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How Consistent are Alternative Short-Term Climate Policies with Long-Term Goals?

Author

Listed:
  • Valentina Bosetti

    (Fondazione Eni Enrico Mattei)

  • Marzio Galeotti

    (Università di Milano and Fondazione Eni Enrico Mattei)

  • Alessandro Lanza

    (Fondazione Eni Enrico Mattei, Eni S.p.A., and CreNos)

Abstract

Choosing long-term goals is a key issue in the climate policy agenda. Targets should be easily measurable and feasible, but also effective in damage control. Once goals are set globally, given the uncertainty affecting long-term strategies and region-specific preferences for different policy instruments, policies will be better represented by a diversified portfolio to be revised over time, rather than “once and forever” decisions. It therefore becomes crucial to understand to what extent different strategies (or policy portfolios) are consistent with long-term targets, that is, when they imply emission paths which do not irreversibly diverge from globally set goals. The present paper aims to investigate emission paths implied by plausible policy scenarios against those derived by imposing alternative long-term targets, comparing, for example, differences in peak periods. Plausible policy scenarios are for instance Kyoto-type targets with or without participation by the U.S. and/or by developing countries. Different long-term targets considered focus on stabilisation of CO2 concentrations, radiative forcing and the increase in atmospheric temperature relative to pre-industrial levels. In order to account for the uncertainty surrounding the climate cycle, for each long-term goal multiple paths of emission - the most probable, the optimistic and the pessimistic ones - are considered in the comparison exercise. Comparative analysis is performed using a newly developed version of the FEEM-RICE model, a regional economy-climate model of optimal economic growth which is based on Nordhaus and Boyer’s RICE model crucially extended in order to account for induced technical change. In particular, both carbon and energy intensity are affected by a new endogenous variable – Technical Progress – which captures both the role of Learning by Researching and of Learning by Doing. These are in turn determined by the optimal levels of Research and Development and of Emission Abatement.

Suggested Citation

  • Valentina Bosetti & Marzio Galeotti & Alessandro Lanza, 2004. "How Consistent are Alternative Short-Term Climate Policies with Long-Term Goals?," Working Papers 2004.157, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2004.157
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    References listed on IDEAS

    as
    1. David Popp, 2003. "ENTICE: Endogenous Technological Change in the DICE Model of Global Warming," NBER Working Papers 9762, National Bureau of Economic Research, Inc.
    2. Carlo Carraro & Barbara Buchner, 2003. "China and the Evolution of the Present Climate Regime," Working Papers 2003.103, Fondazione Eni Enrico Mattei.
    3. William D. Nordhaus & David Popp, 1997. "What is the Value of Scientific Knowledge? An Application to Global Warming Using the PRICE Model," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 1-45.
    4. Marzio Galeotti & Carlo Carraro, 2004. "Does Endogenous Technical Change Make a Difference in Climate Policy Analysis? A Robustness Exercise with the FEEM-RICE Model," Working Papers 2004.152, Fondazione Eni Enrico Mattei.
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    Cited by:

    1. Valentina Bosetti & Carlo Carraro & Marzio Galeotti, 2006. "Stabilisation Targets, Technical Change and the Macroeconomic Costs of Climate Change Control," Working Papers 2006.2, Fondazione Eni Enrico Mattei.
    2. Valentina Bosetti, Carlo Carraro and Marzio Galeotti, 2006. "The Dynamics of Carbon and Energy Intensity in a Model of Endogenous Technical Change," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 191-206.
    3. Marzio Galeotti & Carlo Carraro, 2004. "Does Endogenous Technical Change Make a Difference in Climate Policy Analysis? A Robustness Exercise with the FEEM-RICE Model," Working Papers 2004.152, Fondazione Eni Enrico Mattei.

    More about this item

    Keywords

    Climate policy; Long-term climate targets; Climate sensitivity uncertainty; Capping radiative forcing;

    JEL classification:

    • H0 - Public Economics - - General
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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