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The evolution of a climate regime: Kyoto to Marrakech and beyond

At meetings in Bonn and Marrakech in 2001, the Conference of the Parties to the Framework Convention on Climate Change broke through an impasse on the detailed provisions needed to allow the Kyoto Protocol to enter into force. Key ingredients in the breakthrough included US withdrawal from the process, an effective relaxation of emissions targets for Japan, Canada, and Russia, and provision of access to unrestricted emissions trading. We analyze the costs of implementation and the environmental effectiveness of the Bonn-Marrakech agreement, and its effect on the relative roles of CO2 versus non-CO2 greenhouse gases. The ability of the major sellers of permits, notably Russia and Ukraine, to restrict access to permits, and the ability to trade across all greenhouse gases controlled under the Protocol, are both found to have a significant effect for both costs and effectiveness. Nevertheless, the current agreement requires reductions that do not constitute a significant step in accomplishing the long-term objectives of the Framework Convention. While the letter of the agreement does not require substantive action, individual nations have indicated an interest in actions that will affect the distribution of costs and could improve the environmental effectiveness of the agreement. The Bush administration proposal allows for emissions growth that exceeds even that found under the weakened Protocol, but is important for re-engaging the US and offering a possible approach for developing countries in future commitment periods. Finally, the potential for reconciling competing systems is explored. © 2002 Elsevier Science Ltd.

The First Step Toward Emissions Trading

Emissions trading is much admired, but it raises difficult issues of equity for which there are no obvious answers. Everyone recognizes that emissions trading would reduce the cost of meeting the greenhouse gas emission limits in the Kyoto Protocol, but little attention is given to the domestic pre-conditions for robust emissions trading. One of the most important of these pre-conditions is an agreeable allocation of the newly limited (and thus, valuable) rights to emit greenhouse gases. This Policy Note reviews what is involved in taking this first step toward emissions trading.

The future mobility of the world population

On average a person spends 1.1h per day traveling and devotes a predictable fraction of income to travel. We show that these time and money budgets are stable over space and time and can be used for projecting future levels of mobility and transport mode. The fixed travel money budget requires that mobility rises nearly in proportion with income. Covering greater distances within the same fixed travel time budget requires that travelers shift to faster modes of transport. The choice of future transport modes is also constrained by path dependence because transport infrastructures change only slowly. In addition, demand for low-speed public transport is partially determined by urban population densities and land-use characteristics. We present a model that incorporates these constraints, which we use for projecting traffic volume and the share of the major motorized modes of transport-automobiles, buses, trains and high speed transport (mainly aircraft)-for 11 regions and the world through 2050. We project that by 2050 the average world citizen will travel as many kilometers as the average West European in 1990. The average American's mobility will rise by a factor of 2.6 by 2050, to 58,000 km/year. The average Indian travels 6000km/year by 2050, comparable with West European levels in the early 1970s. Today, world citizens move 23 billion km in total; by 2050 that figure grows to 105 billion.

Copyright Elsevier

The Future of Coal Consumption in a Carbon Constrained World

Coal accounts for nearly 30% of all global fossil fuel consumption and 37% of fossil fuel emissions of carbon dioxide. It is used primarily in the electric power sector where it provides over half of the primary energy input. In the absence of penalties or restrictions on carbon dioxide emissions, coal use for electricity generation is expected to grow over the course of this century due to its relative abundance. However, policies to reduce carbon dioxide emissions have the potential to threaten coal’s dominance in the electric power sector in favor of less carbon-intensive natural gas. Carbon dioxide capture and storage (CCS) technologies hold promise in offsetting this switch. To understand these tradeoffs in a carbon dioxide constrained world, we examine the influence of four factors on future of coal consumption in the electric power sector: the price of carbon emissions, the price of natural gas, costs of CCS technologies, and the dispatch between coal and natural gas generation technologies. In this paper, we develop plausible, yet wide-ranging, scenarios for the variables mentioned above. We assess their effect on coal consumption using a computable general equilibrium model of the world economy, the MIT Emissions Prediction and Policy Analysis (EPPA) model. The results illustrate how competing technologies, changing input prices, and general equilibrium effects influence the adoption of CCS technologies. Our results for the United States and Europe suggest that carbon price and dispatch have the most significant effect on future coal consumption. Improvements in CCS technology costs make coal consumption less dependent on gas price, but do not mitigate the carbon price effects on consumption through 2050.

The Future of Coal: Options for a Carbon-Constrained World, an interdisciplinary MIT study

An interdisciplinary MIT faculty group examined the role of coal in a world where constraints on carbon dioxide emissions are adopted to mitigate global climate change. This follows "The Future of Nuclear Power" which focused on carbon dioxide emissions-free electricity generation from nuclear energy and was published in 2003. This report, the future of coal in a carbon-constrained world, evaluates the technologies and costs associated with the generation of electricity from coal along with those associated with the capture and sequestration of the carbon dioxide produced coal-based power generation. Growing electricity demand in the U.S. and in the world will require increases in all generation options (renewables, coal, and nuclear) in addition to increased efficiency and conservation in its use. Coal will continue to play a significant role in power generation and as such carbon dioxide management from it will become increasingly important. This study, addressed to government, industry and academic leaders, discusses the interrelated technical, economic, environmental and political challenges facing increased coal-based power generation while managing carbon dioxide emissions from this sector.

The Future of the Electric Grid: An Interdisciplinary MIT Study

The U.S. electric grid is a vast physical and human network connecting thousands of electricity generators to millions of consumers — a linked system of public and private enterprises operating within a web of government institutions: federal, regional, state, and municipal. The grid will face a number of serious challenges over the next two decades, while new technologies also present valuable opportunities for meeting these challenges. A failure to realize these opportunities or meet these challenges could result in degraded reliability, significantly increased costs, and a failure to achieve several public policy goals.

This report, the fifth in the MIT Energy Initiative’s Future of series, aims to provide a comprehensive, objective portrait of the U.S. electric grid and the identification and analysis of areas in which intelligent policy changes, focused research, and data development and sharing can contribute to meeting the challenges the grid is facing. It reflects a focus on integrating and evaluating existing knowledge rather than performing original research. We hope it will be of value to decision makers in industry and in all levels of government as they guide the grid’s necessary evolution.

The Future of U.S. Natural Gas Production, Use, and Trade

Two computable general equilibrium models, one global and the other providing U.S. regional detail, are applied to analysis of the future of U.S. natural gas. The focus is on uncertainties including the scale and cost of gas resources, the costs of competing technologies, the pattern of greenhouse gas mitigation, and the evolution of global natural gas markets. Results show that the outlook for gas over the next several decades is very favorable. In electric generation, given the unproven and relatively high cost of other low-carbon generation alternatives, gas is likely the preferred alternative to coal. A broad GHG pricing policy would increase gas use in generation but reduce use in other sectors, on balance increasing its role from present levels. The shale gas resource is a major contributor to this optimistic view of the future of gas. Gas can be an effective bridge to a lower emissions future, but investment in the development of still lower CO2 technologies remains an important priority. International gas resources may well prove to be less costly than those in the U.S., except for the lowest-cost domestic shale resources, and the emergence of an integrated global gas market could result in significant U.S. gas imports.

©2011 Elsevier Ltd.

The Future of US Natural Gas Production, Use, and Trade

Two computable general equilibrium models, one global and the other providing U.S. regional detail, are applied to analysis of the future of U.S. natural gas as an input to an MIT study of the topic. The focus is on uncertainties including the scale and cost of gas resources, the costs of competing technologies, the pattern of greenhouse gas mitigation, and the evolution of global natural gas markets. Results show that the outlook for gas over the next several decades is very favorable. In electric generation, given the unproven and relatively high cost of other low-carbon generation alternatives, gas likely is the preferred alternative to coal. A broad GHG pricing policy would increase gas use in generation but reduce use in other sectors, on a balance increasing its role from present levels. The shale gas resource is a major contributor to this optimistic view of the future of gas, but it is far from a panacea over the longer term. Gas can be an effective bridge to a lower emissions future, but investment in the development of still lower CO2 technologies remains an important priority. Also, international gas resources may well prove to be less costly than those in the U.S., except for the lowest-cost domestic shale resources, and the emergence of an integrated global gas market could result in significant U.S. gas imports.

The Hedge Value of International Emissions Trading under Uncertainty

This paper estimates the value of international emissions trading, focusing on a here-to-fore neglected component; its value as a hedge against uncertainty. Much analysis has been done of the Kyoto Protocol and other potential international greenhouse gas mitigation policies comparing the costs of achieving emission targets with and without trading. These studies often show large cost reductions for all Parties under trading compared to a no trading case. We investigate the welfare gains of including emissions trading in the presence of uncertainty in economic growth rates, using both a partial equilibrium model based on marginal abatement cost curves and a computable general equilibrium model. We find that the hedge value of international trading is small relative to its value in reallocating emissions reductions when the burden sharing scheme does not resemble a least cost allocation. We also find that the effects of pre-existing tax distortions and terms of trade dominate the hedge value of trading. We conclude that the primary value of emissions trading in international agreements is as a burden sharing or wealth transfer mechanism and should be judged accordingly.

© 2010 Elsevier

The High Dam at Aswan

Dam assessment, by its very nature, is a complex undertaking. Many of the benefits and costs associated with dam development have quite different time streams. These benefits and costs are faced by different sectors and there are inter-relationships between sectors. The effects of dams are distributed across different spatial scales, from local to basin, to regional to national, and in some cases, to trans-national. To add to the complexity, while some of the impacts of the dam projects are ‘direct’, the others are ‘indirect’ with the definition of what constitutes ‘direct’ versus ‘indirect’ impacts also varying.

The aim of the present study has been to evaluate some of the above interactions, in particular the ‘direct’ and ‘indirect’ economic impacts of dams. The study ex-post evaluates the magnitude of multipliers, a measure of the total benefits (direct plus indirect) of the project in relation to its direct benefits, and assesses the distributional and poverty reduction impacts of dam projects. The four cases studied in the present book include three large projects—Bhakra Dam System (India), Aswan High Dam (Egypt) and Sobradinho Dam (and the set of cascading reservoirs) (Brazil)— and one small check dam—Bunga (India).

The present study should be seen as one of the numerous other steps that need to be taken to reach the goal of evaluating the full development impact of the dam projects. The aim here has been to highlight the relevance of one of the components of a full evaluation of dam projects that is often neglected, i.e., their indirect and induced economic impacts.

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