No-policy Scenario Research Articles

The substantial impacts of carbon capture and storage technology policies on climate change mitigation pathways in China

Carbon capture and storage (CCS) technology, considered as a pivotal tool in mitigating climate change within the fossil energy system, particularly in China, has experienced slower development than expected. The exploration of direct incentive policies to facilitate its growth remains relatively underdeveloped. This study developed a hybrid dynamic computable general equilibrium (CGE) model to simulate the substantial impacts of CCS incentive policies on China within the context of carbon neutrality target. Two potential incentive policies, carbon emission trading system (ETS) and 45Q tax credit, were simulated, with different sectoral coverage. The results indicate that CCS technologies can reduce carbon emissions by 960 ∼ 1,604 MtCO2 annually by 2060 through the strategic implementation of these incentive policies. The 45Q tax credit demonstrates its effectiveness in promoting early-stage research and development (R&D) and demonstration of CCS, while the ETS policy facilitates the commercial development of CCS in the later stage of development. By 2060, the implementation of CCS incentive policies could potentially result in 7.7 ∼ 17.4 % reduction in China’s primary energy consumption, 71.2 ∼ 82.7 % decrease in the carbon price of ETS and 5.64 ∼ 6.59 % increase in the GDP compared with the no-policy scenario. In addition, the sectoral output in various sectors and the welfare of urban and rural households also increase. This paper provides an important reference for the realization of China’s carbon neutrality goal and the model framework can be applied to other countries.

Reducing the cost of capital through international climate finance to accelerate the renewable energy transition in developing countries

Despite a vast potential, the accessibility of low cost finance remains a critical barrier to the deployment of Variable Renewable Energy (VRE) in many developing countries. High financing costs threaten the competitiveness of renewable energy technologies and impede progress in the energy transition. This study aims to assess the extent to which international climate finance could help reduce the cost of capital for VRE investments and accelerate the renewable energy transition in developing countries. We employ the IMACLIM-R multi-regional Integrated Assessment Model (IAM) to examine various climate finance scenarios, factoring in the interaction between public and private capital through a dedicated model for the average cost of capital (CoC). The results show that international climate finance can significantly enhance the adoption of renewable energy in regions that receive this support. For instance, Africa could achieve +43% electricity generation from VRE by 2030 in a scenario with deep risk sharing and mitigation for VRE investments, compared to a no-policy scenario. Our study demonstrates that reducing the financing costs of VRE investment through international climate finance encourages clean and affordable energy development. However it must be complemented by other policies to achieve more ambitious climate and sustainable development objectives.

Evaluating and simulating the impact of afforestation policy on land use and ecosystem services trade-offs in Linyi, China

Forest can provide multiple benefits, such as supplying a variety of ecosystem services. However, the planet is currently at risk of deforestation as a result of increased urbanization and growing food demand. Countries around the world have introduced a wide range of policies to mitigate this issue. In China, the Linyi City government has launched the cross-county forest credit market transactions (CFCMT) policy, which showcased significant innovations in compliance credits and transaction entities to enhance motivation for afforestation. This study creates a no-policy counterfactual scenario to analyze the woodland growth and ecosystem service trade-offs between 2013 and 2021. The results demonstrate that the woodland grew faster after this policy, with a growth rate 1.78 times higher than that from 2013 to 2017. The areas of woodland growth with the policy are mainly located on the edges of cropland and woodland. The increased woodland primarily originates from cropland conversion, and compared to the no-policy scenario, these growing woodlands have gentler slopes and lower altitudes. After the policy’s enforcement, there were more increases in carbon storage, soil retention, and habitat quality. And ecosystem services showed a more optimizing trend in the direction of synergy at grid and town scales. We also find that larger spatial scales exhibit synergies and less accurately represent trade-off/synergistic change trends. The ecosystem services bundle consisting of carbon stocks, soil conservation and habitat quality showed a significant increase. This study reveals woodland growth and trade-offs among ecosystem services after the implementation of CFCMT policy, offering valuable insights for future afforestation policy optimization and promotion.

Agricultural emission reduction targets at country and global levels: a bottom-up analysis

ABSTRACT Few countries have declared sector-specific emission reduction targets in agriculture, making it difficult to construct and assess realistic climate mitigation scenarios for analytical and policymaking purposes. We aim to fill this analytical gap by using a set of cluster analyses to gauge likely ambitions levels in reducing agricultural emission at country-level, taking into consideration important country-level characteristics and referencing the ‘common but differentiated responsibilities’ principle. We then use the results from the cluster analysis together with information from submitted NDCs and other considerations to design formulas for assigning numerical reduction targets to individual countries. Our main results indicate a global agricultural emission level in 2030 exceeding the limit for the 1.5°C temperature target, but representing substantially lower emissions than the no-policy scenario. At individual country-level, the scenarios consist of large emission reductions in Northern and Western Europe, followed by the USA and other developed economies, and emission increases in many developing countries. To facilitate the construction of alternative scenarios, our method also contains parameters for flexibility to scale up or down ambition levels at both country and global levels, making the method useful for other researchers to develop alternative scenarios.

Labor Market and Macroeconomic Dynamics in Latin America amid COVID: The Role of Digital-Adoption Policies

Abstract This paper analyzes how a policy that lowers firm digital-adoption costs shapes the labor-market and economic recovery from COVID-19 in Latin America (LA) using a framework with firm entry and unemployment, where salaried firms can adopt digital technologies and the employment and firm structure embodies key features of LA economies. Using Mexico as a case study, the model replicates the response of the labor market and output at the onset of the COVID recession and in its aftermath, including the dynamics of labor-force participation and informal employment. A policy-induced permanent reduction in the cost of adopting digital technologies at the trough of the recession bolsters the recovery of GDP, total employment, and labor income, and leads to a larger expansion in the share of formal employment compared to a no-policy scenario. In the long run, the economy exhibits a reduction in total employment but higher levels of GDP and labor income, greater average firm productivity, a larger formal employment share, and a marginally lower unemployment rate. Finally, as a side effect, the policy exacerbates the differential between formal and informal labor income, both as the economy recovers from the COVID recession and in the long run.

How do carbon cap-and-trade mechanisms and renewable portfolio standards affect renewable energy investment?

In order to promote the low-carbon transformation, Chinese government plans to implement two policies in the power industry: carbon cap-and-trade mechanisms and renewable portfolio standards. However, whether their synergy can drive the development of Chinese renewable energy industry has become a key issue. Based on China’s renewable energy industry, this paper established an optimization model with the objective function for maximizing electricity company profits. The study further employed scenario analysis to design four policy scenarios: no-policy scenario, carbon cap-and-trade mechanisms scenario, renewable portfolio standards scenario and mixed scenario. The mentioned scenarios were used to explore the impact of various policy situations on electricity companies’ investment decisions, total carbon emissions, consumer surplus and social welfare when renewable energy, new conventional energy and conventional energy are available in the market. The research findings obtained thus showed that in terms of renewable energy promotion, mixed scenario is the best. Our results also showed that at the initial stage of China’s low-carbon transformation, the social welfare level under mixed scenario is the highest. The outlined findings provide some policy suggestions for promoting the rapid development of renewable energy and accelerating the low-carbon transformation with high quality.

The Effectiveness of Borrower-Based Macroprudential Measures: A Quantitative Analysis for Slovakia

We develop a semi-structural quantitative framework that combines micro and macroeconomic data to assess the effectiveness of combinations of borrower-based macroprudential measures in Slovakia. We expand on the integrated dynamic household balance sheet model of Gross and Poblacion (2017) by introducing an endogenous loan granting feature, in turn to quantify the potential (ex-ante) impact of macroprudential measures on resilience parameters, compared with a counterfactual no-policy scenario, under adverse macroeconomic conditions. We conclude that (1) borrower-based measures can noticeably improve household and bank resilience to macroeconomic downturns, in particular when multiple measures are applied; (2) those measures tend to complement each other, as the impact of individual instruments is transmitted via different channels; and (3) the resilience benefits are more sizeable if the measures effectively limit the accumulation of risks before an economic downturn occurs, suggesting that an early, preemptive implementation of borrower-based measures is indeed warranted.

The Effectiveness of Borrower-Based Macroprudential Measures

We develop a semi-structural quantitative framework that combines micro and macroeconomic data to assess the effectiveness of combinations of borrower-based macroprudential measures in Slovakia. We expand on the integrated dynamic household balance sheet model of Gross and Población (2017) by introducing an endogenous loan granting feature, in turn to quantify the potential (ex-ante) impact of macroprudential measures on resilience parameters, compared with a counterfactual no-policy scenario, under adverse macroeconomic conditions. We conclude that (1) borrower-based measures can noticeably improve household and bank resilience to macroeconomic downturns, in particular when multiple measures are applied; (2) those measures tend to complement each other, as the impact of individual instruments is transmitted via different channels; and (3) the resilience benefits are more sizeable if the measures effectively limit the accumulation of risks before an economic downturn occurs, suggesting that an early, preemptive implementation of borrower-based measures is indeed warranted.

The Effectiveness of Borrower-Based Macroprudential Measures: A Quantitative Analysis for Slovakia

We develop a semi-structural quantitative framework that combines micro and macroeconomic data to assess the effectiveness of combinations of borrower-based macroprudential measures in Slovakia. We expand on the integrated dynamic household balance sheet model of Gross and Poblacion (2017) by introducing an endogenous loan granting feature, in turn to quantify the potential (ex-ante) impact of macroprudential measures on resilience parameters, compared with a counterfactual no-policy scenario, under adverse macroeconomic conditions. We conclude that (1) borrower-based measures can noticeably improve household and bank resilience to macroeconomic downturns, in particular when multiple measures are applied; (2) those measures tend to complement each other, as the impact of individual instruments is transmitted via different channels; and (3) the resilience benefits are more sizeable if the measures effectively limit the accumulation of risks before an economic downturn occurs, suggesting that an early, preemptive implementation of borrower-based measures is indeed warranted.

Health and economic benefits of cleaner residential heating in the Beijing–Tianjin–Hebei region in China

Millions of households in many underdeveloped countries use coal stoves for heating, which remains a major air pollution source. Since 2015, policies for substituting residential coal use with electricity have been implemented at unprecedented levels in the Beijing–Tianjin–Hebei (BTH) region, one of the most severely air polluted areas in China. This study evaluated the health benefits of the residential “coal-to-electricity” policy in the BTH region. We developed an integrated assessment model to investigate the impact of the policy on both the ambient and indoor air quality improvement. The private health benefits from indoor air quality improvements do not justify the costs. However, adding the spillover public health benefits from ambient air quality improvements, the policy brings net social benefits to the BTH region. Compared to a no-policy scenario, Beijing obtains the most health benefits and enjoys the most synergies from regional cooperation among the three provinces/municipalities. Hebei bears the highest cost since it has more households fueled by coal. Our results showing net social benefits provide support for a massive and accelerated implementation of this policy in the BTH region. The provincial distributional results can provide a reference for subsidies from Beijing and Tianjin to Hebei for achieving region-wide implementation.

Limiting global-mean temperature increase to 1.5–2 °C could reduce the incidence and spatial spread of dengue fever in Latin America

The Paris Climate Agreement aims to hold global-mean temperature well below 2 °C and to pursue efforts to limit it to 1.5 °C above preindustrial levels. While it is recognized that there are benefits for human health in limiting global warming to 1.5 °C, the magnitude with which those societal benefits will be accrued remains unquantified. Crucial to public health preparedness and response is the understanding and quantification of such impacts at different levels of warming. Using dengue in Latin America as a study case, a climate-driven dengue generalized additive mixed model was developed to predict global warming impacts using five different global circulation models, all scaled to represent multiple global-mean temperature assumptions. We show that policies to limit global warming to 2 °C could reduce dengue cases by about 2.8 (0.8-7.4) million cases per year by the end of the century compared with a no-policy scenario that warms by 3.7 °C. Limiting warming further to 1.5 °C produces an additional drop in cases of about 0.5 (0.2-1.1) million per year. Furthermore, we found that by limiting global warming we can limit the expansion of the disease toward areas where incidence is currently low. We anticipate our study to be a starting point for more comprehensive studies incorporating socioeconomic scenarios and how they may further impact dengue incidence. Our results demonstrate that although future climate change may amplify dengue transmission in the region, impacts may be avoided by constraining the level of warming.

Co-Benefits of CO2 Mitigation for NOX Emission Reduction: A Research Based on the DICE Model

Actions to reduce carbon emissions often entail co-benefits for environmental protection, like air pollutants reduction. Previous studies made contributions to estimate these co-benefits, but few considered the feedbacks from the socioeconomic system and the natural system. This paper extends the Dynamic Integrated model of Climate and the Economy (DICE) model, a classical Integrated Assessment model (IAM), into the Dynamic Integrated model of Climate, Air pollution and the Economy (DICAE) model. Through the hard link between a new air pollution module and the other modules in the original DICE, this paper quantifies the co-benefits of mitigating CO2 emissions for NOX emission reduction, and compares the predicted climate change, economic output and social utility under seven mixed policy scenarios. In addition, uncertainty analysis based on Monte Carlo simulation is carried out to verify the robustness of the DICAE model. The results indicate that the NOX emissions co-emitted with CO2 emissions would be over 0.6 Gt/year in a no-policy scenario. In policy scenarios, mitigating CO2 emissions can simultaneously reduce at least 15% of the NOX emissions, and the more severe the climate mitigation target is, the more obvious co-benefits for NOX emission reduction. Although these co-benefits can offset some mitigation costs, it will not be cost-effective when NOX emission reduction is achieved completely depending on ambitious carbon mitigation, so the end-of-pipe technology for NOX emission is also indispensable. For policymakers, they should recognize the co-benefits of climate policies, actively taking mitigation actions. Moreover, they are encouraged to combine CO2 mitigation with NOX emission reduction and coordinate their policy intensities to make wise use of the co-benefits.

Effect of Environmental Regulation Stringency on the Pulp and Paper Industry

The article investigates whether environmental regulations have affected productivity development and technological change in the European pulp and paper industry. A dynamic panel data approach is selected for analyzing a sample consisting of the pulp and paper industries in eight European countries. Industry total factor productivity for the period 1993–2009 is used as the dependent variable; it is explained by the intensities of environmental regulations for various types of pollutants, as well as by a number of other independent variables. The econometric results indicate that the regulation of nitrogen oxides is associated with productivity improvements with a one-year lag, whereas regulations regarding sulphur dioxide and carbon dioxide have not had any statistically significant impact. In line with the a priori expectations, the price of pulp is connected to a negative effect, while lagged R&D expenditures have had corresponding positive impacts. However, since stationary tests are asymptotic and the data series are quite short, strong conclusions regarding the actual causal effect of environmental policy could not be drawn. The results could therefore not be viewed as a proof of the so-called strong Porter hypothesis postulating that stringent well-designed environmental regulations increase productivity growth compared to a no-policy scenario.

Coaseian Biodiversity Conservation. Who Benefits?

We consider a world economy, in which the global public good ’biodiversity’ is positively correlated with that share of land which is protected by land-use restrictions against the deterioration of habitats and ecosystems. The willingness-to-pay for biodiversity conservation is positive in ’rich’ developed countries (North), but very low in ’poor’ developing countries (South). Taking the no-policy scenario (Regime 1) as our point of departure, we analyze the changes in allocations and welfare when the North financially supports biodiversity conservation in the South – as stipulated in the Convention on Biological Diversity (1992). We model that support as a market for biodiversity conservation and distinguish the cases, in which the North does (Regime 3) or does not (Regime 2) coordinate its biodiversity conservation actions. Our numerical examples exhibit various unexpected and even undesirable results. The move from Regime 1 to Regime 2 hardly improves welfare and biodiversity in our examples irrespective of whether governments act strategically. That may explain the low level of North’s financial support of biodiversity in the South we observe in practice. Without strategic action, the move from Regime 1 to 3 enhances aggregate welfare, because Regime 3 is efficient, but the North or the South may be worse off due to unfavorable changes in their terms-of-trade. If governments act strategically, the aggregate welfare may decline when moving from Regime 1 to 3, but the welfare changes with opposite signs for North and South tend to be smaller than without strategic action.

An integrated CO2 tax and subsidy policy for low carbon electricity in Guangdong, China

ABSTRACTIn order to tackle climate change, Guangdong has been chosen as an experimental province for low carbon transition by the Chinese government. To analyze the low carbon transition of the electricity sector in Guangdong, a techno-economic model is developed. By applying the model, the policies of CO2 tax and subsidy are analyzed first. Based on the analysis, an optimal integrated CO2 tax and subsidy policy is designed to exert positive pole and limit negative effects of a simple CO2 tax or subsidy policy. As a result, the development of renewable power can be incentivized efficiently and the development of coal-fired power plants can be inhibited. The CO2 emission per unit electricity supply can be reduced about 25.1% by 2020 compared with that in 2007.The cost of unit electricity supply will increase about 15.1%, which is close to that in a no-policy scenario and similar to the historical level.

The effects of country-level population policy for enhancing adaptation to climate change

Abstract. The effectiveness of population policy in reducing the combined impacts of population change and climate change on water resources is explored. One no-policy scenario and two scenarios with population policy assumptions are employed in combination with water availability under the SRES scenarios A1b, B1 and A2 for the impact analysis. The population data used are from the World Bank. The river discharges per grid of horizontal resolution 0.5° are obtained from the Total Runoff Integrating Pathways (TRIP) of the University of Tokyo, Japan. Unlike the population scenarios utilized in the SRES emission scenarios and the newest representative concentration pathways, the scenarios employed in this research are based, even after 2050, on country-level rather than regional-level growth assumptions. Our analysis implies that the heterogeneous pattern of population changes across the world is the dominant driver of water stress, irrespective of future greenhouse gas emissions, with highest impacts occurring in the already water-stressed low latitudes. In 2100, Africa, Middle East and parts of Asia are under extreme water stress under all scenarios. The sensitivity analysis reveals that a small reduction in populations over the region could relieve a large number of people from high water stress, while a further increase in population from the assumed levels (SC1) might not increase the number of people under high water stress considerably. Most of the population increase towards 2100 occurs in the already water-stressed lower latitudes. Therefore, population reduction policies are recommended for this region as a method of adaptation to the future water stress conditions. Population reduction policies will facilitate more control over their future development pathways, even if these countries were not able to contribute significantly to greenhouse gas (GHG) emission cuts due to economic constraints. However, for the European region, the population living in water-stressed regions is almost 20 times lower than that in the lower latitudes. For countries with high population momentum, the population policy scenario with fertility-reduction assumptions gained a maximum of 6.1 times the water availability in Niger and 5.3 times that in Uganda compared with the no-policy scenario. Most of these countries are in sub-Saharan Africa. These countries represent 24.5% of the global population in the no-policy scenario, and the scenario with fertility-reduction assumptions reduces it to 8.7% by 2100. This scenario is also effective in reducing the area under extreme water stress in these countries. However, the policy scenario with assumptions of population stabilization at the replacement fertility rate increases the water stress in high-latitude countries. Nevertheless, the impact is low due to the high per capita water availability in the region. This research is expected to widen the understanding of the combined impacts of climate change in the future and of the strategies needed to enhance the space for adaptation.

EUROPEAN-LED CLIMATE POLICY VERSUS GLOBAL MITIGATION ACTION: IMPLICATIONS ON TRADE, TECHNOLOGY, AND ENERGY

This paper examines how changes in an international climate regime would affect the European decarbonization strategy and costs through the mechanisms of trade, technology, and innovation. We present the results from the Energy Modeling Forum (EMF) model comparison study on European climate policy to 2050. Moving from a no-policy scenario to an existing-policies case reduces all energy imports, on average. Introducing a more stringent climate policy target for the EU only leads to slightly greater global emission reductions. Consumers and producers in Europe bear most of the additional burden and inevitably face some economic losses. More ambitious mitigation action outside Europe, especially when paired with a well-operating global carbon market, could reduce the burden for Europe significantly. Because of global learning, the costs of wind and especially solar-PV in Europe would decline below the levels observed in the existing-policy case and increased R&D spending outside the EU would leverage EU R&D investments as well.

Pan-Arctic land–atmospheric fluxes of methane and carbon dioxide in response to climate change over the 21st century

Future changes of pan-Arctic land–atmospheric methane (CH4) and carbon dioxide (CO2) depend on how terrestrial ecosystems respond to warming climate. Here, we used a coupled hydrology–biogeochemistry model to make our estimates of these carbon exchanges with two contrasting climate change scenarios (no-policy versus policy) over the 21st century, by considering (1) a detailed water table dynamics and (2) a permafrost-thawing effect. Our simulations indicate that, under present climate conditions, pan-Arctic terrestrial ecosystems act as a net greenhouse gas (GHG) sink of −0.2 Pg CO2-eq. yr−1, as a result of a CH4 source (53 Tg CH4 yr−1) and a CO2 sink (−0.4 Pg C yr−1). In response to warming climate, both CH4 emissions and CO2 uptakes are projected to increase over the century, but the increasing rates largely depend on the climate change scenario. Under the non-policy scenario, the CH4 source and CO2 sink are projected to increase by 60% and 75% by 2100, respectively, while the GHG sink does not show a significant trend. Thawing permafrost has a small effect on GHG sink under the policy scenario; however, under the no-policy scenario, about two thirds of the accumulated GHG sink over the 21st century has been offset by the carbon losses as CH4 and CO2 from thawing permafrost. Over the century, nearly all CO2-induced GHG sink through photosynthesis has been undone by CH4-induced GHG source. This study indicates that increasing active layer depth significantly affects soil carbon decomposition in response to future climate change. The methane emissions considering more detailed water table dynamics continuously play an important role in affecting regional radiative forcing in the pan-Arctic.

Influence of climate change mitigation technology on global demands of water for electricity generation

Globally, electricity generation accounts for a large and potentially growing water demand, and as such is an important component to assessments of global and regional water scarcity. However, the current suite—as well as potential future suite—of thermoelectric generation technologies has a very wide range of water demand intensities, spanning two orders of magnitude. As such, the evolution of the generation mix is important for the future water demands of the sector. This study uses GCAM, an integrated assessment model, to analyze the global electric sector's water demands in three futures of climate change mitigation policy and two technology strategies. We find that despite five- to seven-fold expansion of the electric sector as a whole from 2005 to 2095, global electric sector water withdrawals remain relatively stable, due to the retirement of existing power plants with water-intensive once-through flow cooling systems. In the scenarios examined here, climate policies lead to the large-scale deployment of advanced, low-emissions technologies such as carbon dioxide capture and storage (CCS), concentrating solar power, and engineered geothermal systems. In particular, we find that the large-scale deployment of CCS technologies does not increase long-term water consumption from hydrocarbon-fueled power generation as compared with a no-policy scenario without CCS. Moreover, in sensitivity scenarios where low-emissions electricity technologies are required to use dry cooling systems, we find that the consequent additional costs and efficiency reductions do not limit the utility of these technologies in achieving cost-effective whole-system emissions mitigation.

Climate mitigation and the future of tropical landscapes

Land-use change to meet 21st-century demands for food, fuel, and fiber will depend on many interactive factors, including global policies limiting anthropogenic climate change and realized improvements in agricultural productivity. Climate-change mitigation policies will alter the decision-making environment for land management, and changes in agricultural productivity will influence cultivated land expansion. We explore to what extent future increases in agricultural productivity might offset conversion of tropical forest lands to crop lands under a climate mitigation policy and a contrasting no-policy scenario in a global integrated assessment model. The Global Change Assessment Model is applied here to simulate a mitigation policy that stabilizes radiative forcing at 4.5 W m(-2) (approximately 526 ppm CO(2)) in the year 2100 by introducing a price for all greenhouse gas emissions, including those from land use. These scenarios are simulated with several cases of future agricultural productivity growth rates and the results downscaled to produce gridded maps of potential land-use change. We find that tropical forests are preserved near their present-day extent, and bioenergy crops emerge as an effective mitigation option, only in cases in which a climate mitigation policy that includes an economic price for land-use emissions is in place, and in which agricultural productivity growth continues throughout the century. We find that idealized land-use emissions price assumptions are most effective at limiting deforestation, even when cropland area must increase to meet future food demand. These findings emphasize the importance of accounting for feedbacks from land-use change emissions in global climate change mitigation strategies.