Exploring a Technology Strategy for Stabilizing Atmospheric Co2
Fondazione Eni Enrico Mattei Working Paper No. 15.98
29 Pages Posted: 10 Sep 1998
Date Written: August 27, 1997
The goal of the Framework Convention on Climate Change (FCCC) is to stabilize the concentration of greenhouse gases in the atmosphere at levels which avoid dangerous anthropogenic interference with the climate (United Nations, 1992). Work by the Intergovernmental Panel on Climate Change (IPCC, 1995; WG1) and others (Wigley et al., 1996; WRE) have explored the issue of stabilizing the concentration of atmospheric CO2. This work developed emissions trajectories consistent with various atmospheric concentration ceilings. Since an emissions path is not uniquely prescribed by a concentration ceiling, various criteria have been added to shape trajectories, including implied climate impacts and costs.
The attraction of efficient instruments for achieving atmospheric stabilization is great, and most of the analysis to date has focused on either tradable permits or taxes as the instruments of implementation (Hourcade et al., 1996). Clearly, efficient instruments are a first-best alternative for achieving any emissions mitigation objective. But they are not without their own difficulties, not the least of which is the income distribution problem.
The purpose of this paper is to examine the performance and cost characteristics of an alternative, technology based, policy instrument. Such instruments are of interest because they potentially offer a strategy for stabilizing the atmosphere, while requiring relatively minor financial transfers and allowing economic development to proceed. They accomplish these goals at the expense of economic efficiency, although our study shows the effect of the economic inefficiency is limited to approximately 30%. On the other hand, a technology strategy approach can offer wide technological flexibility in meeting the performance standard.
The technology protocol we study here requires new powerplant and coal-based synthetic fuels capacity to scrub carbon from the waste gas stream in Annex I nations, and provides a mechanism by which non-Annex I nations can graduate into obligations. We examine this protocol under two alternative reference energy futures: one dominated by coal and the other dominated by unconventional oil and gas.
We show that under the coal dominated reference future (CBF) that the simple protocol effectively stabilizes the concentration of CO2 in the atmosphere. If the protocol is initiated in the year 2020 the atmosphere stabilizes at approximately 510 ppmv, less than double the pre-industrial concentration. Under the unconventional oil and gas dominated reference future (OGF) the simple protocol holds concentrations to approximately double the pre-industrial level, but the atmosphere is not stabilized. Emissions are rising at the end of the century.
Atmospheric stabilization under the OGF requires a second stage to the protocol beginning 30 years after the initiation of the simple protocol; the second stage would require that new refining and processing capacity remove all carbon from the fuel stream in Annex I nations, with imports of refined and process fuels phased out over a 45-year period, and the same graduation mechanism for non-Annex I nations as in the simple protocol. The imposition of this second stage leads to the creation of an energy system utilizing hydrogen and electricity in end-use applications and enforces atmospheric stabilization in the OGF as well as the CBF.
The date at which the protocol goes into effect strongly influences the concentration in the year 2100. From this study, we found the year 2100 concentration of CO2 approximately a linear function of the date at which the protocol is initiated in Annex I nations. Starting in 2005 gives a lower bound of CO2 concentration levels reachable under the protocol, a level near 450 ppmv. Keeping the concentration of CO2 below 550 ppmv requires that the first stage of the protocol be initiated between 2030 and 2040, depending on fossil energy technology developments.
The cost inefficiency penalty associated with the technology protocol varies with time. Initially, annual costs under the protocol are higher than an equivalent efficient policy. As the second stage of the protocol becomes effective in the later years, the inefficiency of the protocol diminishes. However, the present discounted costs of the technology protocols are about 30 % higher than efficient costs when summed over the next century.
The inclusion of joint implementation mechanisms could reduce the cost penalty of the hypothetical protocol and is promising avenue for further work.
JEL Classification: Q28, Q38
Suggested Citation: Suggested Citation