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, the accompanying process to the German Ministry of Education and Research funding measure “Economics of Climate Change II”.
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 scenarios to be investigated jointly across all participating modeling groups, there is scope for additional complementary scenarios to be 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.
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)
All interested modeling groups with multi-regional climate-economy models are welcome to join the EMF round.