Mitigation Strategies and Costs of Climate Protection: The Effects of Etc in the Hybrid Model Mind

27 Pages Posted: 3 Jan 2006

See all articles by Ottmar Edenhofer

Ottmar Edenhofer

Potsdam Institute for Climate Impact Research (PIK); Mercator Research Institute on Global Commons and Climate Change (MCC); Technische Universität Berlin (TU Berlin)

Kai Lessmann

Potsdam Institute of Climate Impact Research

Nico Bauer

Paul Scherrer Institute (PSI)

Date Written: December 2005

Abstract

MIND is a hybrid model incorporating several energy related sectors in an endogenous growth model of the world economy. This model structure allows a better understanding of the linkages between the energy sectors and the macro-economic environment. We perform a sensitivity analysis and parameter studies to improve the understanding of the economic mechanisms underlying opportunity costs and the optimal mix of mitigation options. Parameters representing technological change that permeates the entire economy have a strong impact on both the opportunity costs of climate protection and on the optimal mitigation strategies, e.g. parameters in the macro-economic environment and in the extraction sector. Sector-specific energy technology parameters change the portfolio of mitigation options but have only modest effects on opportunity costs, e.g. learning rate of the renewable energy technologies. We conclude that feedback loops between the macro-economy and the energy sectors are crucial for the determination of opportunity costs and mitigation strategies.

Keywords: Endogenous technological change, Climate change mitigation costs, Integrated assessment, Growth model, Energy sector, Integrated assessment

JEL Classification: O41, Q40, Q43, Q55, C61, D99

Suggested Citation

Edenhofer, Ottmar and Lessmann, Kai and Bauer, Nico, Mitigation Strategies and Costs of Climate Protection: The Effects of Etc in the Hybrid Model Mind (December 2005). FEEM Working Paper No. 150.05, Available at SSRN: https://ssrn.com/abstract=871447 or http://dx.doi.org/10.2139/ssrn.871447

Ottmar Edenhofer

Potsdam Institute for Climate Impact Research (PIK) ( email )

P.O. Box 601203
14412 Potsdam, Brandenburg
Germany

Mercator Research Institute on Global Commons and Climate Change (MCC)

Torgauer Straße 12-15
Berlin, 10829
Germany

Technische Universität Berlin (TU Berlin)

Straße des 17
Juni 135
Berlin, 10623
Germany

Kai Lessmann (Contact Author)

Potsdam Institute of Climate Impact Research ( email )

HOME PAGE: http://https://pik-potsdam.de/members/lessmann

Nico Bauer

Paul Scherrer Institute (PSI) ( email )

5232 Villigen PSI
Switzerland

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