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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
  • 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

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  • 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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    7. Leimbach, Marian & Roming, Niklas & Schultes, Anselm & Schwerhoff, Gregor, 2018. "Long-Term Development Perspectives of Sub-Saharan Africa under Climate Policies," Ecological Economics, Elsevier, vol. 144(C), pages 148-159.
    8. Zhang, Shuwei & Bauer, Nico & Yin, Guangzhi & Xie, Xi, 2020. "Technology learning and diffusion at the global and local scales: A modeling exercise in the REMIND model," Technological Forecasting and Social Change, Elsevier, vol. 151(C).
    9. Leimbach Marian & Baumstark Lavinia & Luderer Gunnar, 2015. "The Role of Time Preferences in Explaining the Long-Term Pattern of International Trade," Global Economy Journal, De Gruyter, vol. 15(1), pages 83-106, March.
    10. Henningsen, Arne & Henningsen, Geraldine & van der Werf, Edwin, 2019. "Capital-labour-energy substitution in a nested CES framework: A replication and update of Kemfert (1998)," Energy Economics, Elsevier, vol. 82(C), pages 16-25.
    11. Sebastian Rauner & Jérôme Hilaire & David Klein & Jessica Strefler & Gunnar Luderer, 2020. "Air quality co-benefits of ratcheting up the NDCs," Climatic Change, Springer, vol. 163(3), pages 1481-1500, December.
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    13. 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.
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    15. del Río, Pablo, 2017. "Why does the combination of the European Union Emissions Trading Scheme and a renewable energy target makes economic sense?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 74(C), pages 824-834.
    16. Nico Bauer & David Klein & Florian Humpenöder & Elmar Kriegler & Gunnar Luderer & Alexander Popp & Jessica Strefler, 2020. "Bio-energy and CO2 emission reductions: an integrated land-use and energy sector perspective," Climatic Change, Springer, vol. 163(3), pages 1675-1693, December.
    17. 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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