Abstract
Future emissions scenarios have served as a primary basis for assessing climate change and formulating climate policies. To explore the impact of uncertainty in future emissions scenarios on major outcomes related to climate change, this study examines the marginal abatement cost (MAC) of carbon emissions under the latest Shared Socioeconomic Pathways (SSPs) subject to the economic optimum and the 1.5 °C temperature increase constraint using the Epstein-Zin (EZ) climate model. Taking the “Regional Rivalry” (SSP3) scenario narrative under the economic optimum as a representative case, the expected MACs per ton CO2 equivalent (CO2e) emissions in the years 2015, 2030, 2060, 2100, and 2200 are: $102.08, $84.42, $61.19, $10.71, and $0.12, respectively. In parallel, the associated expected average mitigation rates (AMRs) are 0%, 63%, 66%, 81%, and 96%, respectively. In summary, in a world developing towards regional rivalry (SSP3) or fossil-fueled development (SSP5) with high mitigation pressure, the MAC values have approximately doubled, compared with the sustainability (SSP1) and inequality (SSP4) storylines with low mitigation pressure levels. The SSP2 (Middle of the Road) shows a moderate MAC decreasing trend with moderate mitigation pressure. The results provide a carbon price benchmark for policy makers with different attitudes towards the unknown future and can be used to formulate carbon mitigation strategy to respond to specific climate goals.
Highlights
Since the start of industrialization, economic development and population growth have driven the high use of carbon-based fossil fuels
Marginal cost theory proposes that, in a perfectly competitive market, the optimal price per unit of CO2 emission permit should be equal to the marginal abatement cost (MAC), defined as the cost to reduce one unit of CO2 emissions at a specific emission level [1]
greenhouse gases (GHGs) concentrations for each of the Shared Socioeconomic Pathways (SSPs) are from the IIASA (International Institute for Applied Systems Analysis, https://tntcat.iiasa.ac.at/SspDb/ accessed on 28 July 2021)
Summary
Since the start of industrialization, economic development and population growth have driven the high use of carbon-based fossil fuels. IAMs modelers use several generations of emission scenarios to develop a series of impact assessments with respect to climate change [3]. SSPs have been successfully applied in different impact assessment studies; this coverage has not included predicting future MACs. This paper estimates the MACs under the SSP storylines by applying the Epstein-Zin (EZ) climate model; the associated average mitigation rates (AMRs) are given in parallel. Focusing on the SSP3 narrative under the economically optimal policy as a representative case, this section presents the MACs and AMRs at five emission reduction decision timepoints for each state: 2015, 2030, 2060, 2100, and 2200. We present the expected MACs and AMRs at the five emission reduction decision timepoints under the five SSPs. the sensitivity of the main model parameters is analyzed.
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