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- ItemThe IPCC AR5 guidance note on consistent treatment of uncertainties: A common approach across the working groups(Heidelberg : Springer, 2011) Mastrandrea, Michael D.; Mach, Katharine J.; Plattner, Gian-Kasper; Edenhofer, Ottmar; Stocker, Thomas F.; Field, Christopher B.; Ebi, Kristie L.; Matschoss, Patrick R.Evaluation and communication of the relative degree of certainty in assessment findings are key cross-cutting issues for the three Working Groups of the Intergovernmental Panel on Climate Change. A goal for the Fifth Assessment Report, which is currently under development, is the application of a common framework with associated calibrated uncertainty language that can be used to characterize findings of the assessment process. A guidance note for authors of the Fifth Assessment Report has been developed that describes this common approach and language, building upon the guidance employed in past Assessment Reports. Here, we introduce the main features of this guidance note, with a focus on how it has been designed for use by author teams. We also provide perspectives on considerations and challenges relevant to the application of this guidance in the contribution of each Working Group to the Fifth Assessment Report. Despite the wide spectrum of disciplines encompassed by the three Working Groups, we expect that the framework of the new uncertainties guidance will enable consistent communication of the degree of certainty in their policy-relevant assessment findings.
- ItemIs atmospheric carbon dioxide removal a game changer for climate change mitigation?(Heidelberg : Springer, 2013) Kriegler, Elmar; Edenhofer, Ottmar; Reuster, Lena; Luderer, Gunnar; Klein, DavidThe ability to directly remove carbon dioxide from the atmosphere allows the decoupling of emissions and emissions control in space and time. We ask the question whether this unique feature of carbon dioxide removal technologies fundamentally alters the dynamics of climate mitigation pathways. The analysis is performed in the coupled energy-economy-climate model ReMIND using the bioenergy with CCS route as an application of CDR technology. BECCS is arguably the least cost CDR option if biomass availability is not a strongly limiting factor. We compare mitigation pathways with and without BECCS to explore the impact of CDR technologies on the mitigation portfolio. Effects are most pronounced for stringent climate policies where BECCS is a key technology for the effectiveness of carbon pricing policies. The decoupling of emissions and emissions control allows prolonging the use of fossil fuels in sectors that are difficult to decarbonize, particularly in the transport sector. It also balances the distribution of mitigation costs across future generations. CDR is not a silver bullet technology. The largest part of emissions reductions continues to be provided by direct mitigation measures at the emissions source. The value of CDR lies in its flexibility to alleviate the most costly constraints on mitigating emissions.
- ItemScientific assessments to facilitate deliberative policy learning(Basingstoke, Hampshire : Palgrave Macmillan, 2016) Kowarsch, Martin; Garard, Jennifer; Riousset, Pauline; Lenzi, Dominic; Dorsch, Marcel J.; Knopf, Brigitte; Harrs, Jan-Albrecht; Edenhofer, OttmarPutting the recently adopted global Sustainable Development Goals or the Paris Agreement on international climate policy into action will require careful policy choices. Appropriately informing decision-makers about longer-term, wicked policy issues remains a considerable challenge for the scientific community. Typically, these vital policy issues are highly uncertain, value-laden and disputed, and affect multiple temporal and spatial scales, governance levels, policy fields, and socioeconomic contexts simultaneously. In light of this, science-policy interfaces should help facilitate learning processes and open deliberation among all actors involved about potentially acceptable policy pathways. For this purpose, science-policy interfaces must strive to foster some enabling conditions: (1) “representation” in terms of engaging with diverse stakeholders (including experts) and acknowledging divergent viewpoints; (2) “empowerment” of underrepresented societal groups by co-developing and integrating policy scenarios that reflect their specific knowledge systems and worldviews; (3) “capacity building” regarding methods and skills for integration and synthesis, as well as through the provision of knowledge synthesis about the policy solution space; and (4) “spaces for deliberation”, facilitating direct interaction between different stakeholders, including governments and scientists. We argue that integrated, multi-stakeholder, scientific assessment processes—particularly the collaborative assessments of policy alternatives and their various implications—offer potential advantages in this regard, compared with alternatives for bridging scientific expertise and public policy. This article is part of a collection on scientific advice to governments.
- ItemAlternative carbon price trajectories can avoid excessive carbon removal([London] : Nature Publishing Group UK, 2021) Strefler, Jessica; Kriegler, Elmar; Bauer, Nico; Luderer, Gunnar; Pietzcker, Robert C.; Giannousakis, Anastasis; Edenhofer, OttmarThe large majority of climate change mitigation scenarios that hold warming below 2 °C show high deployment of carbon dioxide removal (CDR), resulting in a peak-and-decline behavior in global temperature. This is driven by the assumption of an exponentially increasing carbon price trajectory which is perceived to be economically optimal for meeting a carbon budget. However, this optimality relies on the assumption that a finite carbon budget associated with a temperature target is filled up steadily over time. The availability of net carbon removals invalidates this assumption and therefore a different carbon price trajectory should be chosen. We show how the optimal carbon price path for remaining well below 2 °C limits CDR demand and analyze requirements for constructing alternatives, which may be easier to implement in reality. We show that warming can be held at well below 2 °C at much lower long-term economic effort and lower CDR deployment and therefore lower risks if carbon prices are high enough in the beginning to ensure target compliance, but increase at a lower rate after carbon neutrality has been reached.
- ItemOptimal carbon taxation and horizontal equity: A welfare-theoretic approach with application to German household data(Amsterdam : Elsevier, 2022) Hänsel, Martin C.; Franks, Max; Kalkuhl, Matthias; Edenhofer, OttmarWe develop a model of optimal taxation and redistribution under an ambitious climate target. We take into account vertical income differences, but also explicitly capture horizontal equity concerns by considering heterogeneous energy efficiencies. By deriving first- and second-best rules for policy instruments including carbon and labor taxes, transfers and energy subsidies, we investigate analytically how vertical and horizontal inequality is considered in the welfare maximizing tax structure. We calibrate the model to German household data and a 30 percent emission reduction goal and show that redistribution of carbon tax revenues via household-specific transfers is the first-best policy. Under plausible assumptions on inequality aversion, transfers to energy-intensive households should be about five times higher than transfers to energy-efficient households. Equal per-capita transfers do not require to observe households’ efficiency type, but increase equity-weighted mitigation costs by around 5 percent compared to the first-best. Mitigation costs increase by less, if the government can implement a uniform clean energy subsidy or household-specific tax-subsidy schemes on energy consumption and labor income that target heterogeneous energy efficiencies. Horizontal equity concerns may therefore constitute a new second-best rationale for clean energy policies or differentiated energy taxes.
- ItemThe social cost of carbon and inequality: When local redistribution shapes global carbon prices(Amsterdam [u.a.] : Elsevier, 2021) Kornek, Ulrike; Klenert, David; Edenhofer, Ottmar; Fleurbaey, MarcThe social cost of carbon is a central metric for optimal carbon prices. Previous literature shows that inequality significantly influences the social cost of carbon, but mostly omits heterogeneity below the national level. We present an optimal taxation model of the social cost of carbon that accounts for inequality between and within countries. We find that climate and distributional policy can generally not be separated. If only one country does not compensate low-income households for disproportionate damages, the social cost of carbon tends to increase globally. Optimal carbon prices remain roughly unchanged if national redistribution leaves inequality between households unaffected by climate change and if the utility of households is approximately logarithmic in consumption.
- ItemPigou in the 21st Century: a tribute on the occasion of the 100th anniversary of the publication of The Economics of Welfare(New York, NY : Springer Science + Business Media B.V., 2021) Edenhofer, Ottmar; Franks, Max; Kalkuhl, MatthiasThe year 2020 marks the centennial of the publication of Arthur Cecil Pigou’s magnum opus The Economics of Welfare. Pigou’s pricing principles have had an enduring influence on the academic debate, with a widespread consensus having emerged among economists that Pigouvian taxes or subsidies are theoretically desirable, but politically infeasible. In this article, we revisit Pigou’s contribution and argue that this consensus is somewhat spurious, particularly in two ways: (1) Economists are too quick to ignore the theoretical problems and subtleties that Pigouvian pricing still faces; (2) The wholesale skepticism concerning the political viability of Pigouvian pricing is at odds with its recent practical achievements. These two points are made by, first, outlining the theoretical and political challenges that include uncertainty about the social cost of carbon, the unclear relationship between the cost–benefit and cost-effectiveness approaches, distributional concerns, fragmented ministerial responsibilities, an unstable tax base, commitment problems, lack of acceptance and trust between government and citizens as well as incomplete international cooperation. Secondly, we discuss the recent political success of Pigouvian pricing, as evidenced by the German government’s 2019 climate policy reform and the EU’s Green Deal. We conclude by presenting a research agenda for addressing the remaining barriers that need to be overcome to make Pigouvian pricing a common political practice.
- ItemReviewing the Market Stability Reserve in light of more ambitious EU ETS emission targets(Amsterdam [u.a.] : Elsevier Science, 2021) Osorio, Sebastian; Tietjen, Oliver; Pahle, Michael; Pietzcker, Robert C.; Edenhofer, OttmarThe stringency of the EU's Emission Trading System (ETS) is bound to be ratcheted-up to deliver on more ambitious goals as formulated in the EU's Green Deal. Tightening the cap needs to consider the interactions with the Market Stability Reserve (MSR), which will be reviewed in 2021. We analyse these issues using the model LIMES-EU. First, we examine how revising MSR parameters impacts allowance cancellations. We find that varying key design parameters leads to cancellations in the range of 2.6–7.9 Gt – compared to 5.1 Gt under current regulation. Overall, the bank thresholds, which define when there is intake to/outtake from the MSR, have the highest impact. Intake rates above 12% only have a limited effect, and cause oscillatory intake behaviour. Second, we analyse how more ambitious climate 2030 targets can be achieved by adjusting the linear reduction factor (LRF). We find that the LRF increases MSR cancellations substantially up to 10.0 Gt. This implies that increasing its value from currently 2.2% to only 2.6% could be consistent with an EU-wide target of −55% by 2030. However, MSR cancellations are subject to large uncertainty, which increases the complexity of the market and induces high price uncertainty.
- ItemBetween Scylla and Charybdis: Delayed mitigation narrows the passage between large-scale CDR and high costs(Bristol : IOP Publishing, 2018) Strefler, Jessica; Bauer, Nico; Kriegler, Elmar; Popp, Alexander; Giannousakis, Anastasis; Edenhofer, OttmarThere are major concerns about the sustainability of large-scale deployment of carbon dioxide removal (CDR) technologies. It is therefore an urgent question to what extent CDR will be needed to implement the long term ambition of the Paris Agreement. Here we show that ambitious near term mitigation significantly decreases CDR requirements to keep the Paris climate targets within reach. Following the nationally determined contributions (NDCs) until 2030 makes 2 °C unachievable without CDR. Reducing 2030 emissions by 20% below NDC levels alleviates the trade-off between high transitional challenges and high CDR deployment. Nevertheless, transitional challenges increase significantly if CDR is constrained to less than 5 Gt CO2 a−1 in any year. At least 8 Gt CO2 a−1 CDR are necessary in the long term to achieve 1.5 °C and more than 15 Gt CO2 a−1 to keep transitional challenges in bounds.
- ItemReports of coal's terminal decline may be exaggerated(Bristol : IOP Publishing, 2018) Edenhofer, Ottmar; Steckel, Jan Christoph; Jakob, Michael; Bertram, ChristophWe estimate the cumulative future emissions expected to be released by coal power plants that are currently under construction, announced, or planned. Even though coal consumption has recently declined and plans to build new coal-fired capacities have been shelved, constructing all these planned coal-fired power plants would endanger national and international climate targets. Plans to build new coal-fired power capacity would likely undermine the credibility of some countries' (Intended) Nationally Determined Contributions submitted to the UNFCCC. If all the coal-fired power plants that are currently planned were built, the carbon budget for reaching the 2 °C temperature target would nearly be depleted. Propositions about 'coal's terminal decline' may thereby be premature. The phase-out of coal requires dedicated and well-designed policies. We discuss the political economy of policy options that could avoid a continued build-up of coal-fired power plants.
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