The REMIND-R model: the role of renewables in the low-carbon transformation—first-best vs. second-best worlds
Can near-term public support of renewable energy technologies contain the increase of mitigation costs due to delays of implementing emission caps at the global level? To answer this question we design a set of first and second best scenarios to analyze the impact of early deployment of renewable energy technologies on welfare and emission timing to achieve atmospheric carbon stabilization by 2100. We use the global multiregional energy–economy–climate hybrid model REMIND-R as a tool for this analysis. An important design feature of the policy scenarios is the timing of climate policy. Immediate climate policy contains the mitigation costs at less than 1% even if the CO 2 concentration target is 410 ppm by 2100. Delayed climate policy increases the costs significantly because the absence of a strong carbon price signal continues the carbon intensive growth path. The additional costs can be decreased by early technology policies supporting renewable energy technologies because emissions grow less, alternative energy technologies are increased in capacity and their costs are reduced through learning by doing. The effects of early technology policy are different in scenarios with immediate carbon pricing. In the case of delayed climate policy, the emission path can be brought closer to the first-best solution, whereas in the case of immediate climate policy additional technology policy would lead to deviations from the optimal emission path. Hence, technology policy in the delayed climate policy case reduces costs, but in the case of immediate climate policy they increase. However, the near-term emission reductions are smaller in the case of delayed climate policies. At the regional level the effects on mitigation costs are heterogeneously distributed. For the USA and Europe early technology policy has a positive welfare effect for immediate and delayed climate policies. In contrast, India looses in both cases. China loses in the case of immediate climate policy, but profits in the delayed case. Early support of renewable energy technologies devalues the stock of emission allowances, and this effect is considerable for delayed climate policies. In combination with the initial allocation rule of contraction and convergence a relatively well-endowed country like India loses and potential importers like the EU gain from early renewable deployment. Copyright Springer Science+Business Media B.V. 2012
Volume (Year): 114 (2012)
Issue (Month): 1 (September)
|Contact details of provider:|| Web page: http://www.springer.com/economics/journal/10584|
|Order Information:||Web: http://link.springer.de/orders.htm|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- Nico Bauer & Ottmar Edenhofer & Socrates Kypreos, 2008. "Linking energy system and macroeconomic growth models," Computational Management Science, Springer, vol. 5(1), pages 95-117, February.
- Gerlagh, R. & Kverndokk, S. & Rosendahl, K.E., 2009.
"Optimal timing of climate change policy : Interaction between carbon taxes and innovation externalities,"
Other publications TiSEM
4312dde8-f323-4ee2-9764-a, Tilburg University, School of Economics and Management.
- Reyer Gerlagh & Snorre Kverndokk & Knut Rosendahl, 2009. "Optimal Timing of Climate Change Policy: Interaction Between Carbon Taxes and Innovation Externalities," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 43(3), pages 369-390, July.
- Michael Jakob & Gunnar Luderer & Jan Steckel & Massimo Tavoni & Stephanie Monjon, 2012.
"Time to act now? Assessing the costs of delaying climate measures and benefits of early action,"
Springer, vol. 114(1), pages 79-99, September.
- Monjon, Stéphanie & Tavoni, Massimo & Steckel, Jan & Luderer, Gunnar & Jakob, Michael, 2011. "Time to act now ? Assessing the costs of delaying climate measures and benefits of early action," Economics Papers from University Paris Dauphine 123456789/7943, Paris Dauphine University.
- Ottmar Edenhofer, Kai Lessmann, Claudia Kemfert, Michael Grubb and Jonathan Kohler , 2006. "Induced Technological Change: Exploring its Implications for the Economics of Atmospheric Stabilization: Synthesis Report from the Innovation Modeling Comparison Project," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 57-108.
- Manne, Alan & Richels, Richard, 2004. "The impact of learning-by-doing on the timing and costs of CO2 abatement," Energy Economics, Elsevier, vol. 26(4), pages 603-619, July.
- Steven Sorrell, 2003. "Carbon Trading in the Policy Mix," Oxford Review of Economic Policy, Oxford University Press, vol. 19(3), pages 420-437.
When requesting a correction, please mention this item's handle: RePEc:spr:climat:v:114:y:2012:i:1:p:145-168. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn)or (Christopher F Baum)
If references are entirely missing, you can add them using this form.