CMI’s policy group is the only group whose mission was not outlined in the original CMI proposal. The group’s goals are to search for viable paths to a low-carbon economy and to analyze policies that will promote traveling those paths.
Previous benefit-cost studies have generally concluded that delaying action to reduce carbon emissions may be a sound policy, as it would carry only small costs and because, over time, key uncertainties may be reduced. In contrast, research led by Klaus Keller, now at Penn State University, suggests that early action may have substantial economic benefits, once realistic climate thresholds are considered.
In the area of carbon sequestration, the group’s work has shown that investing early in CO2 sequestration can be more cost-effective than previous models suggested, due to cost savings that accrue as society learns over time to mitigate emissions more efficiently. These savings lower the tax required to make sequestration economical, improving the outlook for lowering emissions.
Dangerous Human Interference
Work on introducing uncertain climate thresholds into models contradicts a common assumption that waiting to learn more about the climate system before taking action will lead to more cost-effective mitigation strategies. Simulations with an optimal growth model indicate that uncertainty in climate sensitivity and economic damages does reduce the size of optimal near-term abatement efforts, but that even small future damages would justify considerable near-term investments.
New work this year has focused on a study of the regrets society will face if carbon mitigation is postponed but abatement is pursued later to avoid crossing “climate thresholds.” Because avoiding climate thresholds becomes more difficult as policies are delayed, decades of delay would carry economic costs of trillions of dollars (see figure).
Purchase of a Public Good
David Bradford is leading a study on an alternative to traditional “cap and trade” programs for reducing carbon emissions. Rather than establish emission caps for individual countries, this program would determine desired reductions of emissions for the globe and allow market forces to determine the distribution of reductions.
Under the plan, which would focus initially on “upstream” sources of fossil fuel, the world’s countries would participate in an international institution that would determine the size of fossil fuel use cuts necessary for the global good, then jointly fund the purchase of the reductions. The novel element is the granting to each country a baseline level of fossil fuel use that exceeds the business-asusual level. Countries would profit from sale of abatement from the baseline; the financial burden would be shared on the basis of conventional criteria, such as a country’s relative wealth or its benefit from climate control. An important objective is to obtain the advantages of a cap and trade system, including allowing market forces to determine where and how emissions would be reduced and to spur innovation, with fewer problems of enforcing limits.
This system has distinct advantages over traditional emission cap schemes. For one, an “invisible hand,” rather than government negotiators, determines the distribution of emissions cuts among countries. In addition, unlimited trading should lower the costs of emissions reductions made. At this stage the group is working on both refinements of the conceptual model and simulations of its implementation, using a suite of economic models to quantify the costs and benefits of this alternative trading system.
Other current modeling work includes:
- improving the carbon cycle models in integrated assessment models
- quantifying the tradeoffs between decreased pollution and increased warming in optimization studies with aerosols
- optimizing models with learning and thresholds
- identifying policies that allow for large uncertainties associated with climate change.
Impacts of Emissions Scenarios
Michael Oppenheimer’s work has centered on analyzing the impacts of various CO2 emissions trajectories. By estimating the atmospheric CO2 concentrations likely to cause particular climate impacts, a study published last year allows climate-related damages to be linked to particular emissions scenarios. These ties sharpen the carbon-climate debate by illustrating the connection between energy policies and their environmental consequences.
Dr. Oppenheimer and colleagues are presently analyzing the environmental and social consequences of overshooting concentration targets, then lowering emissions to meet these targets at a later date. Their preliminary work indicates that interim warming during the overshoot period will be faster and larger than that experienced if a linear path to a stabilization target were pursued. This work suggests that delaying emissions reductions may have unexpected consequences not predicted in traditional simulations.
Additional work currently being carried out by Oppenheimer and colleagues includes investigating the effect of future climate on nitrogen cycling and developing a credible system of monitoring and accounting for carbon sequestration through agriculture.
Impacts of Decreasing Population
The United Nations Population Division suggests that world population growth may become negative after 2050. Jeffery Greenblatt leads a new investigation of the effect of a decreasing population on carbon emissions under an atmospheric stabilization policy framework. Downward revision of population estimates may increase public support for investment in mitigation strategies, since the size of the total effort needed to stabilize CO2 would be reduced and decline with time.