Infrastructure capacity planning for reducing risks of future hydrologic extremes

Floods and droughts and their associated economic, environmental, and social losses or damages are increasing in severity and frequency. Measures taken to reduce these losses or damages stemming from extreme events typically depend on how effective they are in reducing the consequences of having either too much or too little water and for longer periods of time. To identify trade-offs between the annual estimated loss or damage reduction, i.e., the benefits, however measured, and the average annual cost of various damage reduction measures, one can perform risk–cost analyses. Because of climate change, the likelihoods of future hydrologic extremes are both changing and uncertain. Also uncertain are any estimates of future damages that would occur given any specific extreme event. In addition, one cannot be certain of the future costs or benefits of damage reduction measures. This paper outlines a range of practical approaches for identifying these trade-offs, taking into account the uncertainties associated with future damages resulting from any specific flood or drought event, the changing uncertainties of future flood and drought events, and the uncertainty of future damage mitigation costs.

Solid Biofuels Scenarios from Rural Agricultural and Forestry Residues for Mexican Industrial SMEs

In Mexico, as in the rest of the world, the industry sector is frequently highly dependent on fossil fuels; in addition, energy transformation processes are not very efficient and scarcely oriented towards climate change mitigation. Given these facts, solid biofuels (SBFs) from agricultural and forestry residues from rural areas may represent an alternative that contributes to the decarbonization of the industrial sector, especially in Small- and Medium-Sized Enterprises (SMEs). From an economic and climate change mitigation perspective, this study evaluates harnessing SBFs in SMEs related to lime, bricks, dairy products, craft beer, and artisanal mezcal (a well-known Mexican distilled alcoholic beverage), products mainly manufactured in rural areas of Mexico. For each of these SMEs, we constructed two energy consumption scenarios that span from 2018 to 2050. On the one hand, a baseline scenario (BS) that reflects the behaviour of historical energy consumption in Mexico and, on the other hand, an alternative scenario (AS) that proposes the use of SBFs with modern and efficient technologies and sustainable inputs of agricultural and forestry residues originated mainly from rural areas. According to our results, a comparison between the two scenarios reveals that two out of five SMEs industrial niches studied, appear with mitigation costs in the AS namely brick kilns, and limekilns SMEs that have mitigation costs of 9.99 and 19.74 USD/tCO2e, respectively, primarily due to the high investment cost of the new MK2 kilns and the relatively high cost of pellets, respectively. Since these niches have high mitigation potentials (7.77 MtCO2e for brick kilns and 2.83 MtCO2e for limekilns), their implementation requires adequate incentives and financing. On the contrary, the dairy, craft beer, and mezcal SMEs niches have negative mitigation costs (−14.30, −10.68, −0.98) USD/tCO2e, mainly due to the high savings in the cost of fossil fuels and their materialization, especially for the mezcal niche which has a mitigation potential of 2.97 MtCO2e, requires only an adequate regulatory and normative framework. We conclude that using commercial SBFs (pellets, briquettes, and traditional firewood) in SMEs niches contribute to generating formal markets with adequate distribution channels, both for SBFs and sustainable residual biomass inputs (residual firewood, agave bagasse, and spent barley grain). This alternative scenario also promotes the creation of green jobs in agricultural and forestry areas, adding an economic value to residual biomass inputs not previously considered and contributing to the social development of rural areas.

Capital markets and the costs of climate policies

Globalization is accompanied by increasing current account imbalances. They can undermine the positive impacts of increasing international cooperation and trade on economic growth and income convergence. At the same time, climate change challenges the global community and requests for co-operative action. Regional energy transformation due to climate policies and the resulting regional mitigation costs are key variables of climate economic analysis. This study is the first that include current account imbalances and imperfect capital markets to investigate potential market feedback mechanisms between climate policies, energy sector transformation and capital markets. Furthermore, it answers the question whether the capital-intensive transformation towards zero-carbon economies increases the policy cost of mitigation under the condition of imperfect capital markets. First results demonstrate a dominant baseline effect of capital market imperfections on macroeconomic variables, and moderate effects on mitigation costs in global climate policy scenarios. For some regions (e.g. Middle East) estimates of relatively high mitigation costs are revised downwards, if imperfect capital markets are considered.

Designing the Optimal International Climate Agreement with Variability in Commitments

We analyze the design of an international climate agreement. In particular, we consider two goals of such an agreement: overcoming free-rider problems and adjusting for differences in mitigation costs between countries. Previous work suggests that it is difficult to achieve both of these goals at once under asymmetric information because countries free ride by exaggerating their abatement costs. We argue that independent information collection (investigations) by an international organization can alleviate this problem. In fact, though the best implementable climate agreement without investigations fails to adjust for individual differences even with significant enforcement power, a mechanism with investigations allows adjustment and can enable implementation of the socially optimal agreement. Furthermore, when the organization has significant enforcement power, the optimal agreement is achievable even with minimal investigative resources (and vice versa). The results suggest that discussions about institutions for climate cooperation should focus on information collection as well as enforcement.

Modelling and optimal control of multi strain epidemics, with application to COVID-19

Reinfection and multiple viral strains are among the latest challenges in the current COVID-19 pandemic. In contrast, epidemic models often consider a single strain and perennial immunity. To bridge this gap, we present a new epidemic model that simultaneously considers multiple viral strains and reinfection due to waning immunity. The model is general, applies to any viral disease and includes an optimal control formulation to seek a trade-off between the societal and economic costs of mitigation. We validate the model, with and without mitigation, in the light of the COVID-19 epidemic in England and in the state of Amazonas, Brazil. The model can derive optimal mitigation strategies for any number of viral strains, whilst also evaluating the effect of distinct mitigation costs on the infection levels. The results show that relaxations in the mitigation measures cause a rapid increase in the number of cases, and therefore demand more restrictive measures in the future.

Cost-effective implementation of the Paris Agreement using flexible greenhouse gas metrics

Greenhouse gas (GHG) metrics, that is, conversion factors to evaluate the emissions of non-CO2 GHGs on a common scale with CO2, serve crucial functions in the implementation of the Paris Agreement. While different metrics have been proposed, their economic cost-effectiveness has not been investigated under a range of pathways, including those substantially overshooting the temperature targets. Here, we show that cost-effective metrics for methane that minimize the overall mitigation costs are time-dependent, primarily determined by the pathway, and strongly influenced by temperature overshoot. Parties to the Paris Agreement have already adopted the conventional GWP100 (100-year global warming potential), which is shown to be a good approximation of cost-effective metrics for the coming decades. In the longer term, however, we suggest that parties consider adapting the choice of common metrics to the future pathway as it unfolds, as part of the recurring global stocktake, if global cost-effectiveness is a key consideration.

Least-cost targets and avoided fossil fuel capacity in India’s pursuit of renewable energy

India has set aggressive targets to install more than 400 GW of wind and solar electricity generation by 2030, with more than two-thirds of that capacity coming from solar. This paper examines the electricity and carbon mitigation costs to reliably operate India’s grid in 2030 for a variety of wind and solar targets (200 GW to 600 GW) and the most promising options for reducing these costs. We find that systems where solar photovoltaic comprises only 25 to 50% of the total renewable target have the lowest carbon mitigation costs in most scenarios. This result invites a reexamination of India’s proposed solar-majority targets. We also find that, compared to other regions and contrary to prevailing assumptions, meeting high renewable targets will avoid building very few new fossil fuel (coal and natural gas) power plants because of India’s specific weather patterns and need to meet peak electricity demand. However, building 600 GW of renewable capacity, with the majority being wind plants, reduces how often fossil fuel power plants run, and this amount of capacity can hold India’s 2030 emissions below 2018 levels for less than the social cost of carbon. With likely wind and solar cost declines and increases in coal energy costs, balanced or wind-majority high renewable energy systems (600 GW or ≈ 45% share by energy) could result in electricity costs similar to a fossil fuel-dominated system. As an alternative strategy for meeting peak electricity demand, battery storage can avert the need for new fossil fuel capacity but is cost effective only at low capital costs (≈ USD 150 per kWh).

The economic costs of planting, preserving, and managing the world’s forests to mitigate climate change

Forests are critical for stabilizing our climate, but costs of mitigation over space, time, and stakeholder group remain uncertain. Using the Global Timber Model, we project mitigation potential and costs for four abatement activities across 16 regions for carbon price scenarios of $5–$100/tCO2. We project 0.6–6.0 GtCO2 yr−1 in global mitigation by 2055 at costs of 2–393 billion USD yr−1, with avoided tropical deforestation comprising 30–54% of total mitigation. Higher prices incentivize larger mitigation proportions via rotation and forest management activities in temperate and boreal biomes. Forest area increases 415–875 Mha relative to the baseline by 2055 at prices $35–$100/tCO2, with intensive plantations comprising <7% of this increase. Mitigation costs borne by private land managers comprise less than one-quarter of total costs. For forests to contribute ~10% of mitigation needed to limit global warming to 1.5 °C, carbon prices will need to reach $281/tCO2 in 2055.

Climate Change and Reversed Intergenerational Equity: the Problem of Costs Now, for Benefits Later

Climate change is often seen as an issue of intergenerational equity—consumption now creates costs for future generations. However, radical mitigation now would reverse the problem, creating immediate costs for current generations, while the benefits would be primarily for future ones. This is a policy problem, as persuading those living now to bear the cost of changes whose benefits will mostly accrue after their deaths is politically difficult. The policy challenge is then how to temporally match costs to benefits, either by deferring mitigation costs, or by speeding up climatic benefits. Geoengineering may provide some help here, as it might enable climate change to be slowed more immediately, at a lower upfront cost, and allow a greater share of the mitigation and adaptation burden to be passed on to those in the future who will benefit most.