Ten Facts about the Economics of Climate Change and Climate Policy Report

The global climate has already changed measurably, as evidenced by the consistent increase in greenhouse gas (GHG) emissions released into the atmosphere. These changes and future dysfunctions have prompted intense research into the nature of the problem in order to find potential political solutions.

The "Ten Facts about the Economics of Climate Change and Climate Policy" Report, edited by The Hamilton Project and the Stanford Institute for Economic Policy Research, aims to summarize much of this by adopting an economic lens focused on how ambitious climate goals can be achieved at the lowest possible cost.

Significant uncertainties surround both the magnitude of future climate change and the magnitude of the biophysical impacts of this change. Despite the uncertainties, climate scientists have reached a strong consensus that in the absence of measures to significantly reduce GHG emissions, climate change will be substantial, with irreversible long-term effects.

The scientific consensus was expressed through summary documents offered each year by the United Nations-sponsored Intergovernmental Panel on Climate Change (IPCC). These documents indicate the expected results in the context of Representative Concentration Pathways (RCP) for GHG (IPCC 2014). Each of these SPCs represents several possible GHGs trajectories in the next century.

The expected path of greenhouse gas emissions is essential to accurately predict the physical, biological, economic and social effects of climate change. CPRs are scenarios, chosen by the IPCC, which represent the scientific consensus on potential routes for GHG emissions and concentrations, air pollutant emissions and land use up to 2100. In the most recent evaluation, the IPCC selected four RCPs as basis for its projections and analysis:

  1. RPC 2.6 - peak emissions in 2020 to then decrease until 2100.
  2. RCP 4.5 - peak emissions between 2040 and 2050 and then decreased until 2100.
  3. RCP 6.0 - emissions increase until 2080 and then decrease until 2100.
  4. RCP 8.5 - emissions increase continuously up to 2100.

The IPCC does not assign probabilities to these different emission routes. What is clear is that the paths would require drastic changes in technology and politics.

RCPs 2.6 and 4.5 would most likely require significant advances in technology and policy changes to be made. However, it seems highly unlikely that global emissions will follow the path outlined in RCP 2.6; annual emissions should begin to decline in 2020. In contrast, RCPs 6.0 and 8.5 represent scenarios in which future emissions follow past trends with minimal or no change in policy and / or technology.

The four CPRs also have different effects on global temperatures. The magnitude of climate change is a function of the atmospheric stock of CO2 and other greenhouse gases, and the stock at any given time reflects the cumulative emissions so far. Therefore, the contribution of a particular country or region to global climate change can be measured in terms of cumulative emissions.

Until 1990, the historical responsibility for climate change was mainly attributable to the most industrialized countries. This responsibility has been a primary issue in the debates on how much of the burden of reducing current and future emissions should fall on the shoulders of developed countries over developing ones.

Although the United States and other developed nations continue to be responsible for much of the current excess CO2 concentration, their contributions and responsibilities are changing. As of 2017, the United States and Europe accounted for just over 50% of the cumulative CO2 emitted into the atmosphere since 1850. One of the reasons for this sharp decline is that CO2 emissions from China, India and others developing countries have grown faster than emissions from developed countries.

Therefore, it seems likely that, in order to avoid the worst effects of climate change, emission reduction efforts will be needed by both historical contributors - the United States and Europe - and by more recent developing countries like China and India.

Failure to implement any climate policy action would result in much higher annual emission growth rates than those that would prevent temperature rises above the focal points of 1.5 ° C and 2 ° C.


Ten Facts about the Economics of Climate Change and Climate Policy Report