Global socio-economic and climate change mitigation scenarios through the lens of structural change

Abstract

This paper analyses structural change in the economy as a key but largely unexplored aspect of global socio-economic and climate change mitigation scenarios. Structural change can actually drive energy and land use as much as economic growth and influence mitigation opportunities and barriers. Conversely, stringent climate policy is bound to induce specific structural and socio-economic transformations that are still insufficiently understood. We introduce Multi-Sectoral macroeconomic Integrated Assessment Models as tools to capture the key drivers of structural change and we conduct a multi-model study to assess main structural effects – changes of the sectoral composition and intensity of trade of global and regional economies – in a baseline and 2°C policy scenario by 2050. First, the range of baseline projections across models, for which we identify the main drivers, illustrates the uncertainty on future economic pathways – in emerging economies especially – and inform on plausible alternative futures with implications for energy use and emissions. Second, in all models, climate policy in the 2°C scenario imposes only a second-order impact on the economic structure at the macro-sectoral level – agriculture, manufacturing and services - compared to changes modelled in the baseline. However, this hides more radical changes for individual industries – within the energy sector especially. The study, which adopts a top-down framing of global structural change, represents a starting point to kick-start a conversation and propose a new research agenda seeking to improve understanding of the structural change effects in socio-economic and mitigation scenarios, and better inform policy assessments.