Pablo Salas

The dynamics of technology diffusion and the impacts of climate policy instruments in the decarbonisation of the global electricity sector

This paper presents an analysis of climate policy instruments for the decarbonisation of the global electricity sector in a non-equilibrium economic and technology diffusion perspective. Energy markets are driven by innovation, path-dependent technology choices and diffusion. However, conventional optimisation models lack detail on these aspects and have limited ability to address the effectiveness of policy interventions because they do not represent decision-making. As a result, known effects of technology lock-ins are liable to be underestimated. In contrast, our approach places investor decision-making at the core of the analysis and investigates how it drives the diffusion of low-carbon technology in a highly disaggregated, hybrid, global macroeconometric model, FTT:Power-E3MG. Ten scenarios to 2050 of the electricity sector in 21 regions exploring combinations of electricity policy instruments are analysed, including their climate impacts. We show that in a diffusion and path-dependent perspective, the impact of combinations of policies does not correspond to the sum of impacts of individual instruments: synergies exist between policy tools. We argue that the carbon price required to break the current fossil technology lock-in can be much lower when combined with other policies, and that a 90% decarbonisation of the electricity sector by 2050 is affordable without early scrapping.

An assessement of global energy resource economic potentials

This paper presents an assessment of global economic energy potentials for all major natural energy resources. This work is based on both an extensive literature review and calculations using natural resource assessment data. Economic potentials are presented in the form of cost-supply curves, in terms of energy flows for renewable energy sources, or fixed amounts for fossil and nuclear resources, with strong emphasis on uncertainty, using a consistent methodology that allow direct comparisons to be made. In order to interpolate through available resource assessment data and associated uncertainty, a theoretical framework and a computational methodology are given based on statistical properties of different types of resources, justified empirically by the data, and used throughout. This work aims to provide a global database for natural energy resources ready to integrate into models of energy systems, enabling to introduce at the same time uncertainty over natural resource assessments. The supplementary material provides theoretical details and tables of data and parameters that enable this extensive database to be adapted to a variety of energy systems modelling frameworks.

On the global economic potentials and marginal costs of non-renewable resources and the price of energy commodities

A model is presented in this work for simulating endogenously the evolution of the marginal costs of production of energy carriers from non-renewable resources, their consumption, depletion pathways and timescales. Such marginal costs can be used to simulate the long term average price formation of energy commodities. Drawing on previous work where a global database of energy resource economic potentials was constructed, this work uses cost distributions of non-renewable resources in order to evaluate global flows of energy commodities. A mathematical framework is given to calculate endogenous flows of energy resources given an exogenous commodity price path. This framework can be used in reverse in order to calculate an endogenous marginal cost of production of energy carriers given an exogenous carrier demand. Using rigid price inelastic assumptions independent of the economy, these two approaches generate limiting scenarios that depict extreme use of natural resources. This is useful to characterise the current state and possible uses of remaining non-renewable resources such as fossil fuels and natural uranium. The theory is however designed for use within economic or technology models that allow technology substitutions. In this work, it is implemented in the global power sector model FTT:Power. Policy implications are given.

Environmental impact assessment for climate change policy with the simulation-based integrated assessment model E3ME-FTT-GENIE

A high degree of consensus exists in the climate sciences over the role that human interference with the atmosphere is playing in changing the climate. Following the Paris Agreement, a similar consensus exists in the policy community over the urgency of policy solutions to the climate problem. The context for climate policy is thus moving from agenda setting, which has now been mostly established, to impact assessment, in which we identify policy pathways to implement the Paris Agreement. Most integrated assessment models currently used to address the economic and technical feasibility of avoiding climate change are based on engineering perspectives with a normative systems optimisation philosophy, suitable for agenda setting, but unsuitable to assess the socio-economic impacts of a realistic baskets of climate policies. Here, we introduce a fully descriptive, simulation-based integrated assessment model designed specifically to assess policies, formed by the combination of (1) a highly disaggregated macro-econometric simulation of the global economy based on time series regressions (E3ME), (2) a family of bottom-up evolutionary simulations of technology diffusion based on cross-sectional discrete choice models (FTT), and (3) a carbon cycle and atmosphere circulation model of intermediate complexity (GENIE-1). We use this combined model to create a detailed global and sectoral policy map and scenario that sets the economy on a pathway that achieves the goals of the Paris Agreement with >66% probability of not exceeding 2

Macroeconomic impact of stranded fossil fuel assets

^\circ

Climate-carbon cycle uncertainties and the Paris Agreement

C of global warming. We propose a blueprint for a new role for integrated assessment models in this upcoming policy assessment context.

Author Correction: Climate–carbon cycle uncertainties and the Paris Agreement

Several major economies rely heavily on fossil fuel production and exports, yet current low-carbon technology diffusion, energy efficiency and climate policy may be substantially reducing global demand for fossil fuels1–4. This trend is inconsistent with observed investment in new fossil fuel ventures1,2, which could become stranded as a result. Here, we use an integrated global economy–environment simulation model to study the macroeconomic impact of stranded fossil fuel assets (SFFA). Our analysis suggests that part of the SFFA would occur as a result of an already ongoing technological trajectory, irrespective of whether or not new climate policies are adopted; the loss would be amplified if new climate policies to reach the 2 °C target of the Paris Agreement are adopted and/or if low-cost producers (some OPEC countries) maintain their level of production (‘sell out’) despite declining demand; the magnitude of the loss from SFFA may amount to a discounted global wealth loss of US

Climate model emulation in an integrated assessment framework: a case study for mitigation policies in the electricity sector

1–4 trillion; and there are clear distributional impacts, with winners (for example, net importers such as China or the EU) and losers (for example, Russia, the United States or Canada, which could see their fossil fuel industries nearly shut down), although the two effects would largely offset each other at the level of aggregate global GDP.New fossil fuel investments may become stranded if demand for fossil fuel declines due to technological change. This could amount to a discounted global wealth loss of US

Complexity, economic science and possible economic benefits of climate change mitigation policy

1–4 trillion, with the negative impact for producer countries amplified by climate mitigation policies of consumer countries.

An assessment of energy resources for global decarbonisation

The Paris Agreement1 aims to address the gap between existing climate policies and policies consistent with “holding the increase in global average temperature to well below 2 C”. The feasibility of meeting the target has been questioned both in terms of the possible requirement for negative emissions2 and ongoing debate on the sensitivity of the climate–carbon-cycle system3. Using a sequence of ensembles of a fully dynamic three-dimensional climate–carbon-cycle model, forced by emissions from an integrated assessment model of regional-level climate policy, economy, and technological transformation, we show that a reasonable interpretation of the Paris Agreement is still technically achievable. Specifically, limiting peak (decadal) warming to less than 1.7 °C, or end-of-century warming to less than 1.54 °C, occurs in 50% of our simulations in a policy scenario without net negative emissions or excessive stringency in any policy domain. We evaluate two mitigation scenarios, with 200 gigatonnes of carbon and 307 gigatonnes of carbon post-2017 emissions respectively, quantifying the spatio-temporal variability of warming, precipitation, ocean acidification and marine productivity. Under rapid decarbonization decadal variability dominates the mean response in critical regions, with significant implications for decision-making, demanding impact methodologies that address non-linear spatio-temporal responses. Ignoring carbon-cycle feedback uncertainties (which can explain 47% of peak warming uncertainty) becomes unreasonable under strong mitigation conditions.A reasonable interpretation of the Paris Agreement may well still be technically achievable without the need for net negative emissions or excessively stringent policies according to climate–carbon-cycle modelling.