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The I maclim-R model: infrastructures, technical inertia and the costs of low carbon futures under imperfect foresight

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  • Henri Waisman

    ()

  • Céline Guivarch
  • Fabio Grazi
  • Jean Hourcade

Abstract

This paper analyzes the transition costs of moving towards a low carbon society when the second-best nature of the economy is accounted for. We emphasize the consequences on mitigation costs of considering the interplay between a) technical systems inertia, including slow infrastructure turnover in transportation and construction; and b) imperfect foresight influencing investment decisions. To this end, the hybrid general equilibrium modeling framework I maclim-R is employed as it allows for transitory partial adjustments of the economy and captures their impact on the dynamics of economic growth. The modeling exercise quantitatively emphasizes the a) specific risks that the interplay between inertia and imperfect foresight leads to high macroeconomic costs of carbon abatement measures; b) opportunities of co-benefits from climate policies permitted by the correction of sub-optimalities in the reference scenarios. The article draws insights for the framing of future climate architectures by studying the role of measures that act complementarily to carbon pricing in the transport sector. In particular, reallocating public investment towards low-carbon transport infrastructure significantly reduces the overall macroeconomic costs of a given GHG stabilization target and even creates the room for long-term net economic benefits from climate policies. Copyright Springer Science+Business Media B.V. 2012

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File URL: http://hdl.handle.net/10.1007/s10584-011-0387-z
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Bibliographic Info

Article provided by Springer in its journal Climatic Change.

Volume (Year): 114 (2012)
Issue (Month): 1 (September)
Pages: 101-120

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Handle: RePEc:spr:climat:v:114:y:2012:i:1:p:101-120

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Web page: http://www.springer.com/economics/journal/10584

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  1. Greene, David L. & Hopson, Janet L. & Li, Jia, 2006. "Have we run out of oil yet? Oil peaking analysis from an optimist's perspective," Energy Policy, Elsevier, vol. 34(5), pages 515-531, March.
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  3. Céline Guivarch & Renaud Crassous & Olivier Sassi & Stephane Hallegatte, 2011. "The costs of climate policies in a second best world with labour market imperfections," Post-Print halshs-00724487, HAL.
  4. Kverndokk, Snorre & Rosendahl, Knut Einar, 2007. "Climate policies and learning by doing: Impacts and timing of technology subsidies," Resource and Energy Economics, Elsevier, vol. 29(1), pages 58-82, January.
  5. Carol Corrado & Joe Mattey, 1997. "Capacity Utilization," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 151-167, Winter.
  6. Olivier Sassi & Renaud Crassous & Jean-Charles Hourcade & Vincent Gitz & Henri Waisman & Celine Guivarch, 2010. "IMACLIM-R: a modelling framework to simulate sustainable development pathways," International Journal of Global Environmental Issues, Inderscience Enterprises Ltd, vol. 10(1/2), pages 5-24.
  7. Gunnar Luderer & Valentina Bosetti & Michael Jakob & Marian Leimbach & Jan Steckel & Henri Waisman & Ottmar Edenhofer, 2012. "The economics of decarbonizing the energy system—results and insights from the RECIPE model intercomparison," Climatic Change, Springer, vol. 114(1), pages 9-37, September.
  8. Jaccard, Mark & Failing, Lee & Berry, Trent, 1997. "From equipment to infrastructure: community energy management and greenhouse gas emission reduction," Energy Policy, Elsevier, vol. 25(13), pages 1065-1074, November.
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  10. Fabio Grazi & Jeroen C.J.M. van den Bergh & Jos N. van Ommeren, 2008. "An Empirical Analysis of Urban Form, Transport, and Global Warming," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 97-122.
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Cited by:
  1. Julie Rozenberg & Céline Guivarch & Robert Lempert & Stéphane Hallegatte, 2012. "Building SSPs for Climate Policy Analysis: A Scenario Elicitation Methodology to Map the Space of Possible Future Challenges to Mitigation and Adaptation," Working Papers 2012.52, Fondazione Eni Enrico Mattei.
  2. Gunnar Luderer & Enrica DeCian & Jean-Charles Hourcade & Marian Leimbach & Henri Waisman & Ottmar Edenhofer, 2012. "On the regional distribution of mitigation costs in a global cap-and-trade regime," Climatic Change, Springer, vol. 114(1), pages 59-78, September.

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