Energy transformation cost for the Japanese mid-century strategy

Shinichiro Fujimori,Tomoko Hasegawa,Ken Oshiro,Hiroto Shiraki

doi:10.1038/s41467-019-12730-4

Abstract

The costs of climate change mitigation policy are one of the main concerns in decarbonizing the economy. The macroeconomic and sectoral implications of policy interventions are typically estimated by economic models, which tend be higher than the additional energy system costs projected by energy system models. Here, we show the extent to which policy costs can be lower than those from conventional economic models by integrating an energy system and an economic model, applying Japan’s mid-century climate mitigation target. The GDP losses estimated with the integrated model were significantly lower than those in the conventional economic model by more than 50% in 2050. The representation of industry and service sector energy consumption is the main factor causing these differences. Our findings suggest that this type of integrated approach would contribute new insights by providing improved estimates of GDP losses, which can be critical information for setting national climate policies.

Highlights

The costs of climate change mitigation policy are one of the main concerns in decarbonizing the economy
Under the long-term global goal in the Paris Agreement (PA) of keeping the global mean temperature increase well below 2 °C compared with the pre-industrial level, the net CO2 emissions in this mid-century must be close to neutral according to numerous studies carried out using Integrated Assessment Models (IAMs)[4]
An 80% reduction of greenhouse gas (GHG) emissions requires substantial changes in the energy system compared to the current system or the baseline scenario (Fig. 1a)

Summary

Introduction

The costs of climate change mitigation policy are one of the main concerns in decarbonizing the economy. The macroeconomic and sectoral implications of policy interventions are typically estimated by economic models, which tend be higher than the additional energy system costs projected by energy system models. We show the extent to which policy costs can be lower than those from conventional economic models by integrating an energy system and an economic model, applying Japan’s mid-century climate mitigation target. Macroeconomic implications including sectoral impacts provided by CGE models is more meaningful than energy system costs alone. To this end, several attempts have been made[14,15,16], whereas investigators such as Bohringer et al.[17,18,19,20] incorporated disaggregated information on power sectors.

Methods

Results

Conclusion