Gernot Klepper

The Real Economics of Climate Engineering

In 2008 Scott Barrett wrote a paper on “The incredible economics of geoengineering” in which he argued that the potentially low cost of climate engineering (CE) measures together with the quick response of the earth’s temperature to such interventions will change the whole debate about the mitigation of climate change. Whereas Barrett was mostly focusing on the cost of running CE measures, we point out that several determinants of overall economic cost like price or external effects are not yet sufficiently accounted for and that the question of dynamic efficiency is still unresolved. Combining the existing theoretical investigations about the topic from the literature, we show that even though these new measures provide new options to deal with climate change, several of them might also reduce our scope of action. Consequently, we suggest that economic research should shift its focus to portfolios of CE measures and put more emphasis on those measures which control atmospheric carbon concentration and therefore allow extending our scope of action. Additionally, economic research should address the question of phase-in and phase-out scenarios for measures which directly influence the radiation balance.

Climate Engineering: Economic Considerations and Research Challenges

Climate engineering measures are designed to either reduce atmospheric carbon concentration (by growing trees or spreading iron in the ocean, for example) or directly influence the radiation reaching or leaving the earth (by injecting sulfur into the stratosphere or modifying cloud formations, for example) to compensate for greenhouse gas–induced warming. The former measures are termed carbon dioxide removal (CDR), which we characterize as a low-leverage causative approach, and the latter are termed radiation management (RM), which we characterize as a high-leverage symptomatic approach. There are similarities between CDR and emission control. Accordingly, benefit-cost analysis can be used to assess certain CDR measures. By contrast, high-leverage RM represents a genuinely new option in the climate change response portfolio, at first glance promising insurance against fat-tail climate change risks. However, the persistent intrinsic uncertainties of RM suggest that any cautious climate risk management approach should consider RM as a complement to (rather than a substitute for) emission control at best. Moreover, the complexity of the earth system imposes major limitations on the ability of research to reduce these uncertainties. Thus we argue that a research strategy is needed that focuses on increasing our basic understanding of the earth system and conducting comprehensive assessments of the risk(s) associated with both climate change and the deployment of climate engineering. (JEL: Q52, Q54, Q55)

Research for assessment, not deployment, of Climate Engineering: The German Research Foundation's Priority Program SPP 1689

The historical developments are reviewed that have led from a bottom-up responsibility initiative of concerned scientists to the emergence of a nationwide interdisciplinary Priority Program on the assessment of Climate Engineering (CE), funded by the German Research Foundation (DFG). Given the perceived lack of comprehensive and comparative appraisals of different CE methods, the Priority Program was designed to encompass both solar radiation management (SRM) and carbon dioxide removal (CDR) ideas, and to cover the atmospheric, terrestrial and oceanic realm. First key findings obtained by the ongoing Priority Program are summarized and reveal that compared to earlier assessments, such as the 2009 Royal Society report, more detailed investigations tend to indicate less efficiency, lower effectiveness and often lower safety. Emerging research trends are discussed in the context of the recent Paris agreement to limit global warming to less than two degrees and the associated increasing reliance on negative emission technologies. Our results show then when deployed at scales large enough to have a significant impact on atmospheric CO2, even CDR methods such as afforestation – often perceived as ‘benign’ – can have substantial side effects and may raise severe ethical, legal and governance issues. We suppose that before being deployed at climatically relevant scales, any negative-emission or climate engineering method will require careful analysis of efficiency, effectiveness and undesired side effects.

The international dimension of sustainability policies

At least since the Earth Summit in Rio, global environmental problems are on the international policy agenda. The main problems which obviously require international policy coordination are the risks of global warming, the loss of biological diversity and the destruction of the ozone shelter. Although all these problems call for different actions to cope with, they are closely interconnected. For example, the burning or clearing of tropical forests does not only add to greenhouse gas accumulation which is responsible for the risks of global warming. Additionally, tropical forests host an unknown reserve of genetic codes the size of which is assumed to depend on the diversity of species.