• Energy Research

The Paris agreement has provided a new framework for climate policy. Complementary forms of international collaboration, such as climate clubs, are probably necessary to foster and mainstream the process of gradual and voluntary increase in nationally determined contributions. We provide a quantitative macro-economic assessment of the costs and benefits that would be associated with different climate club architectures. We find that the key benefits that could structure the club are enhanced technological diffusion and the provision of low-cost climate finance, which reduce investment costs and also enables developing countries to take full advantage of technological diffusion. Although they face the highest absolute mitigation cost, China and India are the largest relative winners from club participation because the burden faced by these countries to finance their energy transition can be massively reduced following their participation in the club. Achieving the Paris Agreement goals may require complementary institutions such as climate clubs. Enhanced technological diffusion and the provision of low-cost climate finance are shown to support the creation of climate coalitions.

The Paris agreement has provided a new framework for climate policy. Complementary forms of international collaboration, such as climate clubs, are probably necessary to foster and mainstream the process of gradual and voluntary increase in nationally determined contributions. We provide a quantitative macro-economic assessment of the costs and benefits that would be associated with different climate club architectures. We find that the key benefits that could structure the club are enhanced technological diffusion and the provision of low-cost climate finance, which reduce investment costs and also enables developing countries to take full advantage of technological diffusion. Although they face the highest absolute mitigation cost, China and India are the largest relative winners from club participation because the burden faced by these countries to finance their energy transition can be massively reduced following their participation in the club. Achieving the Paris Agreement goals may require complementary institutions such as climate clubs. Enhanced technological diffusion and the provision of low-cost climate finance are shown to support the creation of climate coalitions.

Abstract Research and development (R&D) investments foster green innovation, which is key to decarbonize the energy system and attain long-term climate goals. In this paper, we link three integrated assessment models that possess a macroeconomic framework – WITCH, MERGE-ETL and GEM-E3 – with the bottom-up technology-rich energy system model TIAM-ECN, in order to quantitatively explore how investments in R&D can support deep decarbonization pathways. We take advantage of the endogenous technological learning feature of the first three models to derive R&D-induced capital cost reductions for strategic clusters of low-carbon technologies: solar energy, on- and offshore wind energy, carbon capture and storage, advanced fuels, and batteries for electric vehicles. We examine scenarios with different assumptions on CO2 mitigation and R&D policy. These assumptions are harmonized among our four models, and capital cost reductions driven by R&D are exogenously incorporated in TIAM-ECN, which enables a detailed assessment of the required energy transition. Our results show that the stringency of climate change mitigation policy remains the key factor influencing the diffusion of low-carbon technologies, while R&D can support mitigation goals and influence the contribution of different types of technologies. If implemented effectively and without worldwide barriers to knowledge spill-overs, R&D facilitates the deployment of mature technologies such as solar, wind, and electric vehicles, and enables lower overall energy system costs.

Abstract Research and development (R&D) investments foster green innovation, which is key to decarbonize the energy system and attain long-term climate goals. In this paper, we link three integrated assessment models that possess a macroeconomic framework – WITCH, MERGE-ETL and GEM-E3 – with the bottom-up technology-rich energy system model TIAM-ECN, in order to quantitatively explore how investments in R&D can support deep decarbonization pathways. We take advantage of the endogenous technological learning feature of the first three models to derive R&D-induced capital cost reductions for strategic clusters of low-carbon technologies: solar energy, on- and offshore wind energy, carbon capture and storage, advanced fuels, and batteries for electric vehicles. We examine scenarios with different assumptions on CO2 mitigation and R&D policy. These assumptions are harmonized among our four models, and capital cost reductions driven by R&D are exogenously incorporated in TIAM-ECN, which enables a detailed assessment of the required energy transition. Our results show that the stringency of climate change mitigation policy remains the key factor influencing the diffusion of low-carbon technologies, while R&D can support mitigation goals and influence the contribution of different types of technologies. If implemented effectively and without worldwide barriers to knowledge spill-overs, R&D facilitates the deployment of mature technologies such as solar, wind, and electric vehicles, and enables lower overall energy system costs.

Hopes are high that removing fossil fuel subsidies could help to mitigate climate change by discouraging inefficient energy consumption and levelling the playing field for renewable energy. In September 2016, the G20 countries re-affirmed their 2009 commitment (at the G20 Leaders' Summit) to phase out fossil fuel subsidies and many national governments are using today's low oil prices as an opportunity to do so. In practical terms, this means abandoning policies that decrease the price of fossil fuels and electricity generated from fossil fuels to below normal market prices. However, whether the removal of subsidies, even if implemented worldwide, would have a large impact on climate change mitigation has not been systematically explored. Here we show that removing fossil fuel subsidies would have an unexpectedly small impact on global energy demand and carbon dioxide emissions and would not increase renewable energy use by 2030. Subsidy removal would reduce the carbon price necessary to stabilize greenhouse gas concentration at 550 parts per million by only 2-12 per cent under low oil prices. Removing subsidies in most regions would deliver smaller emission reductions than the Paris Agreement (2015) climate pledges and in some regions global subsidy removal may actually lead to an increase in emissions, owing to either coal replacing subsidized oil and natural gas or natural-gas use shifting from subsidizing, energy-exporting regions to non-subsidizing, importing regions. Our results show that subsidy removal would result in the largest CO2 emission reductions in high-income oil- and gas-exporting regions, where the reductions would exceed the climate pledges of these regions and where subsidy removal would affect fewer people living below the poverty line than in lower-income regions.

Hopes are high that removing fossil fuel subsidies could help to mitigate climate change by discouraging inefficient energy consumption and levelling the playing field for renewable energy. In September 2016, the G20 countries re-affirmed their 2009 commitment (at the G20 Leaders' Summit) to phase out fossil fuel subsidies and many national governments are using today's low oil prices as an opportunity to do so. In practical terms, this means abandoning policies that decrease the price of fossil fuels and electricity generated from fossil fuels to below normal market prices. However, whether the removal of subsidies, even if implemented worldwide, would have a large impact on climate change mitigation has not been systematically explored. Here we show that removing fossil fuel subsidies would have an unexpectedly small impact on global energy demand and carbon dioxide emissions and would not increase renewable energy use by 2030. Subsidy removal would reduce the carbon price necessary to stabilize greenhouse gas concentration at 550 parts per million by only 2-12 per cent under low oil prices. Removing subsidies in most regions would deliver smaller emission reductions than the Paris Agreement (2015) climate pledges and in some regions global subsidy removal may actually lead to an increase in emissions, owing to either coal replacing subsidized oil and natural gas or natural-gas use shifting from subsidizing, energy-exporting regions to non-subsidizing, importing regions. Our results show that subsidy removal would result in the largest CO2 emission reductions in high-income oil- and gas-exporting regions, where the reductions would exceed the climate pledges of these regions and where subsidy removal would affect fewer people living below the poverty line than in lower-income regions.