ABSTRACT

The issues of technology and uncertainty are very much at the heart of the policy debate of how much to control greenhouse gas emissions. The costs of doing so are present and high while the benefits are very much in the future and, most importantly, they are highly uncertain. Whilst there is broad consensus on the key elements of climate change science and agreement that near-term actions are needed to prevent dangerous anthropogenic interference with the climate system, there is little agreement on the costs and benefits of climate policy. The book looks at different ways of reconciling the needs for sustainability and equity with the costs of action now.

Presenting a compendium of methodologies for evaluating the economic impact of technological innovation upon climate-change policy, this book describes mathematical models and their predictions. The goal is to provide a practitioner’s guide for doing the science of economics and climate change. Because the assumptions motivating different problems in the economics of climate change have different complexities, a number of models are presented with varying levels of difficulty: reduced-form and structural, partial- and general-equilibrium, closed-form and computational. A unifying theme of these models is the incorporation of a number of price and quantity instruments and an analysis of their respective efficacies. This book presents models that contain structural uncertainty, i.e., uncertainty that economic agents respond to via their risk attitudes. The novelty of this book is to relate the effects of risk and risk attitudes to environment-improving technological innovation.

chapter |8 pages

Introduction

ByALEXANDER GOLUB, ANIL MARKANDYA

chapter 1|24 pages

Cost and benefits of climate policy under uncertainty

ByALEXANDER GOLUB, ELENA STRUKOVA, JAMES S. WANG

chapter 2|21 pages

Trade-offs between expectations and uncertainties: applying real options methodology to climate policy analysis

ByJON A. ANDA, ALEXANDER GOLUB, ELENA STRUKOVA

chapter 3|24 pages

Learning about climate change and its implications for near-term policy

ByMORT WEBSTER, LISA JAKOBOVITS, JAMES NORTON

chapter 4|49 pages

Structural uncertainty in the DICE model

ByAJ A. BOSTIAN, ALEXANDER GOLUB

chapter 5|31 pages

Abatement cost uncertainty and policy instrument selection under a stringent climate policy

ByVALENTINA BOSETTI, ALEXANDER GOLUB, ANIL MARKANDYA, EMANUELE MASSETTI, MASSIMO TAVONI

chapter 6|28 pages

The effects of climate policy on the energy–technology mix: an integrated CVaR and real options approach

BySABINE FUSS, NIKOLAY KHABAROV, JANA SZOLGAYOVA, MICHAEL OBERSTEINER

chapter 7|19 pages

Risk-averse firms and new technologies

ByALEXANDER GOLUB, DAN DUDEK, ELENA STRUKOVA

chapter 9|24 pages

Does the Kyoto Protocol cost too much and create unbreakable barriers for economic growth?

ByALEXANDER GOLUB, ANIL MARKANDYA, DOMINIC MARCELLINO

chapter 11|21 pages

The economic benefits of an energy-efficiency and onsite renewable energy strategy in meeting growing electricity needs in Texas

ByJOHN A. “SKIP” LAITNER, MAGGIE ELDRIDGE AND R. NEAL ELLIOTT

chapter 12|18 pages

Low-cost offsets and incentives for new technologies

ByALEXANDER GOLUB, NOAH GREENBERG, JON A. ANDA, JAMES S. WANG