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The REMIND-R model: the role of renewables in the low-carbon transformation—first-best vs. second-best worlds

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  • Nico Bauer

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  • Lavinia Baumstark
  • Marian Leimbach

Abstract

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

Suggested Citation

  • Nico Bauer & Lavinia Baumstark & Marian Leimbach, 2012. "The REMIND-R model: the role of renewables in the low-carbon transformation—first-best vs. second-best worlds," Climatic Change, Springer, vol. 114(1), pages 145-168, September.
  • Handle: RePEc:spr:climat:v:114:y:2012:i:1:p:145-168
    DOI: 10.1007/s10584-011-0129-2
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    References listed on IDEAS

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    1. 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.
    2. Reyer Gerlagh & Snorre Kverndokk & Knut Rosendahl, 2009. "Optimal Timing of Climate Change Policy: Interaction Between Carbon Taxes and Innovation Externalities," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 43(3), pages 369-390, July.
    3. Detlef P. van Vuuren, Elie Bellevrat, Alban Kitous and Morna Isaac, 2010. "Bio-Energy Use and Low Stabilization Scenarios," The Energy Journal, International Association for Energy Economics, vol. 0(Special I).
    4. Steven Sorrell, 2003. "Carbon Trading in the Policy Mix," Oxford Review of Economic Policy, Oxford University Press, vol. 19(3), pages 420-437.
    5. 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.
    6. 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.
    7. 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.
    8. 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," Climatic Change, Springer, vol. 114(1), pages 79-99, September.
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    Cited by:

    1. repec:eee:appene:v:195:y:2017:i:c:p:356-369 is not listed on IDEAS
    2. Marian Leimbach & Niklas Roming & Gregor Schwerhoff & Anselm Schultes, 2016. "Development perspectives of Sub-Saharan Africa under climate policies," EcoMod2016 9336, EcoMod.
    3. Elmar Kriegler & Ioanna Mouratiadou & Gunnar Luderer & Jae Edmonds & Ottmar Edenhofer, 2016. "Introduction to the RoSE special issue on the impact of economic growth and fossil fuel availability on climate protection," Climatic Change, Springer, vol. 136(1), pages 1-6, May.
    4. Jessica Strefler & Gunnar Luderer & Tino Aboumahboub & Elmar Kriegler, 2014. "Economic impacts of alternative greenhouse gas emission metrics: a model-based assessment," Climatic Change, Springer, vol. 125(3), pages 319-331, August.
    5. repec:eee:ecolec:v:144:y:2018:i:c:p:148-159 is not listed on IDEAS
    6. Arroyo-Currás, Tabaré & Bauer, Nico & Kriegler, Elmar & Schwanitz, Valeria Jana & Luderer, Gunnar & Aboumahboub, Tino & Giannousakis, Anastasis & Hilaire, Jérôme, 2015. "Carbon leakage in a fragmented climate regime: The dynamic response of global energy markets," Technological Forecasting and Social Change, Elsevier, vol. 90(PA), pages 192-203.
    7. Elmar Kriegler & Ioanna Mouratiadou & Gunnar Luderer & Nico Bauer & Robert J. Brecha & Katherine Calvin & Enrica Cian & Jae Edmonds & Kejun Jiang & Massimo Tavoni & Ottmar Edenhofer, 2016. "Will economic growth and fossil fuel scarcity help or hinder climate stabilization?," Climatic Change, Springer, vol. 136(1), pages 7-22, May.
    8. repec:eee:rensus:v:74:y:2017:i:c:p:824-834 is not listed on IDEAS
    9. Zhang, Shuwei & Bauer, Nico & Luderer, Gunnar & Kriegler, Elmar, 2014. "Role of technologies in energy-related CO2 mitigation in China within a climate-protection world: A scenarios analysis using REMIND," Applied Energy, Elsevier, vol. 115(C), pages 445-455.

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