Transcript No Slide Title

Fourth Annual Conference on Global Economic Analysis
Policy Panel I:
Climate Change Policy
Some Research Issues
June 27, 2001
Larry Williams
EPRI
Overview
• The easy stuff
– Climate science
– Policy proposals
– Basic observations
• Open questions
– Two studies underway through EMF-Stanford
– International policy process in flux
– Opportunity to rethink the issue
– Introduce imperfections of real world
– Uncertainty analysis
4th GEA-Purdue
2
Climate science
• The issue is real—won’t be going away
• First signs of human-caused climate change have likely
occurred
• Further change appears inevitable
• Time scale is very long term
– Not the next election cycle!
• Less certain about…
– Where (regions of globe)
– When (rate of change)
– How much (magnitude)
4th GEA-Purdue
3
UN Framework Convention
on Climate Change
• Ultimate goal is the
stabilization of greenhouse
gas concentrations in the
atmosphere
• Initially called upon Annex
I countries to take lead
and aim to return
emissions to 1990 levels
by 2000
• Calls for periodic reviews
4th GEA-Purdue
4
Basic Observations
• The Framework Convention deals with concentrations and
NOT emissions
• Timing matters—a gradual energy transition will be
cheaper than an abrupt transition
• Stabilization requires participation by the big emitters
– Net emissions need to go to ZERO eventually
• Solution requires a portfolio of actions
– No single magic solution
• Problem is real and will NOT go away on it’s own
4th GEA-Purdue
5
Policy Directions…?
• Kyoto Protocol as written (US inside)
• KyotoEU + Japan + Russia (US outside)
• Renew Negotiations
– Revisit Kyoto ?
– Revisit Rio ?
• Individual Nations take actions
– Bilateral agreements
– Permit trading slowly takes hold
– Eventual convergence
– Europe as laboratory experiment for GHG control
4th GEA-Purdue
6
Failure to agree at COP6 opens up
research possibilities…
• Most recent climate policy research organized relative to
the Kyoto Protocol
• Now is a good time to take broader focus
– Rethink global problems related to
• Development, air and water pollution (and water
scarcity) AND
• Climate jointly
• Stay tuned—new policies will be surfacing
4th GEA-Purdue
7
Research possibilities…
• “International Trade Dimensions of Climate Policy
Analysis”
– EMF18 (Stanford University) study underway to
examine leakage effects and spill-over effects
• “Technology Strategies for Greenhouse Gas Mitigation”
– EMF19 (Stanford University) study examines
• Alternative sets of technology assumptions and
ways to represent technological progress
• Strong impact on cost estimates
4th GEA-Purdue
8
Research possibilities…
• Real policy implementations unlikely to be
optimal
– How much more costly will non-optimal be?
• Various forms of command and control
• Sector specific caps
• Upstream vs. downstream
• Various domestic burden sharing schemes
– How will lack of harmony between domestic
and international policies affect the costs?
4th GEA-Purdue
9
Research possibilities…
• More work on uncertainty analysis is needed
– What are key uncertainties influencing future
emissions
• Examine climate issue as risk management
– Climate surprises
– Action vs. inaction
– Sequential policy proposals
– Prudent risk management strategy
4th GEA-Purdue
10