The Private Provision of International Impure Public Goods: the Case of Climate Policy

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Transport energy demand: techno-economic modelling and scenarios for Irish climate policy

The case for energy policy modelling is strong in Ireland, where stringent EU climate targets are projected to be overshot by 2015. Policy targets aiming to deliver greenhouse gas and renewable energy targets have been made, but it is unclear what savings are to be achieved and from which sectors. Concurrently, the growth of personal mobility has caused an astonishing increase in CO2 emissions from private cars in Ireland, a 37% rise between 2000 and 2008, and while there have been improvements in the efficiency of car technology, there was no decrease in the energy intensity of the car fleet in the same period. This thesis increases the capacity for evidenced-based policymaking in Ireland by developing techno-economic transport energy models and using them to analyse historical trends and to project possible future scenarios. A central focus of this thesis is to understand the effect of the car fleet‘s evolving technical characteristics on energy demand. A car stock model is developed to analyse this question from three angles: Firstly, analysis of car registration and activity data between 2000 and 2008 examines the trends which brought about the surge in energy demand. Secondly, the car stock is modelled into the future and is used to populate a baseline “no new policy” scenario, looking at the impact of recent (2008-2011) policy and purchasing developments on projected energy demand and emissions. Thirdly, a range of technology efficiency, fuel switching and behavioural scenarios are developed up to 2025 in order to indicate the emissions abatement and renewable energy penetration potential from alternative policy packages. In particular, an ambitious car fleet electrification target for Ireland is examined. The car stock model‘s functionality is extended by linking it with other models: LEAP-Ireland, a bottom-up energy demand model for all energy sectors in the country; Irish TIMES, a linear optimisation energy system model; and COPERT, a pollution model. The methodology is also adapted to analyse trends in freight energy demand in a similar way. Finally, this thesis addresses the gap in the representation of travel behaviour in linear energy systems models. A novel methodology is developed and case studies for Ireland and California are presented using the TIMES model. Transport Energy

Modeling endogenous technological change for climate policy analysis

The approach used to model technological change in a climate policy model is a critical determinant of its results in terms of the time path of CO2 prices and costs required to achieve various emission reduction goals. We provide an overview of the different approaches used in the literature, with an emphasis on recent developments regarding endogenous technological change, research and development, and learning. Detailed examination sheds light on the salient features of each approach, including strengths, limitations, and policy implications. Key issues include proper accounting for the opportunity costs of climate-related knowledge generation, treatment of knowledge spillovers and appropriability, and the empirical basis for parameterizing technological relationships. No single approach appears to dominate on all these dimensions, and different approaches may be preferred depending on the purpose of the analysis, be it positive or normative. © 2008 Elsevier B.V. All rights reserved.

Carbon leakage revisited: unilateral climate policy with directed technical change

Using a stylized theoretical model, we argue that current economic analyses of climate policy tend to over-estimate the degree of carbon leakage, as they abstract from the effects of induced technological change. We analyse carbon leakage in a two-country model with directed technical change, where only one of the countries enforces an exogenous cap on emissions. Climate policy induces changes in relative prices, that cause carbon leakage through a terms-of-trade effect. However, these changes in relative prices also affect the incentives to innovate in different sectors. This leads to a counterbalancing induced-technology effect, which always reduces carbon leakage. We therefore conclude that the leakage rates reported in the literature may be too high, as these estimates neglect the effect of price changes on the incentives to innovate.

Lobbying by Trade Associations on EU Climate Policy

Climate change has been recognised as one of the greatest challenges of the 21st Century. Its impacts, and they way that we choose to deal with them will profoundly affect how business and society operates. This report focuses on European Union (EU) climate policy – the governance structures, rules and regulations that have been put in place at the EU level to attempt to mitigate and adapt to the impacts of climate change. Specifically, it focuses on how trade associations representing industrial sectors or broader business interest have lobbied on EU climate policy, and the impact that they have had on the policymaking process. The report then goes on to discuss whether the impacts of this lobbying align with the stated policies of the companies that are members of these trade associations.

Modeling the Transport Sector: The Role of Existing Fuel Taxes in Climate Policy

Existing fuel taxes play a major role in determining the welfare effects of exempting the transportation sector from measures to control greenhouse gases. To study this phenomenon we modify the MIT Emissions Prediction and Policy Analysis (EPPA) model to disaggregate the household transportation sector. This improvement requires an extension of the GTAP data set that underlies the model. The revised and extended facility is then used to compare economic costs of cap-and-trade systems differentiated by sector, focusing on two regions: the USA where the fuel taxes are low, and Europe where the fuel taxes are high. We find that the interplay between carbon policies and pre-existing taxes leads to different results in these regions: in the USA exemption of transport from such a system would increase the welfare cost of achieving a national emissions target, while in Europe such exemptions will correct pre-existing distortions and reduce the cost.

The implications of climate policy for the impacts of climate change on global water resources

This paper assesses the implications of climate policy for exposure to water resources stresses. It compares a Reference scenario which leads to an increase in global mean temperature of 4oC by the end of the 21st century with a Mitigation scenario which stabilises greenhouse gas concentrations at around 450ppm CO2e and leads to a 2oC increase in 2100. Associated changes in river runoff are simulated using a global hydrological model, for four spatial patterns of change in temperature and rainfall. There is a considerable difference in hydrological change between these four patterns, but the percentages of change avoided at the global scale are relatively robust. By the 2050s, the Mitigation scenario typically avoids between 16 and 30% of the change in runoff under the Reference scenario, and by 2100 it avoids between 43 and 65%. Two different measures of exposure to water resources stress are calculated, based on resources per capita and the ratio of withdrawals to resources. Using the first measure, the Mitigation scenario avoids 8-17% of the impact in 2050 and 20-31% in 2100; with the second measure, the avoided impacts are 5-21% and 15-47% respectively. However, at the same time, the Mitigation scenario also reduces the positive impacts of climate change on water scarcity in other areas. The absolute numbers and locations of people affected by climate change and climate policy vary considerably between the four climate model patterns.

To what extent are EU steel companies susceptible to competitive loss due to climate policy?

In recognition of their competitive vulnerability, a set of special rules have been devised for managing sectors such as steel and cement within the EU ETS. These rules basically seek to set sector specific performance benchmarks and reward top performers. However, the steel sector as a whole will receive the vast majority of its allowances for free in Phase III. Perceptions of competitive vulnerability have been largely based on inherently hypothetical analyses which rely heavily on counterfactual scenario and abatement cost estimates often provided by firms themselves. This paper diverges from these approaches by providing a qualitative assessment of the two key reasons underpinning the competitive vulnerability argument of the EU Steel Companies based on interviews and case study involving the three largest producers of steel within the EU – AcerlorMittal, Corus, and ThyssenKrupp. We find that these arguments provide only partial and weak justifications for competitive loss and discriminatory treatment in the EUETS. This strategy is difficult to counter by governments due to information asymmetry; and it appears to have proved very successful insofar as it has helped the industry to achieve free allocation in Phases I-III of EU ETS by playing up the risk of carbon leakage.

A global assessment of the effects of climate policy on the impacts of climate change

This study presents the first global-scale multi-sectoral regional assessment of the magnitude and uncertainty in the impacts of climate change avoided by emissions policies. The analysis suggests that the most stringent emissions policy considered here – which gives a 50% chance of remaining below a 2oC temperature rise target - reduces impacts by 20-65% by 2100 relative to a ‘business-as-usual’ pathway (A1B) which reaches 4oC, and can delay impacts by several decades. Effects vary between sector and region, and there are few noticeable effects of mitigation policy by 2030. The impacts avoided by 2100 are more strongly influenced by the date and level at which emissions peak than the rate of decline of emissions, with an earlier and lower emissions peak avoiding more impacts. The estimated proportion of impacts avoided at the global scale is relatively robust despite uncertainty in the spatial pattern of climate change, but the absolute amount of avoided impacts is considerably more variable and therefore uncertain.

The national dialogue on behaviour change in UK climate policy: some observations on responsibility, agency and political dimensions

This chapter explores the politics around the role of agency in the UK climate change debate. Government interventions on the demand side of consumption have increasingly involved attempts to obtain greater traction with the values, attitudes and beliefs of citizens in relation to climate change and also in terms of influencing consumer behaviour at an individual level. With figures showing that approximately 40% of the UK’s carbon emissions are attributable to household and transport behaviour, policy initiatives have progressively focused on the facilitation of “sustainable behaviours”. Evidence suggests however, that mobilisation of pro-environmental attitudes in addressing the perceived “value-action gap” has so far had limited success. Research in this field suggests that there is a more significant and nuanced “gap” between context and behaviour; a relationship that perhaps provides a more adroit reflection of reasons why people do not necessarily react in the way that policy-makers anticipate. Tracing the development of the UK Government’s behaviour change agenda over the last decade, we posit that a core reason for the limitations of this programme relates to an excessively narrow focus on the individual. This has served to obscure some of the wider political and economic aspects of the debate in favour of a more simplified discussion. The second part of the chapter reports findings from a series of focus groups exploring some of the wider political views that people hold around household energy habits, purchase and use of domestic appliances, and transport behaviour-and discusses these insights in relation to the literature on the agenda’s apparent limitations. The chapter concludes by considering whether the aims of the Big Society approach (recently established by the UK’s Coalition Government) hold the potential to engage more directly with some of these issues or whether they merely constitute a “repackaging” of the individualism agenda.

The effect of climate policy on the impacts of climate change on river flows in the UK

This paper compares the effects of two indicative climate mitigation policies on river flows in six catchments in the UK with two scenarios representing un-mitigated emissions. It considers the consequences of uncertainty in both the pattern of catchment climate change as represented by different climate models and hydrological model parameterisation on the effects of mitigation policy. Mitigation policy has little effect on estimated flow magnitudes in 2030. By 2050 a mitigation policy which achieves a 2oC temperature rise target reduces impacts on low flows by 20-25% compared to a business-as-usual emissions scenario which increases temperatures by 4oC by the end of the 21st century, but this is small compared to the range in impacts between different climate model scenarios. However, the analysis also demonstrates that an early peak in emissions would reduce impacts by 40-60% by 2080 (compared with the 4oC pathway), easing the adaptation challenge over the long term, and can delay by several decades the impacts that would be experienced from around 2050 in the absence of policy. The estimated proportion of impacts avoided varies between climate model patterns and, to a lesser extent, hydrological model parameterisations, due to variations in the projected shape of the relationship between climate forcing and hydrological response.

An overview of domestic aspects in US climate policy

The article shows how domestic aspects influence the United States national and international climate policy. To accomplish the task, the authors analyzes the discussions when Bill Clinton was ruling the country, a time during which global discussions were forwarded. The paper recalls the debate in the Bush administration and the growing polarization since Barack Obama took office.