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Mitigation Costs in a Globalized World: Climate Policy Analysis with REMIND-R

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Abstract

Within this paper, we present the novel hybrid model REMIND-R and its application in a climate policy context based on the EU target to avoid a warming of the Earth’s atmosphere by more than 2°C compared to the pre-industrial level. This paper aims to identify necessary long-term changes in the energy system and the magnitude of costs to attain such a climate protection target under different designs of the post-2012 climate policy regime. The regional specification of mitigation costs is analyzed in the context of globalization where regions are linked by global markets for emission permits, goods, and several resources. From simulation experiments with REMIND-R, it turns out that quite different strategies of restructuring the energy system are pursued by the regions. Furthermore, it is demonstrated that the variance of mitigation costs is higher across regions than across policy regimes. First-order impacts, in particular, reduced rents from trade in fossil resources, prevail regardless of the design of the policy regime.

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Notes

  1. On http://www.pik-potsdam.de/research/research-domains/sustainable-solutions/remind-code-1, the technical description of REMIND-R and the whole set of input data are available. REMIND-R is programmed in GAMS. The code is available from the authors on request.

  2. We assume a pure rate of time preference of 3% for the simulation experiments presented in later sections.

  3. The assumed values for the substitution elasticities (see Fig. 2) are comparable to the values assumed by [13, p. 49]. Regarding the nesting structure of the energy composite, we tried to replicate the basic structure of energy system services composed of mobile and stationary energy uses. Both are combined by a very low elasticity of substitution.

  4. Most recent data are available on http://www.enerdata.fr/enerdatauk/index.html.

  5. In cases without or with internalized externalities (applies to the climate change externality and technological learning), the pareto-optimal solution computed by REMIND-R corresponds also to a market solution.

  6. Throughout this report, all relevant economic figures (e.g., GDP) are measured in constant international $US 2003 (market exchange rate).

  7. The primary energy consumption of the renewable energy sources wind, solar, and hydro power is put on the same level as the related secondary energy production.

  8. While for the year 2050, the carbon price here is of the same order of magnitude as the carbon prices simulated for the less ambitious 450 ppm CO2 stabilization scenario within the Innovation Modeling Comparison Project (cf. [7, p. 96]), it is significantly higher for the year 2100.

  9. In general, regional GDP losses differ from regional consumption losses. This is due to the effects of international trade.

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Acknowledgements

For their help in implementing the REMIND model, we are grateful to our colleagues Michael Lüken and Markus Haller. We also thank the German Federal Environmental Agency for the financial support of this research.

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Authors and Affiliations

  1. PIK—Potsdam Institute for Climate Impact Research, P.O. Box 60 12 03, 14412, Potsdam, Germany

    Marian Leimbach, Nico Bauer, Lavinia Baumstark & Ottmar Edenhofer

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  1. Marian Leimbach
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  2. Nico Bauer
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Correspondence to Marian Leimbach.

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Leimbach, M., Bauer, N., Baumstark, L. et al. Mitigation Costs in a Globalized World: Climate Policy Analysis with REMIND-R. Environ Model Assess 15, 155–173 (2010). https://doi.org/10.1007/s10666-009-9204-8

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  • DOI: https://doi.org/10.1007/s10666-009-9204-8

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