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

Author

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  • 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.

Suggested Citation

  • Terry Barker & Annela Anger & Unnada Chewpreecha & Hector Pollitt, 2012. "A new economics approach to modelling policies to achieve global 2020 targets for climate stabilisation," International Review of Applied Economics, Taylor & Francis Journals, vol. 26(2), pages 205-221, October.
  • Handle: RePEc:taf:irapec:v:26:y:2012:i:2:p:205-221
    DOI: 10.1080/02692171.2011.631901
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    References listed on IDEAS

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    1. Barbier,Edward B., 2010. "A Global Green New Deal," Cambridge Books, Cambridge University Press, number 9780521763097, March.
    2. Barbier, Edward B., 2010. "Global governance: the G20 and a Global Green New Deal," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 4, pages 1-35.
    3. Robert Pollin & Heidi Garrett-Peltier & James Heintz & Helen Scharber, 2008. "Green Recovery: A Program to Create Good Jobs & Start Building a Low-Carbon Economy," Published Studies peri_report, Political Economy Research Institute, University of Massachusetts at Amherst.
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    Citations

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    Cited by:

    1. 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.
    2. Rezai, Armon & Taylor, Lance & Mechler, Reinhard, 2013. "Ecological macroeconomics: An application to climate change," Ecological Economics, Elsevier, vol. 85(C), pages 69-76.
    3. Dafermos, Yannis & Nikolaidi, Maria & Galanis, Giorgos, 2017. "A stock-flow-fund ecological macroeconomic model," Ecological Economics, Elsevier, vol. 131(C), pages 191-207.
    4. Vaninsky, Alexander, 2014. "Factorial decomposition of CO2 emissions: A generalized Divisia index approach," Energy Economics, Elsevier, vol. 45(C), pages 389-400.
    5. Mercure, Jean-François & Salas, Pablo, 2013. "On the global economic potentials and marginal costs of non-renewable resources and the price of energy commodities," Energy Policy, Elsevier, vol. 63(C), pages 469-483.
    6. Mercure, J.-F. & Pollitt, H. & Chewpreecha, U. & Salas, P. & Foley, A.M. & Holden, P.B. & Edwards, N.R., 2014. "The dynamics of technology diffusion and the impacts of climate policy instruments in the decarbonisation of the global electricity sector," Energy Policy, Elsevier, vol. 73(C), pages 686-700.
    7. Pablo Salas, 2013. "Literature Review of Energy-Economics Models, Regarding Technological Change and Uncertainty," 4CMR Working Paper Series 003, University of Cambridge, Department of Land Economy, Cambridge Centre for Climate Change Mitigation Research.
    8. Bernardo, Giovanni & D'Alessandro, Simone, 2014. "Transition to sustainability? Feasible scenarios towards a low-carbon economy," MPRA Paper 53746, University Library of Munich, Germany.
    9. Sijm, Jos & Lehmann, Paul & Chewpreecha, Unnada & Gawel, Erik & Mercure, Jean-Francois & Pollitt, Hector & Strunz, Sebastian, 2014. "EU climate and energy policy beyond 2020: Are additional targets and instruments for renewables economically reasonable?," UFZ Discussion Papers 3/2014, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).

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