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A new economics approach to modelling policies to achieve global 2020 targets for climate stabilisation

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Author Info

  • Terry Barker
  • Annela Anger
  • Unnada Chewpreecha
  • Hector Pollitt

Abstract

This paper explores a Post Keynesian, ‘new economics’ approach to climate policy, assessing the opportunities for investment in accelerated decarbonisation of the global economy to 2020 following the Great Recession of 2008--2009. The risks associated with business-as-usual growth in greenhouse gas (GHG) concentrations in the atmosphere suggest that avoiding dangerous climate change will require that the world’s energy-economy system is transformed through switching to low-carbon technologies and lifestyles. Governments have agreed a target to hold the increase in temperatures above pre-industrial levels to at most 2°C and have offered reductions by 2020 in GHG emissions or the carbon-intensity of GDP. The effects of policies proposed to achieve pathways to 2020 towards this target are assessed using E3MG, an Energy-Environment-Economy (E3) Model at the Global level. E3MG is an annual simulation econometric model, estimated for 20 world regions over 1972--2006 adopting a new economics approach. Additional low-GHG investment of some 0.7% of GDP, with carbon pricing and other policies, is sufficient to achieve a pathway consistent with a medium chance of achieving the long-term target. GDP is above reference levels because decarbonisation reduces world oil prices and increases investment. Employment is some 0.9% above reference levels by 2020 and public finances are almost unaffected.

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File URL: http://hdl.handle.net/10.1080/02692171.2011.631901
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal International Review of Applied Economics.

Volume (Year): 26 (2012)
Issue (Month): 2 (October)
Pages: 205-221

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Handle: RePEc:taf:irapec:v:26:y:2012:i:2:p:205-221

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Cited by:
  1. Rezai, Armon & Taylor, Lance & Mechler, Reinhard, 2013. "Ecological macroeconomics: An application to climate change," Ecological Economics, Elsevier, vol. 85(C), pages 69-76.
  2. Jean-Francois Mercure & Pablo Salas, 2012. "On the global economic potentials and marginal costs of non-renewable resources and the price of energy commodities," Papers 1209.0708, arXiv.org, revised Jul 2013.
  3. Bernardo, Giovanni & D'Alessandro, Simone, 2014. "Transition to sustainability? Feasible scenarios towards a low-carbon economy," MPRA Paper 53746, University Library of Munich, Germany.
  4. Pablo Salas, 2013. "Literature Review of Energy-Economics Models, Regarding Technological Change and Uncertainty," 4CMR Working Paper Series, University of Cambridge, Department of Land Economy, Cambridge Centre for Climate Change Mitigation Research 003, University of Cambridge, Department of Land Economy, Cambridge Centre for Climate Change Mitigation Research.
  5. Jean-Francois Mercure & Hector Pollitt & Unnada Chewpreecha & Pablo Salas & Aideen M. Foley & Philip B. Holden & Neil R. Edwards, 2013. "The dynamics of technology diffusion and the impacts of climate policy instruments in the decarbonisation of the global electricity sector," 4CMR Working Paper Series, University of Cambridge, Department of Land Economy, Cambridge Centre for Climate Change Mitigation Research 006, University of Cambridge, Department of Land Economy, Cambridge Centre for Climate Change Mitigation Research.
  6. Pollitt, Hector & Park, Seung-Joon & Lee, Soocheol & Ueta, Kazuhiro, 2014. "An economic and environmental assessment of future electricity generation mixes in Japan – an assessment using the E3MG macro-econometric model," Energy Policy, Elsevier, vol. 67(C), pages 243-254.

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