An overview of how the different modelling approaches address the main categories of policies is given here in preparation for a discussion of the main assumptions behind study results. The main categories of climate change mitigation options include:
While climate policies can include elements of all four policies, most analytical approaches focus on a few of the options. Economic models, for instance, mainly assess market-oriented policies, and occasionally technology policies related to energy supply options. Engineering approaches primarily focus on supply- and demand-side technology policies. Both of these approaches have opportunities to expand their representation of R&D policies.
Table 7.3 shows the application of market-oriented, technology-oriented and voluntary climate policies in different analytical approaches. The schematic overview covers a large number of applications in global, regional, national, and local analyses. Chapters 8 and 9 of discuss the actual details and specific methods for different assessment levels. A few general conclusions on the representation of different climate policies in the analytical approaches are:
It is expected that the cost of climate change mitigation policiesall else being equaldecreases with the number of policy categories and options included in the analysis. This means that approaches that are either rich in detail (or facilitate great flexibility) in a number of policy areas can be expected to identify relatively large mitigation potentials and relatively low costs compared with approaches that only address a few instruments or options.
A number of studies have assessed climate change mitigation costs given different regimes of global flexibility mechanism.21 Climate change mitigation costs in these different policy regimes depend on the specific definition of the policy instrument, and on assumptions about market scale, competition, and restrictions. It is generally expected that climate change mitigation costs decrease with increasing supply of carbon-reduction projects.22 Restrictions on this supply, or market imperfections in global markets for carbon-reduction projects, have a tendency to increase the price of the projects (Burniaux, 1998; Mensbrugge, 1998).
Table 7.3: Application of climate change mitigation policies in different analytical approaches | |||
Market-oriented policies | Technology-oriented policies | Voluntary-oriented policies | |
Macroeconomic models | |||
IO models Keynesian CGE |
All instruments difficulties with modelling of transaction costs |
CGE: Exogenous assumptions; few examples with endogenou sassumptions |
Demand functions for ecological values |
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Technology-driven simulation and/or scenario models |
Exogenous | Exogenous, learning | Qualitative assumptions |
Sectoral models |
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Partial equilibrium | All instruments | Changes in capital stock | Exogenous demand function for ecological values |
Technology-driven models | All instruments modelled through changes in capital stock |
Exogenous assumptions on standards and R&D Leaning curves |
Investments reflect future expectations on ecological values and policies |
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Project assessment approaches |
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Costbenefit analysis | All instruments | Exogenous technology data | Exogenous demand function for ecological values |
Cost-effectiveness analyses | All instruments | Vintage models | |
Technology assessment |
No instruments | ||
Other reports in this collection |