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Abstract:
Geological carbon sequestration seems one of the promising options to address, in the near term, the global problem of climate change, since carbon sequestration technologies are in principle available today and their costs are expected to be affordable. Whereas extensive technological and economic feasibility studies rightly point out the large potential of this 'clean fossil fuel' option, relatively little attention has been paid so far to the detrimental environmental externalities that the sequestering of CO2 underground could entail. This paper assesses what the relevance might be of including these external effects in long-term energy planning and scenario analyses. Our main conclusion is that, while these effects are generally likely to be relatively small, carbon sequestration externalities do matter and influence the nature of future world energy supply and consumption. More importantly, since geological carbon storage (depending on the method employed) may in some cases have substantial external impacts, in terms of both environmental damage and health risks, it is recommended that extensive studies are performed to quantify these effects. This article addresses three main questions: (i) What may energy supply look like if one accounts for large-scale CO2 sequestration in the construction of long-term energy and climate change scenarios; (ii) Suppose one hypothesizes a quantification of the external environmental costs of CO2 sequestration, how do then these supposed costs affect the evolution of the energy system during the 21st century; (iii) Does it matter for these scenarios whether carbon sequestration damage costs are charged directly to consumers or, instead, to electricity producers?

Geological carbon storage, External costs, Energy scenarios

Abstract:
Free-riding is a major problem for international climate policy. A country can take advantage of other countries' emission reduction without contributing to abatement policies itself. Game theory suggests that issue linkage may help to overcome free-riding. Earlier studies suggest that if negotiations on greenhouse gas emission reduction are coupled to negotiation on technology transfer, the incentives to co-operate increase. This study confirms that finding. A country has less reason to free-ride if free-riding implies that the countries loses access to desirable, foreign technologies. We also show that, in many cases, it hurts to deny another country access to domestic technologies, if that country retaliates by withholding its technologies. We further show that the losses of withholding abatement technologies are small relative to the gains of free-riding. So, linking greenhouse gas emission reduction with technology diffusion helps to deter free-riding, but only a little bit, and only if the two issues are automatically linked.

Abstract:
The economics of CO2 capture and storage in relation to the possibility of significant leakage of CO2 from geological reservoirs once this greenhouse gas has been stored artificially underground will be among the main determinants of whether CCS can significantly contribute to a deep cut in global CO2 emissions. This paper presents an analysis of the economic and climatic implications of the large-scale use of CCS for reaching a stringent climate change control target, when geological CO2 leakage is accounted for. The natural scientific uncertainties regarding the rates of possible leakage of CO2 from geological reservoirs are likely to remain large for a long time to come. We present a qualitative description, a concise analytical inspection, as well as a more detailed integrated assessment model, proffering insight into the economics of geological CO2 storage and leakage. Our model represents three main CO2 emission reduction options: energy savings, a carbon to non-carbon energy transition and the use of CCS. We find CCS to remain a valuable option even with CO2 leakage of a few %/yr, well above the maximum seepage rates that we think are likely from a geo-scientific point of view.

Climate Change, Carbon Dioxide Emission Reduction, Technological Innovation, CO2 Capture and Storage (CCS), Geological Leakage

Abstract:
This paper applies the theory of social situations to international environmental agreements on greenhouse gas emission reduction. The usual pessimism on the size of stable coalitions among world regions is challenged for two alternative cases, namely by introducing farsightedness and by introducing coalitional moves with commitment. This is an extension of stability in the cartel game, where a cartel symbolises a coalition among world regions for reducing greenhouse gas emissions. It is a special case of the commitment situation, which has been proposed in the theory of social situations. The results are obtained by restricting the move rules in the game among world regions.

Coalitions, coalitional moves, cooperation, theory of social situations, international negotiations, climate change

Abstract:
This paper analyses the policy relevance of the dominant uncertainties in our current scientific understanding of the terrestrial climate system, and provides further evidence for the need to radically transform - this century - our global infrastructure of energy supply, given the global average temperature increase as a result of anthropogenic carbon dioxide emissions. We investigate the effect on required CO2 emission reduction efforts, both in terms of how much and when, of our uncertain knowledge today of the climate sensitivity to a doubling in them atmospheric CO2 concentration. Also the roles of carbon-free energy and energy savings, and their evolutions over time, are researched, as well as their dependence on some of our characteristic modelling features. We use a top-down model in which there are two competing energy sources, fossil and non-fossil. Technological change is represented endogenously through learning curves, and modest but non-zero demand exists for the relatively expensive carbon-free energy resource.

Global warming, CO2 emissions, Climate sensitivity, Fossil to non-fossil transition, Carbon-free power, Energy savings

Abstract:
Most currently employed Integrated Assessment Models are of a dynastic nature, commonly assuming a fixed relation between pure time preference, economic growth and interest rate. This rigid relation has led to much debate on which level of discounting to adopt. Especially the quantitative results of Integrated Assessment Models have been subject to controversy because of their strong sensitivity on future discounting. Many economic analysts advocate employing a descriptive time preference, based on historic data, which usually represents an approximate efficient use of environmental resources. Others encourage assuming a prescriptive time discounting, allowing them - by taking low discount values - to model a sustainable use of environmental services. This paper argues that, although a fixed time preference relation might be convenient for economic analysis, such a supposition can be misleading. By avoiding a rigid discounting relation, the descriptive-prescriptive controversy can be avoided. It is concluded that dynastic Integrated Assessment Models are in many respects inappropriate for providing policy makers with quantitative figures about the costs of carbon dioxide emissions, and their desirable reduction levels. In contrast, Overlapping Generations models, allowing the use of a flexible discounting relation, are suitable for designing a broad class of policy instruments. With the Integrated Assessment Model ALICE 2.0, it is shown how various assumptions on demographic change and public institutions can affect the interest rate, thereby influencing the desired optimal greenhouse gas emission reductions. It is recommended that economic modelling intensify attempting to establish both efficient and sustainable resource use. The discount rate should be treated as an endogenous variable, rather than an exogenous parameter characterising a central planner.