• Energy Research

Effective mitigation of climate change requires a robust set of policy interventions. Existing policy appraisal frameworks and approaches impact the design and choice of these policy options. However, their application to transformative climate policy can present several shortcomings. In light of criticism around current appraisal methods, we review the climate policy appraisal landscape and interview policy experts in three major emerging economies: Brazil, China and India. Little research has been done on the perception, approach, and practice of policy appraisal in these countries, even though they will have a significant impact on global progress to mitigate climate change. We find that policy appraisal in Brazil, China, and India is supported by guidelines, but the detail and implementation of those guidelines vary significantly. Cost–benefit analysis (CBA) is the prevailing decision-making framework in both Brazil and India whereas multi-criteria analysis is the dominant framework in China. Practitioners appear to understand CBA and its limitations well but also value its usability and the perception of robustness. Across all countries, political considerations can outweigh appraisal findings; respondents suggested this can be negative, in the sense that appraisal results are sometimes ignored, but can also be positive in the sense that other objectives are considered. Existing approaches present several limitations, particularly regarding transformational change, which could hamper progress to formulate and implement effective climate and energy policy. Guidelines that standardize the appraisal process are considered better for accountability and therefore increase the influence of appraisal in policymaking.The choice of approach affects the appraisal outcome. The type of policy and its intended aims should inform the method of appraisal used.Climate policies are often transformational in nature. As such, their outcomes can be very uncertain. More efforts are needed to integrate these considerations of uncertainty into appraisal frameworks.More computational models that consider system feedbacks and uncertainty are needed to robustly analyse the impacts of transformative policies. Guidelines that standardize the appraisal process are considered better for accountability and therefore increase the influence of appraisal in policymaking. The choice of approach affects the appraisal outcome. The type of policy and its intended aims should inform the method of appraisal used. Climate policies are often transformational in nature. As such, their outcomes can be very uncertain. More efforts are needed to integrate these considerations of uncertainty into appraisal frameworks. More computational models that consider system feedbacks and uncertainty are needed to robustly analyse the impacts of transformative policies.

Abstract. We present a carbon cycle-climate modelling framework using model emulation, designed for integrated assessment modelling, which introduces a new emulator of the carbon cycle (GENIEem). We demonstrate that GENIEem successfully reproduces the CO2 concentrations of the Representative Concentration Pathways when forced with the corresponding CO2 emissions and non-CO2 forcing. To demonstrate its application as part of the integrated assessment framework, we use GENIEem along with an emulator of the climate (PLASIM-ENTSem) to evaluate global CO2 concentration levels and spatial temperature and precipitation response patterns resulting from CO2 emission scenarios. These scenarios are modelled using a macroeconometric model (E3MG) coupled to a model of technology substitution dynamics (FTT:Power), and represent different emissions reduction policies applied solely in the electricity sector, without mitigation in the rest of the economy. The effect of cascading uncertainty is apparent, but despite uncertainties, it is clear that in all scenarios, global mean temperatures in excess of 2 °C above preindustrial levels are projected by the end of the century. Our approach also reveals the diverse temperature and precipitation patterns that could occur regionally in response to the global mean temperatures associated with these scenarios, enabling more robust impacts modelling and emphasising the necessity of focussing on spatial patterns in addition to global mean temperature change.

A high degree of consensus exists in the climate sciences over the role that human interference with the atmosphere is playing in changing the climate. Following the Paris Agreement, a similar consensus exists in the policy community over the urgency of policy solutions to the climate problem. The context for climate policy is thus moving from agenda setting, which has now been mostly established, to impact assessment, in which we identify policy pathways to implement the Paris Agreement. Most integrated assessment models currently used to address the economic and technical feasibility of avoiding climate change are based on engineering perspectives with a normative systems optimisation philosophy, suitable for agenda setting, but unsuitable to assess the socio-economic impacts of a realistic baskets of climate policies. Here, we introduce a fully descriptive, simulation-based integrated assessment model designed specifically to assess policies, formed by the combination of (1) a highly disaggregated macro-econometric simulation of the global economy based on time series regressions (E3ME), (2) a family of bottom-up evolutionary simulations of technology diffusion based on cross-sectional discrete choice models (FTT), and (3) a carbon cycle and atmosphere circulation model of intermediate complexity (GENIE-1). We use this combined model to create a detailed global and sectoral policy map and scenario that sets the economy on a pathway that achieves the goals of the Paris Agreement with >66% probability of not exceeding 2$^\circ$C of global warming. We propose a blueprint for a new role for integrated assessment models in this upcoming policy assessment context. 23 pages + Supplementary Information 26 pages

This paper presents an analysis of climate policy instruments for the decarbonisation of the global electricity sector in a non-equilibrium economic and technology diffusion perspective. Energy markets are driven by innovation, path-dependent technology choices and diffusion. However, conventional optimisation models lack detail on these aspects and have limited ability to address the effectiveness of policy interventions because they do not represent decision-making. As a result, known effects of technology lock-ins are liable to be underestimated. In contrast, our approach places investor decision-making at the core of the analysis and investigates how it drives the diffusion of low-carbon technology in a highly disaggregated, hybrid, global macroeconometric model, FTT:Power-E3MG. Ten scenarios to 2050 of the electricity sector in 21 regions exploring combinations of electricity policy instruments are analysed, including their climate impacts. We show that in a diffusion and path-dependent perspective, the impact of combinations of policies does not correspond to the sum of impacts of individual instruments: synergies exist between policy tools. We argue that the carbon price required to break the current fossil technology lock-in can be much lower when combined with other policies, and that a 90% decarbonisation of the electricity sector by 2050 is affordable without early scrapping. 18 pages, 6 figures, 3 appendices

Several major economies rely heavily on fossil-fuel production and exports, yet current low-carbon technology diffusion, energy efficiency and climate policy may be substantially reducing global demand for fossil fuels.1-4 This trend is inconsistent with observed investment in new fossil-fuel ventures1,2, which could become stranded as a result. Here we use an integrated global economy environment simulation model to study the macroeconomic impact of stranded fossil-fuel assets (SFFA). Our analysis suggests that part of the SFFA would occur as a result of an already ongoing technological trajectory, irrespective of whether new climate policies are adopted or not; the loss would be amplified if new climate policies to reach the 2°C target are adopted and/or if low-cost producers (some OPEC countries) maintain their level of production (‘sell-out’) despite declining demand; the magnitude of the loss from SFFA may amount to a discounted global wealth loss of $1-4tn; and there are clear distributional impacts, with winners (e.g. net importers such as China or the EU) and losers (e.g. Russia, the US or Canada, which could see their fossil-fuel industries nearly shut down), although the two effects would largely offset each other at the level of aggregate global GDP.