Modelling developments linked to the implementation of the nationally determined contributions (NDCs)
date: 14/10/2019
- Researchers at the Economic and Social Research Council (ESRC) Centre for Climate Change Economics and Policy (CCEEP) at the London School of Economics have developed a new general model to analyse the potential efficiency gains and cost distribution of multilateral linking of emissions trading systems (ETSs). Such multilateral linking of permit markets would allow for an emissions permit issued in one jurisdiction to be used in any of the linked jurisdictions, and therefore cost savings could become available due to increased efficiency and stability. Multilateral linking could be used to achieve the Paris Agreement goals in a cost-effective manner. The authors use two decompositions of the efficiency gains. The first is decomposition into effort- and risk-sharing gains, and the second is into jurisdiction-specific and aggregate gains. This allows for rigorous analysis of not only the cost saving, but also of the distributional issues arising from effort- and risk-sharing. An application of the model on the Paris Agreement pledges and data on the power sectors of five real-world jurisdictions (Australia, Canada, the EU, South Korea and the USA) show that multilateral linking of the ETSs could generate annual gains of up to USD 3.26 billion (constant 2005 USD), split roughly between effort- and risk-sharing. The working paper is available here.
- Researchers at the Department of Applied Economics at the University of Vigo have further developed the water-energy nexus model in Portugal by improving its sectoral coverage. The objective of this research is to better understand the interconnections between climate change policies and the declining availability of raw water in the country. The research included the full disaggregation of electricity generation (with six renewable technologies) into the model. It also includes raw water use for all the sectors of the economy (in addition to the usual sector “distribution of water”). This development contributed to a better understanding of the impact of climate change on water resources, the economy, and the indirect impact from reduced hydroelectricity use on the electricity mix and prices.
- Researchers at the Rhodium Group[1] are currently developing a new model and dataset that provides economy-wide, 6-gas historical estimates from 2000 to 2018 for all countries. They are also developing a set of comparable projections for each country under today’s policies (only taking into account adopted and/or legislated text and discarding aspirational goals) under a range of uncertain future parameters, including key energy technology costs; energy market outcomes (i.e., fuel prices); and economic growth scenarios through 2030. Rather than assuming NDCs are met, Rhodium’s assessment looks at actual economic, technology and policy changes in real-time to allow decision-makers to assess how countries are doing today, and what more needs to be done. Most global emissions datasets rely on data from 2010 or at the latest 2014 (5-10 years old). Technologies and policies are moving rapidly and lack of up-to-date data makes it difficult to assess today's state of affairs. Rhodium will be assessing national and global emissions for the previous calendar year to give the community immediate access to information about how countries progressed in the recent past. This work will be publicly available on the group’s website.
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[1] The Rhodium Group represents one of the few consultancies included in our database of climate change modellers. It is the first time they are reporting on their ongoing projects.