A regional perspective to achieve the future climate regime: a long-term analysis with the TIAM-FR model

Field: Economics, Econometrics and Finance (Social Sciences)

Global warming is in essence an economic and political problem. Greenhouse gas (GHG) emissions contributing to global warming have the same damaging effect regardless of the country in which they originate. All regions of the world are affected regardless of whether and to what extent they contribute to the problem. Protecting the atmosphere and therefore preventing global warming implies a drastic reduction in total greenhouse gas emissions. However, in the absence of an international agreement on emissions control, countries adopt free-riding behaviours. Each country counts on others to reduce emissions and to incur the resulting abatement cost. The Kyoto Protocol was the first international agreement in which some countries (Annex I to the protocol) committed to emission reduction targets over the period 2008-2012. The protocol’s impact has however been limited, because of a lack of commitments from rapidly growing emerging countries such as China, India and Brazil, and non-ratification by the United States. The challenge of the Copenhagen summit in 2009 was to determine the rules for the post-Kyoto period. It was therefore essential to ensure the ratification of a global agreement on emission reduction targets and to include all major industrialized and emerging countries. Although negotiations during the summit failed to reach a global agreement, in late January 2010 some countries including major emerging nations pledged their commitment to the United Nations Framework Convention on Climate Change (UNFCCC) as part of the Copenhagen Agreement. Emissions control commitments now cover 80% of 2005 global GHG emissions. These pledges occur until 2020 and constitute period 2 of the Kyoto Protocol (2013-2020). The challenge now is to get countries to converge towards a global and multilateral agreement to keep in line with ambitious targets to limit GHG emissions. This is the ultimate aim of the Conference of Parties due to take place in Paris in 2015. While the deadline for the implementation of this agreement is imminent, we propose to discuss the key points to reach these ambitious objectives by 2015. The aim of this study is to analyze different paths of GHG emission mitigation targets and to discuss the future climate regime with the modeling tool TIAM-FR. More precisely, we investigate different coordination schemes for regions pledging to reach GHG mitigation targets in line with 1) commitments occurring according to the Copenhagen Agreement by 2020, 2) an ambitious ultimate and global target by 2050-2100 in line with the IPCC recommendations (AR4 and AR5), and 3) regional assumptions by 2050 according to the group of countries (industrialized, fast developing or developing). Drawing from regional scenarios of carbon constraints, we discuss possible futures for the next climate regime according to the rule of “What might happen if…?” e.g.: Can we reach the 2°C target if developing countries do not contribute to reducing GHG emissions in the future? What could happen if developed countries do not contribute enough to reducing GHG emissions in the future? What are the induced regional energy system costs of these climate scenarios if fast developing countries do not contribute early to reducing GHG emissions in the future? and so on. Our analysis mainly focuses on the effects of these environmental constraints on several indicators such as global and regional GHG emissions, the cost of the climate policy, carbon marginal costs, the evolution of primary energy consumption and the energy mix. This paper compares global efforts of GHG mitigation with the cost of carbon for a variety of climate policies and finally discusses the impact of the development of technologies in the energy mix in 2050. We analyze the environmental and economic impacts of the climate commitments by introducing climate pledges in the bottom-up optimization model TIAM-FR. This linear programming model minimizes the total discounted cost of the world energy system over a long time period under a number of environmental, technological and demand constraints. TIAM-FR, as TIMES family models, depicts the energy system with a detailed description of different energy forms, resources, processing technologies and end-uses, on a Reference Energy System (RES). TIAM-FR is geographically integrated and offers a representation of the global energy system in 15 regions covering the entire world. In each region, TIAM-FR describes the entire energy system with the same level of technological disaggregation. To discuss the climate context of the future climate regime, we considered the Post-Copenhagen pledges for 2020 and made assumptions on the 2050 targets based on each country’s announced political ambitions, expected ambitions or required contributions. We then compared these pledges to a business-as-usual scenario and a global scenario compatible with the UNFCCC ultimate objective of limiting temperature change to 2°C, where all countries are constrained or not to contribute to this global mitigation target. Emission reduction is achieved through technology and fuel substitutions. The optimization results are notably the structure of the energy system, i.e. type and capacity of the energy technologies, energy consumption by fuel, development of emissions, energy trade flows between the regions as well as the required transport capacities and the detailed energy system costs, plus information on the marginal costs of environmental measures such as GHG reduction targets. The various scenarios we investigated include environmental targets for different world regions over the period 2000-2050. We analyze a combination of these scenarios in order to provide a framework for understanding the climate context of the future regime which is expected to be decided in 2015: (1) BASE: World reference scenario without any explicit policy measures on GHG mitigation (2) 2°C scenario: World climate scenario in line with limiting temperature change to 2°C in 2100 (i.e. 50% reduction of GHG emissions by 2050) a. DEVin: With the contribution of developing countries b. DEVout: Without the contribution of developing countries (3) Regional Post-Copenhagen pledges scenario: a. COP+: with an optimistic GHG emission reduction commitment to 2020 for countries that pledged commitments in the Copenhagen Accord b. COP-: with a pessimistic GHG emission reduction commitment to 2020 for countries that pledged commitments in the Copenhagen Accord c. NoDEV: without a GHG emission reduction commitment for developing countries d. DEV30: with a GHG emission reduction commitment of 30% to 2020 compared to a business as usual scenario for developing countries e. DEV15: with a GHG emission reduction commitment of 15% to 2020 compared to a business as usual scenario for developing countries (4) Regional long-term objectives scenario by 2050: according to international convergence and expressed ambitions a. Ind80: with a pessimistic GHG emission reduction commitment to 2050 for industrialized countries b. Ind95: with an optimistic GHG emission reduction commitment to 2050 for industrialized countries (5) 4°C scenario: World climate scenario in line with a temperature change to 4°C in 2100 as feared in the last IPCC Report (AR5, 2013). According to the results from the next IPCC report (expected in 2014), new scenarios will be implemented to bring new elements into the climate context assessment. The previously cited scenarios are analyzed to explore the effects of a possible international coordination on the main environmental and economic indicators. The impacts of different commitment levels under post-Copenhagen and/or global policies can thereby be discussed and provide some understanding on the stakes and issues. The main focus will be, in a first part, on the ambition of the various climate policies regarding GHG emissions at global and regional level. In a second part, we discuss the total cost of these policies, the regional costs of avoided GHG (carbon marginal cost) associated with the different GHG mitigation targets, and finally, the level of ambition of the GHG reduction targets. Indeed, we studied the cost implications of these climate policies. How could this cost be distributed between the different committed regions? Is climate policy through associated targets weighed in the same manner for all regions? In a third part, we extend the analysis on the impact of international climate change strategies to the energy system. Discussions investigate long-term solutions, such as the development of CCS technologies or renewables, in response to a constraint that influences the energy mix. The aim is to assess the plausibility of its fulfillment and to highlight the challenges. As shown for example in figure 1, a strong climate policy in line with the 2°C objective (representing the UNFCCC consensus) requires a global contribution, whether countries are industrialized or developing, or especially fast developing or emerging. After many years of discussion, ambitious targets require commitment to meet the recommended 2°C limitation in temperature increases. However, it is primarily up to industrialized countries to keep their promise of helping countries develop a record of adapting to the impacts of climate change, and nothing is certain as regards the possible level of GHG emission reduction that developing countries will be able to attain or, even, accept to reduce. In terms of cost, a larger contribution from developing countries is less expensive than strong emission mitigation in industrialized countries, as expressed by the decision to allow flexible mechanisms under the Kyoto Protocol (i.e. develop GHG emissions mitigation projects where the carbon abatement cost can be lower). But this is not sufficient. Could we reach an ambitious, and necessary, climate target without the participation of developing countries? However, do developing countries have the capacity to imple