IEEJ: February 2017 © IEEJ2017

Long Run Climate ChangeAnalysis – Policy Implications
Samantha GrossIEEJ: February 2017 © IEEJ2017

Summary of Policy Implications
 Incorporating all costs is crucial to efficient outcomes.
 Research and development of low-carbon technology must be a priority.
 Government support for low-carbon technology in the marketplace can bringchallenges.

 Crucial uncertainties demand flexible and adaptable policy responses.

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IEEJ: February 2017 © IEEJ2017

Incorporating all costs is crucial to efficient outcomes.
 Total cost of climate change to society = mitigation + adaptation + damage
 At high levels of mitigation, adapting to temperature change or living with thedamage are less costly than mitigation.

 The scenario with 50% reductions by 2050 is very difficult to justify from an economic
point of view.

 On the other hand, the NDCs from the Paris Accord are not sufficient to reach our
optimal emissions pathways.

 Don’t let perfect become the enemy of good. The Paris Accord recognizes this with its
bottom-up strategy and flexibility.

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Research and development of low-carbon technology must be apriority.
 21st Century economies depend on electricity – we must get this transition right.
 Low-carbon technologies must be cost-effective (including CO2 externality).
 Focus government money where it is needed the most, on research and development
to promote efficient invention and innovation.

• Private industry will underinvest in basic R&D because the commercial payoff is
not yet clear.

• Moving from pilot phase to full commercialization requires a great deal of capital:
the “commercialization valley of death”.

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New Technology Path Toward Commercialization

Source: Sandia National Lab
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IEEJ: February 2017 © IEEJ2017

Government support for low-carbon technology in themarketplace can bring challenges.
 Deployment of still-maturing energy technologies in the marketplace should beundertaken as a means to increase knowledge and spur further invention, not as an
end in itself.

 Technology-agnostic policy tools are best – accounting for externalities on a wholeeconomy basis and setting the playing field for low-carbon technologies to succeed.

 A strong push to bring technologies into the marketplace before they are ready canlock in less efficient and more expensive technology and squeeze out cost-effective
innovations.

 Climate change policies will need intergenerational public support. If government
spends too much and gets too little, it will lose public support, jeopardizing policy
implementation.

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IEEJ: February 2017 © IEEJ2017

Crucial uncertainties demand flexible and adaptable policy
responses.
 We will never reach a stage where we fully understand the climate system. Policy
must be adaptable and responsive as science produces new information.

 The Paris Accord anticipates revisions and refinements every five years and allows
countries to take into account their changing economic and social conditions.

 A practical approach involves making the best decisions possible using today’s
science, without locking in overly expensive technologies to reduce emissions orignoring the risks and waiting for better information.

 The transition to a low-carbon energy system will take generations.
• We need a revolution in low- and zero-carbon energy technologies,• But we will see an evolution of the energy system over time. The world’s vastenergy system cannot change in an instant.

Contact: report@tky.ieej.or.jp

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