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The Role of Stocks and Shocks Concepts in the Debate Over Price Versus Quantity

Many economists and policy makers have long favored the use of a price instrument to control greenhouse gases because they are a stock pollutant and as such the marginal benefit of abatement is relatively flat. While the early literature on the problem is consistent with this view, the later literature is less categorical. It showed that the choice between a price or quantity control depends, in part, upon the assumption on the dynamic structure of cost uncertainty. Temporary shocks to abatement cost favors the use of a price control, while permanent shocks favor a quantity control. Unfortunately, the importance of this assumption to the optimal choice has not yet received wide currency among economists. We analyze the problem in an alternative setting and reproduce the result that temporary shocks favor use of a price control while permanent shocks favor use of a quantity control. Our contribution is the simplicity of the model and the accessibility of the results, which reinforce the critical role played by the assumed structure of uncertainty.

© 2012 Environmental and Resource Economics

The Role of Wind Generation in European Power Sector Decarbonization: A General Equilibrium Analysis

Wind generation has been growing fast, with onshore wind having a 27% average annual growth rate over the past decade. Motivated by this growth, a comprehensive analysis of both the economic and engineering implications of a large wind penetration in power systems was conducted.

In order to understand and capture the unique characteristics of wind generation different tools and methods were combined. First, an analysis of hourly wind and load profiles was completed for individual European countries and for the whole European region. Then, a detailed electricity model was used in order to capture the effects of a large wind penetration (up to 60% of total demand) on the power system. Finally, this information was integrated in a computable general equilibrium (CGE) model, the MIT EPPA model—a tool for analyzing the economy-wide implications of energy and climate policies. Based on the bottom-up modeling results, a new methodology for capturing wind intermittency in EPPA, through modeling system flexibility requirements at large wind penetration levels, was proposed. As a case study, a 40% and an 80% GHG emissions reduction scenarios by 2050 (relative to 1990 levels) were modeled for Europe.

The analysis illustrates that, in order to mitigate wind intermittency, particularly for large wind penetration levels, a system needs to have enough flexible capacity installed—traditionally provided by gas or hydro technologies. However, it is shown that for a significant emissions reduction scenario (80% GHG reduction in Europe by 2050), providing this flexibility from the generation side might be challenging as low-cost, low-carbon, flexible, dispatchable technological options might be limited. This might impose a constraint on the total electricity use and on the growth of wind penetration. Thus, the importance of considering other options for providing flexibility in the system, such as storage, demand response or interconnections is displayed. In particular, the wind and load profile analysis indicates a high value of interconnecting wind farms in the European region.

The variability of methane, nitrous oxide and sulfur hexafluoride in Northeast India

High-frequency atmospheric measurements of methane (CH4), nitrous oxide (N2O) and sulfur hexafluoride (SF6) from Darjeeling, India are presented from December 2011 (CH4)/March 2012 (N2O and SF6) through February 2013. These measurements were made on a gas chromatograph equipped with a flame ionization detector and electron capture detector, and were calibrated on the Tohoku University, the Scripps Institution of Oceanography (SIO)- 98 and SIO-2005 scales for CH4, N2O and SF6 , respectively. The observations show large variability and frequent pollution events in CH4 and N2O mole fractions, suggesting significant sources in the regions sampled by Darjeeling throughout the year. By contrast, SF6 mole fractions show little variability and only occasional pollution episodes, likely due to weak sources in the region. Simulations using the Numerical Atmospheric dispersion Modelling Environment (NAME) particle dispersion model suggest that many of the enhancements in the three gases result from the transport of pollutants from the densely populated Indo-Gangetic Plains of India to Darjeeling. The meteorology of the region varies considerably throughout the year from Himalayan flows in the winter to the strong south Asian summer monsoon. The model is consistent in simulating a diurnal cycle in CH4 and N2O mole fractions that is present during the winter but absent in the summer and suggests that the signals measured at Darjeeling are dominated by large-scale (∼ 100 km) flows rather than local (< 10 km) flows.

© 2013 the authors

The Vulnerability of U.S. Coastal Energy Infrastructure Under Climate Change

The 2005 hurricane season was particularly damaging to the United States, contributing to significant losses to energy infrastructure –much of it a result of flooding from storm surges during hurricanes Katrina and Rita. Previous research suggests that these events are not isolated, but rather foreshadow a risk that is to continue and likely increase with a changing climate (17). Since extensive energy infrastructure exists along the U.S. Atlantic and Gulf coasts, these facilities are exposed to an increasing risk of flooding. We study the combined impacts of anticipated sea level rise, hurricane activity, and subsidence on energy infrastructure in these regions with a first application to Galveston Bay. Using future climate conditions as projected by four different Global Circulation Models (GCMs), we model the change in hurricane activity from present day climate conditions in response to a climate projected in 2100 under the IPCC A1B emissions scenario using hurricane analysis developed by Emanuel (5). We apply the results from hurricane runs from each model to the SLOSH model (Sea, Lake and Overland Surges from Hurricanes) (19) to investigate the change in frequency and distribution of surge heights across climates. Further, we incorporate uncertainty surrounding the magnitude of sea level rise and subsidence, resulting in more detailed projections of risk levels for energy infrastructure over the next century. With a detailed understanding of energy facilities’ changing risk exposure, we conclude with a dynamic programming cost-benefit analysis to optimize decision making over time as it pertains to adaptation.

The Weak Tie Between Natural Gas and Oil Prices

Several recent studies establish that crude oil and natural gas prices are cointegrated. Yet at times in the past, and very powerfully in the last two years, many voices have noted that the two price series appear to have “decoupled”. We explore the apparent contradiction between these two views. We find that recognition of the statistical fact of cointegration needs to be tempered with two additional points. First, there is an enormous amount of unexplained volatility in natural gas prices at short horizons. Hence, any simple formulaic relationship between the prices will leave a large portion of the natural gas price unexplained. Second, the cointegrating relationship does not appear to be stable through time. The prices may be tied, but the relationship can shift dramatically over time. Therefore, although the two price series may be cointegrated, the confidence intervals for both short and long time horizons are large. Keywords: Oil price, Natural gas price, Cointegration

© 2012 IAEE

Threat to future global food security from climate change and ozone air pollution

Future food production is highly vulnerable to both climate change and air pollution with implications for global food security. Climate change adaptation and ozone regulation have been identified as important strategies to safeguard food production, but little is known about how climate and ozone pollution interact to affect agriculture, nor the relative effectiveness of these two strategies for different crops and regions. Here we present an integrated analysis of the individual and combined effects of 2000–2050 climate change and ozone trends on the production of four major crops (wheat, rice, maize and soybean) worldwide based on historical observations and model projections, specifically accounting for ozone–temperature co-variation. The projections exclude the effect of rising CO2, which has complex and potentially offsetting impacts on global food supply. We show that warming reduces global crop production by >10% by 2050 with a potential to substantially worsen global malnutrition in all scenarios considered. Ozone trends either exacerbate or offset a substantial fraction of climate impacts depending on the scenario, suggesting the importance of air quality management in agricultural planning. Furthermore, we find that depending on region some crops are primarily sensitive to either ozone (for example, wheat) or heat (for example, maize) alone, providing a measure of relative benefits of climate adaptation versus ozone regulation for food security in different regions.

© 2014 Nature Publishing Group

Three decades of global methane sources and sinks

Methane is an important greenhouse gas, responsible for about 20% of the warming induced by long-lived greenhouse gases since pre-industrial times. By reacting with hydroxyl radicals, methane reduces the oxidizing capacity of the atmosphere and generates ozone in the troposphere. Although most sources and sinks of methane have been identified, their relative contributions to atmospheric methane levels are highly uncertain. As such, the factors responsible for the observed stabilization of atmospheric methane levels in the early 2000s, and the renewed rise after 2006, remain unclear. Here, we construct decadal budgets for methane sources and sinks between 1980 and 2010, using a combination of atmospheric measurements and results from chemical transport models, ecosystem models, climate chemistry models and inventories of anthropogenic emissions. The resultant budgets suggest that data-driven approaches and ecosystem models overestimate total natural emissions. We build three contrasting emission scenarios—which differ in fossil fuel and microbial emissions—to explain the decadal variability in atmospheric methane levels detected, here and in previous studies, since 1985. Although uncertainties in emission trends do not allow definitive conclusions to be drawn, we show that the observed stabilization of methane levels between 1999 and 2006 can potentially be explained by decreasing-to-stable fossil fuel emissions, combined with stable-to-increasing microbial emissions. We show that a rise in natural wetland emissions and fossil fuel emissions probably accounts for the renewed increase in global methane levels after 2006, although the relative contribution of these two sources remains uncertain.

© 2013 Macmillan Publishers Limited

Top-down control of marine phytoplankton diversity in a global ecosystem model

The potential of marine ecosystems to adapt to ongoing environmental change is largely unknown, making prediction of consequences for nutrient and carbon cycles particularly challenging. Realizing that biodiversity might influence the adaptation potential, recent model approaches have identified bottom-up controls on patterns of phytoplankton diversity regulated by nutrient availability and seasonality. Top-down control of biodiversity, however, has not been considered in depth in such models. Here we demonstrate how zooplankton predation with prey-ratio based food preferences can enhance phytoplankton diversity in a ecosystem-circulation model with self-assembling community structure. Simulated diversity increases more than threefold under preferential grazing relative to standard density-dependent predation, and yields better agreement with observed distributions of phytoplankton diversity. The variable grazing pressure creates refuges for less competitive phytoplankton types, which reduces exclusion and improves the representation of seasonal phytoplankton succession during blooms. The type of grazing parameterization also has a significant impact on primary and net community production. Our results demonstrate how a simple parameterization of a zooplankton community response affects simulated phytoplankton community structure, diversity and dynamics, and motivates development of more detailed representations of top-down processes essential for investigating the role of diversity in marine ecosystems.

© 2012 Elsevier

Toward evaluating the effect of climate change on investments in the water resources sector: insights from the forecast and analysis of hydrological indicators in developing countries

The World Bank has recently developed a method to evaluate the effects of climate change on six hydrological indicators across 8951 basins of the world. The indicators are designed for decision-makers and stakeholders to consider climate risk when planning water resources and related infrastructure investments. Analysis of these hydrological indicators shows that, on average, mean annual runoff will decline in southern Europe; most of Africa; and in southern North America and most of Central and South America. Mean reference crop water deficit, on the other hand, combines temperature and precipitation and is anticipated to increase in nearly all locations globally due to rising global temperatures, with the most dramatic increases projected to occur in southern Europe, southeastern Asia, and parts of South America. These results suggest overall guidance on which regions to focus water infrastructure solutions that could address future runoff flow uncertainty. Most important, we find that uncertainty in projections of mean annual runoff and high runoff events is higher in poorer countries, and increases over time. Uncertainty increases over time for all income categories, but basins in the lower and lower-middle income categories are forecast to experience dramatically higher increases in uncertainty relative to those in the upper-middle and upper income categories. The enhanced understanding of the uncertainty of climate projections for the water sector that this work provides strongly support the adoption of rigorous approaches to infrastructure design under uncertainty, as well as design that incorporates a high degree of flexibility, in response to both risk of damage and opportunity to exploit water supply 'windfalls' that might result, but would require smart infrastructure investments to manage to the greatest benefit.

Trends and Inferred Emissions of Atmospheric High Molecular Weight Perfluorocarbons

Atmospheric observations and atmospheric observation-based global emission estimates are presented for the five high molecular weight perfluorocarbons (PFCs): decafluorobutane (C4F10), dodecafluoropentane (C5F12), tetradecafluorohexane (C6F14), hexadecafluoroheptane (C7F16) and octadecafluorooctane (C8F18). Their atmospheric histories are based on measurements of 36 Northern Hemisphere and 46 Southern Hemisphere archived air samples, collected between 1973 and 2011, using two of the "Medusa" cryogenic preconcentration gas chromatography-mass spectrometry instruments, which are part of the Advanced Global Atmospheric Gases Experiment (AGAGE). A new calibration scale was prepared for each PFC, with estimated accuracies of 6.8% for C4F10, 7.8% for C5F12, 4.0% for C6F14, 6.6% for C7F16 and 7.9% for C8F18. Based on our observations, the 2011 globally averaged dry air mole fractions of these high molecular weight PFCs are: 0.17 parts-per-trillion (ppt, i.e., parts per 1012) for C4F10, 0.12 ppt for C5F12, 0.27 ppt for C6F14, 0.12 ppt for C7F16 and 0.09 ppt for C8F18.

Newly measured infrared absorption spectra are presented for C7F16 and C8F18, and using these, their radiative efficiencies and global warming potentials (GWPs) are estimated. We find that the radiative eciency of C8F18 at 0.57 Wm-2ppb-1 is similar to that of trifluoromethyl sulfur pentafluoride's (SF5CF3), which has the highest radiative efficiency of any known atmospheric species (Forster et al., 2007). Using their radiative efficiencies, the 2011 observed globally averaged atmospheric mole fractions of the above five high molecular weight PFCs combine to contribute a global average radiative forcing of 0.35mWm-2, which is 6% of the total anthropogenic PFC radiative forcing (Montzka et al., 2011; Oram et al., 2012).

Global emissions for C4F10, C5F12, C6F14, C7F16 and C8F18 were estimated from the observations using a 3-dimensional chemical transport model and a Bayseian inverse method that included a constraint on the annual growth rate of their emissions, consistent with the knowledge of the relevant industries emitting them (Rigby et al., 2011). The derived so-called "top-down" emission estimates show that global emission rates were largest in the 1980s and 1990s for C4F10 and C5F12 and in the 1990s for C6F14, C7F16 and C8F18. After a subsequent decline, emission rates have remained relatively stable, within 20% year-to-year variation, for the last 5 years. Using their calculated 100-year time horizon GWPs, the high molecular weight perfluorocarbons studied here contributed up to 15.4% of the total PFC emissions expressed in carbon dioxide (CO2)-equivalents in 1997 and 6% of the total PFC emissions in 2009.

Furthermore, we compare our atmospheric observation-based global emissions to the available so-called "bottom-up" inventories, which are based on production information and end usage. Bottom-up emission estimates are available from the Emission Database for Global Atmospheric Research version 4.2 (EDGARv4.2) for C4F10, C5F12, C6F14 and C7F16, and emission inventories of C4F10, C5F12 and C6F14 are also reported to the United Nations' Framework Convention on Climate Change (UNFCCC) by Annex 1 countries that have ratied the Kyoto Protocol (European Commission, Joint Research Centre (JRC)/Netherlands Environmental Assessment Agency (PBL), 2009; United National Framework Convention on Climate Change Secretariat, 2011). The atmospheric observation-based emission estimates are 20 times larger than EDGARv4.2 for C4F10 and over three orders of magnitude larger for C5F12. In contrast, the top-down emission estimates for C6F14 largely agree with the bottom-up estimates from EDGARv4.2. Moreover, the top-down C7F16 emission estimates are comparable to those of EDGARv4.2 at their peak in the 1990s, albeit with signicant underestimation by EDGARv4.2 for the other time periods. There are no bottom-up emission estimates for C8F18, thus the emission rates reported here are the first for this gas. In general, the emission inventories for C4F10, C5F12 and C6F14 reported to the UNFCCC are five to ten times lower than those estimated in this study from observations. This underreporting to the UNFCCC may be due to only Annex 1 countries reporting inventories and also that some of these countries report a total PFC mixture in CO2-equivalents, instead of individual PFC emissions rates.

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