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Posted: Oct 07, 2013

Risks, costs and equity. Modelling efficient strategies for climate and energy policy

(Nanowerk News) The mitigation of climate change can be framed as a problem of risk management on a global scale. Avoiding dangerous interference with ecosystems and human society calls for a global climate policy, which will translate a selected climatic target into economic incentives for reducing greenhouse gas emissions.
The necessary emission reductions span many decades and involve actors at different levels of the global economy, from nations to companies and individuals. The reductions entail economic costs which are likely to be unevenly distributed across regions and individuals. Uncertainty in how the climate responds to increased greenhouse gas concentrations creates a risk in that the costs of attaining the selected target may increase. Furthermore, climate policy cannot be isolated from other policy aims; aims that can be contradictory to the aspirations of climate policy.
This Dissertation ("Risks, costs and equity - Modelling efficient strategies for climate and energy policy"; pdf) uses numerical scenario modelling to address these issues, and to aid the formulation of efficient climate and energy policies. The perspectives span from the global cost-efficiency analysis of attaining a predetermined temperature target to the consideration of regional equity in mitigation costs, and further to the modelling of capital scarcity and preferences in developing countries.
The Articles in this Dissertation share a number of common questions, particularly how costs occurring at different times should be discounted into a single present value, and how the heterogeneity between different actors regions, countries or households should be taken into account in policy formulation.
On one hand, the results provide guidance on how emissions of different greenhouse gases should be priced and how a global emission market could be used to select the most cost-efficient mitigation measures and to distribute the costs in an equitable manner. On the other hand, the Articles also illustrate potential hindrances for achieving efficient and equitable outcomes. Both types of results share a common aim, which is to explore and quantify the impacts of possible policy options and to facilitate the development of more informed strategies and policies.
Source: Technical Research Centre of Finland (VTT)
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