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  Policy Implications of Uncertainty References

1. Kolstad (see 1996a and 1996b) recognizes that this argument is only valid as long as it would not “be optimal to negatively emit in the future to correct over-emissions today”. In most of the economic literature on climate change, it is assumed that emissions cannot be negative, but in principle they can. A biomass energy system with carbon sequestration and permanent disposal could remove CO2 from the atmosphere, while at the same time delivering CO2-free energy carriers (e.g., heat, electricity or hydrogen) to society. This would enhance the possibilities of climate risk management (see Obersteiner et al, 2001, and Azar & Lindgren, 2001).

2. It is thus likely that the Kyoto protocol (with US participation) can be met without significant premature retirement of existing capital stock, primarily as a result of the collapse of Soviet Union and the many built-in flexibility mechanisms. Annex-1 greenhouse gas emissions in 1998 were 6% below the 1990 levels (www.unfccc.de) and the Kyoto target is an overall 5% reduction, assuming US participation and no “Bonn sinks”

3. Ha-Duong et al. used 400 ppmv as a ceiling, i.e., they did not allow any overshoots. It seems that the fundamental driver for their result is the introduction of this ceiling. Even a trivially small probability that we are not allowed to temporarily exceed the 400 ppmv target would force the model to an early departure from business-as-usual emissions.

4. In the WRE world these options are already adopted in the baseline scenario. Although this is not explicit in the original WRE paper, it was a feature of subsequent modeling efforts developed to support the WRE conclusions. In the baseline scenario developed by Manne and Richels (1997), for instance, carbon free technologies capture roughly 40% of the global energy supply by the year 2050 and 70% by the year 2100.

5. IPCC (1996b) writes that energy efficiency gains of perhaps 10-30 percent above baseline can be realized at negative to zero net costs. Other authors, e.g., Ayres (1994), have pointed to even larger potentials for cost-efficient energy efficiency improvements, but others are less optimistic. Regardless of one's assumption about the magnitude of these “no regrets options,” as well as equally cost-effective deployment of renewables, all parties agree that this potential should be tapped as soon as possible.

6. We compare with the 1990 global economy since costs were discounted back to 1990 and expressed in 1990 USD. We chose 1990 in order to facilitate comparison with IPCC estimates, which are expressed in 1990 USD (see IPCC, 2001c, Chapter 8).

7. A standard economist response to this would typically be that by avoiding emissions reductions now, we would be making people richer in the future, and therefore at least economically more well situated to accept climate policy initiatives. But not reducing the emissions means that we can get even more locked into carbon intensive capital, and perhaps making future generations thus less inclined to abate carbon. Further, the difference in GDP growth rates between an abatement scenario and a business as usual scenario is marginal (see “Is the Cost of Stabilizing the Atmosphere Prohibitive?"). Overall, the relation between willingness to abate carbon seems not to be so strongly correlated to income. Although India seems less inclined to adopt carbon abatement policies than Europe, Europe is more willing than USA and Canada who are richer.

8. We compare with the 1990 global economy since costs were discounted back to 1990 and expressed in 1990 USD. We chose 1990 in order to facilitate comparison with IPCC estimates, which are expressed in 1990 USD (see IPCC, 2001c, Chapter 8).

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Copyright 2011, Stephen H. Schneider, Stanford University