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EMF 36: Carbon Pricing After Paris (CarPri)

Ongoing

Investigators

Abstract: 
The EMF 36 study “Carbon Pricing After Paris (CarPri)” will investigate how the Paris Agreement on steep greenhouse gas emission reductions can be reached through climate policy measures, in particular by means of more stringent carbon pricing. The starting point of the analysis are the national climate action plans submitted to the Paris Agreement by individual countries (the so-called Intended Nationally Determined Contributions – INDCs) which comprise national emission reduction pledges and policy instruments for emission reductions. The EMF study will provide an impact assessment of existing climate action plans and discuss alternative climate policy regimes to meet the Paris targets. The fundamental objective is to provide robust insights into policy options trading off key dimensions of a sustainable climate future, i.e. environmental effectiveness, overall economic performance and the incidence of regulatory measures. The project is participating in the Dialogue on the Economics of Climate Change (https://www.klimadialog.de/), the accompanying process to the German Ministry of Education and Research funding measure “Economics of Climate Change II”.

 

Background and study setup

The Paris Agreement of 2015 is the central international agreement to deal with the challenge of anthropogenic climate change.  The overall objective of CarPri is to provide an impacts assessment for the implementation of the national greenhouse gas emission reduction targets that have been submitted in the context of the Paris agreement and of alternative climate policy futures to comply with more ambitious global reduction requirements in line with a 2°C or even a 1.5°C temperature target as proclaimed in the Paris Agreement.

The Post-Paris climate futures thus include scenarios along two key dimensions. One dimension sets the emission reduction obligations that are either given by the INDCs or may emerge from additional efforts to meet the 2°C (1.5°C) temperature targets; the other dimension refers to the policy strategies and instruments for meeting the emission reduction requirements. Scenarios on climate policy futures will include:

  • a best-case scenario where INDCs are reached in a cost-effective manner (global “where-flexibility”) with a global carbon price.
  • a scenario cluster 1 where different degrees of “where-flexibility” by means of sectoral and regional expansion of emissions trading (linkages) determine the global and regional impacts of Paris compliance.
  • a scenario cluster 2 on how instrument choice affects the magnitude and distribution of economic costs. Instruments include market-based instruments such as emission taxes or emission permits as well as command-and-control instruments such as efficiency (emission) standards or renewable portfolio standards. These instruments can be used in isolation or – reflecting common policy practice – in combination.

Beyond a common set of core scenarios investigated jointly across all participating modeling groups, additional complementary scenarios are studied by individual groups focusing on more specific, yet policy-relevant aspects of future climate policy design such as technological progress, what-/ when-flexibility in greenhouse gas emission reduction, the role of pre-existing distortions and revenue recycling, issue linkage of climate and trade policies.

Organization and project meetings

The steering committee members for CarPri are:

  •     Christoph Böhringer (University of Oldenburg, Germany)
  •     Sonja Peterson (Kiel Institute for the World Economy, Germany)
  •     Tom Rutherford (University of Wisconsin, USA)
  •     John Weyant (Stanford University, USA)
  •     Jan Schneider (University of Oldenburg, Germany)
  •     Malte Winkler (Kiel Institute for the World Economy, Germany)

Project workshops were held in Kiel (Kick-Off Workshop, April 4-5 2019) and Seville (first Modelling Workshop, October 24-25 2019). The other planned workshops had to be held remotely due to the pandemic.

Special Issue

All project results will be published in a special issue in Energy Economics. The core scenarios and some of the individual contributions are also published as working papers.

Core results:

Christoph Böhringer, Sonja Peterson, Thomas F. Rutherford, Jan Schneider & Malte Winkler (2021): Climate policies after Paris: pledge, trade, and recycle – insights from the 36th Energy Modeling Forum Study (EMF36), Kiel Working Paper no. 2183, available at https://www.ifw-kiel.de/de/publikationen/kieler-arbeitspapiere/2021/climate-policies-after-paris-pledge-trade-and-recycle-0/

Individual contributions:

Malte Winkler, Sonja Peterson & Sneha Thube (2021): Gains associated with linking the EU and Chinese ETS under different assumptions on restrictions, allowance endowments, and international trade, Kiel Working Paper no. 2185, available at https://www.ifw-kiel.de/de/publikationen/kieler-arbeitspapiere/2021/gains-associated-with-linking-the-eu-and-chinese-ets-under-different-assumptions-on-restrictions-allowance-endowments-and-international-trade-0/

Taran Fæhn & Hidemichi Yonezawa (2021): Emission targets and coalition options for a small, ambitious country: An analysis of welfare costs and distributional impacts for Norway, Statistics Norway, Research Department, Discussion Paper no. 956, available at https://www.ssb.no/en/forskning/discussion-papers/_attachment/453794?_ts=1795fd3e1c0

Maksym Chepeliev, Israel Osorio Rodarte & Dominique van der Mensbrugghe (2021): Distributional Impacts of Carbon Pricing Policies under Paris Agreement: Inter and Intra-Regional Perspectives. GTAP Working Paper no. 88, available at https://www.gtap.agecon.purdue.edu/resources/res_display.asp?RecordID=6194

Christoph Böhringer, Thomas F. Rutherford & Jan Schneider (2021): The Incidence of CO2 Emissions Pricing Under Alternative International Market Responses - A Computable General Equilibrium Analysis for Germany. Oldenburg Discussion Papers in Economics no. V-435-21, available at https://uol.de/f/2/dept/wire/fachgebiete/vwl/V-435-21.pdf

Dissemination

Additional publications related to CarPri:

Malte Winkler & Sonja Peterson (2021): International carbon pricing coalitions – their potential for saving costs, ratcheting up NDCs and reaching climate targets. Global Solution Journal Issue 7, pp. 194-200, available at  Global-Solutions-Journal-7-Summit-2021-Edition.pdf (global-solutions-initiative.org)

Malte Winkler & Sonja Peterson (2021): Einheitliche CO2-Preise in der EU und China. Table China, available at https://table.media/china/standpunkt/einheitliche-co2-preise-in-der-eu-und-china/ (in German)

Thube, S., Peterson, S., Nachtigall, D. and Ellis, J. (forthc.) The economic and environmental benefits from international co-ordination on carbon pricing:  A review of economic modelling studies. Environmental Research Letters

Conferences:

The GTAP and EAERE conferences are taking place July 23rd – July 25th, 2021. CarPri is represented with several presentations and sessions at both events:

EAERE:

Wednesday, June 23rd

10-12 (CEST): Environment, Trade and firm incentives.

  • The Incidence of CO2 Pricing Under Alternative International Market Responses -- A Computable General Equilibrium Analysis for Germany (Jan Schneider)

10-12 (CEST): Egg-timer session, Pollution.

  • Gains from linking the EU and Chinese ETS under different assumptions on restrictions, transfer payments, and international trade (Malte Winkler)

Thursday, June 24th

10-12 (CEST): IAM and input-output analysis.

  •  The Incidence of Carbon Pricing:  From Input–Output via Microsimulation to General Equilibrium (Florian Landis)

12:30-2:30 (CEST): Redistributional effects of climate policy.

  • Is carbon pricing always regressive? Insights from a recursive-dynamic CGE analysis with heterogeneous households for Austria (Jakob Meyer)
  • Distributional and Efficiency Impacts of Higher EU Climate Targets (Gustav Fredriksson)

Friday, June 25th

5:30-7:30 (CEST): Thematic Session: Results from EMF36

  • Climate Policies after Paris: Pledge, Trade, and Recycle Overview of Results from EMF 36 (Sonja Peterson)
  • A model intercomparison of the welfare effects of regional cooperation for ambitious climate mitigation targets (Gökce Akin Olcum)
  • Climate policy design, competitiveness and income distribution (Toon Vandyck)

5:30-7:30 (CEST): International cooperation on climate

  • Implication of the Paris Targets for the Middle East through different cooperation option (Mohammad M. Khabbazan)
  • Carbon policy options for a small ambitious country: An analysis of social costs and distributional impacts (Taran Faehn)

GTAP:

Wednesday, June 23rd

6:00 – 8:12 EDT: Session “Climate Change Policy”, hosted by Maksym Chepeliev

  •    Gains from linking the EU and Chinese ETS under different assumptions on restrictions, adjusted endowments, and international trade (Malte Winkler)

Thursday, June 24th

8:30 – 10:42 EDT: Session “Climate Change Policy”, hosted by Maksym Chepeliev

  • Implication of the Paris Targets for the Middle East Through Different Cooperation Options (Mohammad M. Khabbazan)

Friday, June 25th

 6:00 – 7:37 EDT: Session “Results from the Energy Modeling Forum on Post-Paris Carbon Pricing (EMF36)”, organized by Sonja Peterson    and Christoph Böhringer

  •  Climate Policies after Paris: Pledge, Trade, and Recycle (Jan Schneider)
  • Distributional Impacts of Carbon Pricing Policies under Paris Agreement: Inter and Intra-Regional Perspectives (Israel Osorio Rodarte)
  •  Distributional effects of carbon pricing on households: a case study for Brazil under the Paris Agreement goals (Rafael Garaffa)

The annual conference of the Verein für Socialpolitik (VfS) took place September 26th - September 29th. CarPri was represented with several presentations:

  • Monday, 27th September: 5:30 – 6:00: Climate Policies after Paris: Pledge, Trade, and Recycle Overview of Results from EMF 36 (Jan Schneider)
  • Tuesday, 28th September: 4:00 – 4:30: Prices and standards for equitable climate policy in Europe (Matthias Weitzel)

Session on "Carbon Pricing on a Global Level” at the Global Solution Summit featuring EMF36 results: Global Solutions Summit 2021 (global-solutions-initiative.org)

Data

This dataset include each group's modeling results of CarPri's core scenarios, which are used in the overview paper (https://doi.org/10.1016/j.eneco.2021.105471). Please consider the following information regarding the dimensions in the files. A gdx file can be obtained on request; please write an e-mail to Sonja Peterson.

Model:

Seventeen teams from different institutions delivered their modelling results and were included in the analysis. The respective model names are included in the data files in dimension “Model” and are associated with the following institutions: CEPE (ETH Zürich), ICES (Euro-Mediterranean Center on Climate Change, CMCC), DART Kiel (Kiel Institute for the World Economy, IfW-Kiel), EC-MSMR (Ministry of Environment, Canada), EDF-GEPA (Environmental Defense Fund, EDF), DREAM (University Fudan), JRC-GEM-E3 (Joint Research Center, JRC), ENVISAGE (University Purdue), SNoW (Statistics Norway), TEA (University Rio de Janeiro), TUB (Technical University Berlin), C-GEM (University Tsinghua), UOL (University Oldenburg), WEGDYN (Wegener Centre Graz). For contact persons in each institution, please refer to Table 1 in the overview paper.

In the case of the Ministry of Environment, Canada, the modelling results for the model region “Canada” had to be excluded due to data protection issues. Therefore, we set EC-MSMR's results for regions “Canada” and, in order to avoid the possibility to re-calculate those values, “All” to zero.

Link to EMF36 special issue.

 

Project Contact:

Funding is provided by the German Federal Ministry of Education and Research (BMBF) within its framework programme “Research for Sustainable Development” (FONA)