COP25 side-event at the Japan Pavilion: International Coordination in Effortsof Climate Change Response Measures
December 11, 2019

Evaluations on International Competitiveness ofNDCs and the Implications of Long-term DeepEmission Reductions
Keigo Akimoto
Systems Analysis Group

Research Institute of Innovative Technology for the Earth(RITE)

Global CO2 Emissions TrajectorySource) Global Carbon Project2- Global CO2 emissions increased more rapidly
since 2000.
- The emissions were almost constant from 2013
to 2016 while the global GDP increased.
- According to our analysis, the largest
contributor to this apparent decoupling was
production adjustment of iron & steel etc.
mostly in China (for a few years after 2010, theproductions were too large), and the second
largest was the shale gas revolution in the US.
- The global CO2 emissions after 2016 areincreasing again mainly due to repercussion ofthe production adjustments in China.

Per-GDP CO2 Emission in European nations, US and Japan:
Production-base v.s. Consumption-base140

Note: 2010 local currency base

2014

2013

2012

2011

2010

2009

2008

2000

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

70

2002

60
2001

Norway
80
2000

70

2007

80

France100
Italy
90
Switzerland200690UK
120
Sweden110
Germany

2005

100

USJapanUK
SwedenGermany
FranceItaly
Switzerland
Norway

2004

110

US130
Japan

2002

[Year2005=1.0][2005年=100]

120

2001

130

2005=1.0][Year[2005年=100]

Consumption-based CO2 per GDP

2003

Production-based CO2 per GDP

3

Source: estimated by RITE

- In terms of the production-based CO2 emissions per GDP, the degrees of improvement of the nine countries
differs greatly.
- However, concerning the consumption-based emissions, the improvement rate of these countries does not differthat much when excluding the impact of Japan’s emission increase due to the shutdown of nuclear power
generation after the Fukushima Daiichi nuclear power accident caused by the Great East Japan Earthquake.
- Focusing only on production-based emissions may lead to wrong interpretation of emission reduction efforts ofindividual nations.

CO2 marginal abatement costs of the NDCs
Average of 2025-2030

42030 (2025 for the U.S.)【World GDP loss due to mitigation】 NDCs:0.38%; the global least cost：0.06%
The least cost (equal marginal abatement costs)：6$/tCO2
Switzerland

380

Japan

378

EU28210

Canada166

Korea

144

New Zealand95United States85

Norway70

East Europe (Non-EU member)

58

Thailand54

Australia

33

Mexico27

Kazakhstan

14

Belarus

12Russia

4South Africa

1

Turkey0India

0Ukraine

0

China

00

Source: J. Aldy et al., Nature Climate Change, 2016

--50

100

Source: K. Akimoto et al., Evol. Inst. Econ. Rev., 2016

150200

250

300

350

400

CO2 marginal abatement cost ($/tCO2)

The estimated marginal abatement costs of NDCs are largely different among countries, and therefore the world total mitigation
costs are much larger than those for achieving the aggregated emission reductions under the least cost measures, i.e., underglobally uniform MAC.
Current economic conditions where lower GDP growth is projected will bring lower MACs in developed countries and higher
MACs in developing countries which have intensity targets, e.g., China.

5(%, relative to the baseline)

Changes in GDP

GDP impacts of the NDCs for the major countries in 2030
1.0%
0.5%
0.0%

Case1

-0.5%

Case2

-1.0%

Case3

-1.5%
-2.0%
-2.5%
USEUJapan

China

India

BrazilSouthAfrica

RussiaWorldaverage

Case 1: NDCs(including typicalenergy policies
within NDCs)
Case 2: Equal
MACs among
sectors withineach nation
Case 3: Equal
MACs among
nations andsectors (Globaltrade)

Source: estimated by a CGE type DEARS model developed by RITE

- The negative GDP impacts are large in the US, EU, and Japan in Case 1 (NDC case).
- The negative GDP impacts for the US and Japan in Case 2 (Equal MACs among sectors within each nation)
will be smaller than those in Case 1.
- The negative GDP impacts for the US, EU, and Japan, and the global impacts in Case 3 (Equal MACs amongnations and sectors) will be much smaller than those in Cases 1 and 2.
- The positive GDP impacts in Cases 1 and 2 for some developing countries are estimated.
- The negative GDP impacts for Russia are estimated in all of the three cases mainly due to the decreases infossil fuel exports.

Trade impacts in Chemical and Iron & steel sector in 2030
62.0%
Changes in(Net Import)/Production(%, relative to the baseline)

Chemical

1.0%

Increase in
Net Imports

0.0%
Increase inNet Exports

-1.0%

-2.0%

Case1

Case2

Case3-3.0%

USChanges in(Net Import)/Production(%, relative to the baseline)

Iron & steel

EUJapanRest of the regions

5.0%
4.0%

Case1

Case2

Case3

3.0%
2.0%

Increase in
Net Imports

1.0%
0.0%

Increase in
Net Exports

-1.0%
-2.0%

USEUJapan

Other regions

Source: estimated by a
CGE type DEARS model
developed by RITE

- The NDCs will make large impacts on the potential international trade balances in Chemical sector in the US, EU andJapan, and in Iron & steel sector in Japan and EU. (Cases 1 and 2)- Under the global emission trade case (equal MACs), the impacts will be relatively small. (Case 3)

Expected global GHG emissions of the aggregated NDCs andthe corresponding emission pathways up to 2100 toward +2 C goal

7200

GHG emissions (GtCO2-eq./yr)

Source) Estimate by RITE

150

About 70$/tCO2 in 2050 evenunder the least cost measures

About 6$/tCO2 in 2030 under the least
cost measures for the achievement of the
expected global emission reductions by NDCs

Baseline emissions reported
in the IPCC AR5

It is important to induce the achievements ofNDCs and further emission reductions forcountries having room for more reductions
through PDCA (plan-do-check-act) cycle.

100

It is important to seek deeper emission
reductions through disruptive innovations
and the induced social change.

50

around +2.5 to 3ºC
around +2 to 2.5ºC
below +2ºC

About 320$/tCO2 in 2050 evenunder the least cost measures
01990

2000

2010

2020

2030

2040

2050

2060

Historical emissions
Emission outlook under current policies

2070

2080

2090

2100

Consistent with the NDC, but also needdeeper emission reductions after 2030

+2.5 ºC stabilization under climate sensitivity of 2.5 ºC (around +2.6 ºC in 2100 and +3.0 ºC in 2200 under C.S. of 3.0 ºC）+2 ºC stabilization under climate sensitivity of 2.5 ºC; temporary overshoot of 580 ppm (+2.5 ºC stabilization under C.S. of 3.0 ºC)
Below +2 ºC in 2100 under climate sensitivity of 3.0 ºC; temporary overshoot of 530 ppm+2 ºC stabilization under climate sensitivity of 3.0 ºC; temporary overshoot of 500 ppm and around 450 ppm in 2300
INDC submitted by October 1 (119 countries) assumed to be implemented--

The expected global GHG emission in 2030 under the NDCs corresponds to the emission to be achieved under only 6 $/tCO2 of global
carbon price. But the required global carbon price for the 2 C goal will be 320 $/tCO2 in 2050. Disruptive innovations and the inducedsocial change are necessary to lower the carbon price.
Global cooperation harmonizing emission reduction efforts is important, but broad innovations both of energy supply and demand sides
are key to achieve the 2 C goal or much deeper emission reduction.

Disruptive Innovations of End-use Technologies
8Source: C. Wilson (IIASA)

Disruptive innovations of end-use technologies
such as IoT, AI, will be able to induce:
1) Shift from atomized to connected
2) Shift from ownership to user-ship3) Sharing economy & circular economy

Human society will be able to continue
economic growth and resolve manysocial issues through building highly
integrated systems of Cyberspace(virtual) and Physical space (real)
Source: Government of Japan (Cabinet Office)Innovations in end-use technologies through IT and AI,and the induced social changes
449 Watts

5 Watts
2.5 Watts

Power72 Watts

9• Energy consumption is not our purpose, but is just aphenomenon accompanied with consumption of
goods and services, which is conducted for ourwelfare increase. Energy embodied in goods andservices must be taken into account.
• The end-use products and services will usuallydiffuse rapidly, and the embodied energy and CO2 may
decrease rapidly.

Stand-byenergy use

75 kWh
0.1 kg1706 kWh
Embodied energy
26 kg

Source：IIASA

WeightOperation ratio ofautomobiles is about 5%.
Large room exists for its
improvement by theachievement of fullyautonomous cars.

There are large opportunities toachieve social changes and toincrease energy efficiency
through fully autonomous cars,
food system improvement, etc.
which can be induced byinnovations of IoT, AI etc.

Conclusions

10

 Increasing trend of global CO2 emissions continues.
 In some developed nations, a relatively long decreasing trend of the emission can be observed,
but it was induced mainly by industrial structure change, and the consumption-based CO2emissions were not reduced in most of the nations. High energy cost burden induced theoverseas transfer of industries. The international competitiveness issue is very important.
 The marginal abatement costs for the currently submitted NDCs are greatly different amongnations. Such large differences will hinder global efficiency of emission reductions andsustainable efforts of participating nations.
 According to the assessments for the macro economic impacts, some developing
nations/regions with almost zero marginal abatement costs will have positive impacts on GDPand on outputs of some energy-intensive sectors as carbon leakages take place throughinternational trade. The coordination of the NDCs through the review process will be important.
 On the other hand, the coordination based on high carbon prices are unrealistic in the realworld. Broad innovations both of energy supply and demand sides will be necessary and key
to achieve the 2 C goal or much deeper emission reduction.
 The energy demand decrease opportunities particularly through IT, IoT, AI will bedesired/expected for deep reductions in the mitigation costs.