1Prof. Dr. Ottmar Edenhofer

Berlin, 10 October 2008

7th Conference on Applied Infrastructure Research (INFRADAY)

New Challenges to Infrastructure Theory and Policy

Markets and Planning, Development and Sustainability

Perspectives of Global Climate Policies

Chair: Economics of Climate ChangeResearch Domain Sustainable Solutions

2

Content• Humankind causes climate change.

• We risk dangerous climate change if we do not curb GHG emissions substantially.

• Ambitious emissions reduction is technically feasible and economically affordable.

3

Content• Humankind causes climate change.

• We risk dangerous climate change if we do not curb GHG emissions substantially.

• Ambitious emissions reduction is technically feasible and economically affordable.

4

Content• Humankind causes climate change.

• We risk dangerous climate change if we do not curb GHG emissions substantially.

• Ambitious emissions reduction is technically feasible and economically affordable.

5

Tipping Points in the Earth System

PIK 2007

6

TAR Reasons For Concern Proposed AR4 Reasons For ConcernProposed AR4 Reasons For Concern

2º CGuardrail

Reasons for Concern

IPCC TAR IPCC AR4 (Proposal)

7

Source: Füssel (2007)

World map of wealth

Capital stock per personvery lowlowmedium

highvery high

8

Source: Füssel (2007)

World map of carbon debt

Carbon emissions per person from fossil fuel burning (1950-2003)very lowlowmedium

highvery high

910

310

410

5

101

102

103

104

Brazil

Mexico

Ethiopia

Russia

Egypt

France

Germany United States

India

Bangladesh

China

Japan South Africa

K: Capital stock (US$2000 per person)

P: F

ossi

l CO 2 e

mis

sion

s (k

g C

per

per

son

and

year

)

Fitting line: ln P=0.987 ln K+c

Wealth and carbon debt

Quelle: Füssel (2007)

10

Content• Humankind causes climate change.

• We risk dangerous climate change if we do not curb GHG emissions substantially.

• Ambitious emissions reduction is technically feasible and economically affordable.

11

Historic challenge

Coal/Oil/Nat.Gas cheap, pure time preference rate 1%

Necessary reductions

Business-as-usual

Climate protection

Year

Gig

aton

sca

rbon

(C) p

er y

ear

Energy-induced emissions

PIK 2007

12

What is an energy system?

PIK 2007

13

Renewable energy

PIK 2007

14

Nuclear energy

PIK 2007

15

Fossil fuels

PIK 2007

16

Carbon capture and sequestration (CCS)

PIK 2007

17

18

Options for CO2 emissions abatement

Coal/Oil/Nat.Gas cheap, pure time preference rate 1%

Necessary reductions

Business-as-usual

Climate protection

Year

Gig

aton

sca

rbon

(C) p

er y

ear

Energy-induced emissions

PIK 2007

19

Options for CO2 emissions abatement

Coal/Oil/Nat.Gas cheap, pure time preference rate 1%

Year

Gig

aton

sca

rbon

(C) p

er y

ear

Energy-induced emissions

Nuclear

Renewables

Biomass + CCS

Fossil + CCS

Efficiency

PIK 2007

20

Options for CO2 emissions abatement

Coal/Oil/Nat.Gas cheap, pure time preference rate 1%

Year

Gig

aton

sca

rbon

(C) p

er y

ear

Energy-induced emissions

Nuclear

Renewables

Biomass + CCS

Fossil + CCS

Efficiency

21

Options for CO2 emissions abatement

Coal/Oil/Nat.Gas cheap, pure time preference rate 1%

Year

Gig

aton

sca

rbon

(C) p

er y

ear

Energy-induced emissions

Nuclear

Renewables

Biomass + CCS

Fossil + CCS

Efficiency

PIK 2007

22

Options for CO2 emissions abatement

Coal/Oil/Nat.Gas cheap, pure time preference rate 1%

Year

Gig

aton

sca

rbon

(C) p

er y

ear

Energy-induced emissions

Nuclear

Renewables

Biomass + CCS

Fossil + CCS

Efficiency

PIK 2007

23

Options for CO2 emissions abatement

Coal/Oil/Nat.Gas cheap, pure time preference rate 1%

Year

Gig

aton

sca

rbon

(C) p

er y

ear

Energy-induced emissions

Nuclear

Renewables

Biomass + CCS

Fossil + CCS

Efficiency

An increasing oil price causes more exploration!

Stern Report 2006, Fig. 7.6

25

Drivers for CO2 Emissions Worldwide

26

Comparison of USA, China, India and Europe

27

Hard Coal: Global Distribution of Reserves & Resources

2,078 Gt = scaling factor 1

Global Reserves: 728 Gt

Source: BGR (2005), Reserves, Resources and Availability of Energy Resources 2005

28

Brown Coal: Global Distribution of Reserves & Resources

434 Gt = scaling factor 1

Global Reserves: 207 Gt

Source: BGR (2005), Reserves, Resources and Availability of Energy Resources 2005

29

Option values of different mitigation options

Long Time Horizon

0.0 0.5 1.0 1.5 2.0

No CCS

No nuclear energy *

All options

%

Oil/gas/coal expensiveOil/gas expensive, coal cheapOil/gas/coal cheap

No solar energy *

* : No mitigation-induced extension of nuclear and solar energy, respectively

30

What are the macro-economic costs in 2030? AR4 IPCC

< 0.12< 3Not available445-535[4]

<0.10.2 – 2.50.6535-590

< 0.06-0.6 – 1.20.2590-710

Reduction of average annual GDP growth

rates [3](percentage points)

Range of GDP reduction [2]

(%)

MedianGDP reduction[1]

(%)

Trajectories towards

stabilization levels (ppm CO2-eq)

[1] This is global GDP based market exchange rates.[2] The median and the 10th and 90th percentile range of the analyzed data are given.[3] The calculation of the reduction of the annual growth rate is based on the average reduction during the period till 2030

that would result in the indicated GDP decrease in 2030.[4] The number of studies that report GDP results is relatively small and they generally use low baselines.

• Costs are global average for least cost appoaches from top-down models

• Costs do not include co-benefits and avoided climate change damages