EDF Talks Global Climate

EDF crunches the numbers for climate change

Environmental Defense Fund’s numbers crunchers once again are providing the critical figures needed to develop new climate change policies this week at the Fourth World Congress of Environmental and Resource Economists in Montreal, Canada.

Intensity targets and economics

U.S. C02 intensity, carbon emissions, and GDP 1996-2006

Intensity targets for emissions can be ineffective at reducing total emissions because, such as in the U.S., it’s possible for a country’s emissions intensity to fall while it total carbon emissions increase. This means falling intensity targets don’t necessarily result in an absolute emissions reduction, which is imperative for successful climate policy.

In their Montreal presentation, Alexander Golub, a senior research fellow at EDF, and Dominic Marcellino of the Ecologic Institute look at intensity targets, policies that specify emissions reductions relative to a country’s economic output or productivity (e.g. tons of CO2 per million dollars GDP), and pose the question: Are intensity targets the way to facilitate economic development and prevent climate change?”  Answer:  No.

They explain why: developing countries are both the primary future victims and the main future contributors to climate change.  These countries need to address climate change without sacrificing their economic development goals.

Some policymakers have proposed climate policy based on intensity targets.  Not a good plan, say Golub and Marcellino, who argue intensity targets don’t provide advantages for climate policy because they:

  1. don’t provide better environmental results
  2. are more expensive than other types of policy
  3. will do nothing to ease international negotiations

View Golub’s presentation about intensity targets, economic development and preventing climate change.

Reducing deforestation and economics

Slowing deforestation can lower the total costs of climate policies by up to 25 percent, according to a new analysis from EDF Senior Economist Ruben Lubowski, EDF’s Golub, Valentina Bosetti of the Fondazione Eni Enrico Mattei (FEEM), a leading energy and climate modeling center in Europe, and Anil Markandya of the Basque Centre for Climate Change (BC3).

Lubowski says the research in “Linking Reduced Deforestation and a Global Carbon Market: Implications for Clean Energy Technology and Policy Flexibility“:

confirms that integrating REDD into global carbon markets can create powerful incentives for preserving tropical forests while lowering costs and enhancing climate protection objectives.

We find that by introducing policies to reduce emissions from deforestation and forest degradation (REDD), countries can reduce the costs of climate policy by up to 25%, and even more if there is uncertainty over future climate targets. Introducing this additional way to meet emission targets has little negative effect on the development of clean energy technologies, and actually could boost investments in some key technologies such as carbon capture and storage (CCS).

EDF’s Lubowski and FEEM’s Bosetti also recently collaborated in authoring and editing a FEEM publication of Deforestation and Climate Change: Reducing Carbon Emissions from Deforestation and Forest Degradation. The book, which looks at the history and current status of REDD, aims to:

shed light on some of the major concerns, issues and challenges related to the inclusion of forest carbon in international climate policies, as well as to illustrate some of the potential solutions and paths forward.

Economics and controlling climate change under uncertainty

EDF's Golub presents "Economics of Controlling Climate Change Under Uncertainty" in Montreal.

EDF’s Golub also tackles another tough economic issue — the costs of controlling climate change by reducing greenhouse gas emissions.

In his paper “Economics of Controlling Climate Change Under Uncertainty”, Golub looks at the best times for reducing emissions as the state of the climate worsens, as well as the best moments for improving the future state of the climate when current situations are improving.

Golub also draws an important conclusion: that uncertainty is not a good excuse for inaction in addressing climate change.  Definitive rules about when to cut emissions, he finds, could be formulated even before uncertainties are resolved.

View Golub’s presentation about economics of controlling climate change under uncertainty.

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The Numbers Game and Climate Change

EDF's experts are at the forefront of work with the economics of climate policy; the figure above is one example of how economic experiments could help take the guesswork out of economic projections when “real life” intervenes.

Some of the papers and reports unveiled this week at the International Energy Workshop in Stockholm, Sweden had the look of a math professor gone mad.

But this conference and others like it are the frontier of climate policy.  The research discussed here will ultimately shape the thinking of negotiators in international climate talks, and governments responsible for designing and implementing policy.

Environmental Defense Fund’s internationally recognized economists are in the vanguard of efforts to create new and better ways of measuring everything from the impact of global economics and climate change to the value of a “strategic reserve” system for regulating emissions allowance prices.

EDF’s economic modeling expert Oleg Lugovoy tackled the long-standing problem of how to measure the interaction of climate and economics when policymakers don’t have perfect information.  The model he proposes could help take the guesswork out of economic projections when “real life” intervenes.  (Also see Lugovoy’s presentation at the International Energy Workshop, “Deterministic models are going stochastic.”)

In another paper, Senior Research Fellow Alexander Golub – along with Lugovoy and climate scientist James Wang — unveiled their ideas for yet another vexing problem: How to factor in unforeseen events and uncertainties when trying to choose the best economic path in the face of climate change. You can read more about the work they compiled along with economists from the Basque Center for Climate Change in the “The DICER Model: methodological issues and initial results of calibration“.

You’ve heard of the strategic oil reserve that can be used help stave off massive fluctuations in oil prices and supplies?

Golub and fellow economist (and Director of Economic Policy and Analysis) Nathaniel Keohane presented a pioneering study of the design and performance of a “strategic reserve” of emission allowances in a U.S. cap-and-trade program for greenhouse gases.

For those who may not understand the complex mathematical formulas behind all the studies, most of the studies illustrate their theories with amazing color charts and graphs.

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