) emissions, land use and other outcomes. Our analysis employs a global economy wide model and simulates alternative oil prices out to 2050 with and without a price on GHG emissions. In one case considered, based on estimates of available resources, technological progress and energy demand, the reference oil price rises to $124 by 2050. Other cases separately consider constant reference oil prices of $50, $75 and $100, which are targeted by adjusting the quantity of oil resources. In our simulations, higher oil prices lead to more biofuel production, more land being used for bioenergy crops, and fewer GHG emissions. Reducing oil resources to simulate higher oil prices has a strong income effect, so decreased food demand under higher oil prices results in an increase in land allocated to natural forests. We also find that introducing a carbon price reduces the differences in oil use and GHG emissions across oil price cases.  

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