Policy sequencing toward decarbonization

Meckling, Jonas; Sterner, Thomas; Wagner, Gernot

doi:10.1038/s41560-017-0025-8

Cited by 303 publications

(160 citation statements)

References 49 publications

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“…Moreover, by lowering the price of energy services, RE subsidies undermine incentives for energy conservation (Holland, Hughes and Knittel, 2009). Yet, policies promoting clean energy from RE sources such as wind and solar are the most widely adopted form of actual low-carbon policy (Meckling, Sterner and Wagner, 2017). 1 This paper investigates how public policies aimed at supporting RE from wind and solar should be best designed in the presence of a carbon externality related to the use of non-renewable fossil fuels in energy supply and demand.…”

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confidence: 99%

The economics of renewable energy support

Abrell

Rausch

Streitberger

2019

Journal of Public Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This paper uses theoretical and numerical economic equilibrium models to examine optimal renewable energy (RE) support policies for wind and solar resources in the presence of a carbon externality associated with the use of fossil fuels. We emphasize three main issues for policy design: the heterogeneity of intermittent natural resources, budget-neutral financing rules, and incentives for carbon mitigation. We find that differentiated subsidies for wind and solar, while being optimal, only yield negligible efficiency gains. Policies with smart financing of RE subsidies which either relax budget neutrality or use "polluter-pays-the-price" financing in the context of budget-neutral schemes can, however, approximate socially optimal outcomes. Our analysis suggests that optimally designed RE support policies do not necessarily have to be viewed as a costly second-best option when carbon pricing is unavailable. (JEL Q28, Q42, Q52, Q58, C61).

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confidence: 99%

The economics of renewable energy support

Abrell

Rausch

Streitberger

2019

Journal of Public Economics

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“…Knowing that both the timing of policy implementation and instrument choice have an influence on Americans' preferences for phase-out policies, policymakers may be interested to know whether the two attributes interact in shaping preferences. Recent research on strategies for decarbonization has proposed smart sequencing of climate policies as an effective way to avoid political dead-ends in the decarbonization of energy systems (Meckling, Sterner, & Wagner, 2017). For instance, subsidies for the purchase of electric vehicles could be introduced early on and be combined with taxes that are ratcheted up over time, while a ban on newly registered cars with an internal combustion engine could be enacted later.…”

Section: Do Temporal Preferences Interact With Policy Instrument Prefmentioning

confidence: 99%

“…As consumer choices are often based on a comparison of upfront costs, using subsidies to bring these down for low-emissions alternatives is a key element in modifying the relevant choice architecture Yoeli et al, 2017). However, subsidies alone might be insufficient to speed up the trans-formation at the needed pace and do also bear some risks like rent capture and costly lock-in (Meckling et al, 2017). Hard regulations will most likely be necessary to reach required mitigation goals.…”

Section: Conclusion and Policy Implicationsmentioning

confidence: 99%

Fast track or Slo-Mo? Public support and temporal preferences for phasing out fossil fuel cars in the United States

2019

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Policies to phase out fossil fuel cars are key to averting dangerous and irreversible changes to the earth's climate. Given the potential impacts of such policies on every-day routines and behaviours, the factors that might increase or decrease their public acceptance require investigation. Here we study the role of specific policy design features in shaping Americans' preferences for policy proposals to phase out fossil fuel cars. In light of the urgency of action against climate change, we are specifically interested in citizens' preferences with respect to the timing of phase-out policies.Based on a demographically representative sample of 1,520 American residents rating 24,320 hypothetical policy scenarios in a conjoint experiment, we find that Americans prefer phase-out policies to be implemented no later than 2030. Policy features other than timing are also important:higher policy costs significantly reduce public support; subsidies for alternative technologies are preferred over taxes and bans; and policy co-benefits in terms of pollution reduction increase public support only when they are substantial. The study also investigates the role of individual characteristics in shaping policy preferences, finding that perceived psychological distance of climate change and party identification influence policy preferences. The results of this study have important implications for the political feasibility of rapid decarbonization initiatives like the 'Green New Deal'that are now being discussed in the US and beyond. Among these is the insight that smart sequencing of policies (early implementation of subsidies for low-emission technologies, followed by tax increases and/or bans) might help ensure majority support for a fossil fuel car phase-out.

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“…Goulder, Hafstead, and Williams III (2016) argue that under plausible conditions a more conventional form of regulation, a clean energy standard, is more cost-effective than emissions pricing such as carbon taxation or cap-and-trade. Meckling, Sterner, and Wagner (2017) model, which is based on the full DICE model but adds renewable and non-renewable energy sectors as well as a government who decides the optimal dynamic carbon tax or subsidy.…”

Section: Model Uncertainty and Scenario Uncertaintymentioning

confidence: 99%

The Role of Uncertainty and Risk in Climate Change Economics

Chari¹

2018

Preprint

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Integrated Assessment Models (IAMs) of the climate and economy aim to analyze the impact and efficacy of policies that aim to control climate change, such as carbon taxes and subsidies. A major characteristic of IAMs is that their geophysical sector determines the mean surface temperature increase over the preindustrial level, which in turn determines the damage function. Most of the existing IAMs are perfect-foresight forward-looking models, assuming that we know all of the future information. However, there are significant uncertainties in the climate and economic system, including parameter uncertainty, model uncertainty, climate tipping risks, economic risks, and ambiguity. For example, climate sensitivity, a well-known parameter that measures how much the equilibrium temperature will change if the atmospheric carbon concentration doubles, can range from one to ten in the literature. Climate damages are also uncertain: some researchers assume that climate damages are proportional to instantaneous output, while others assume that climate damages have a more persistent impact on economic growth. The spatial distribution of climate damages is also uncertain.Climate tipping risks represent (nearly) irreversible climate events that may lead to significant changes in the climate system, such as the Greenland ice sheet collapse, while the conditions, probability of tipping, duration, and associated damage are also uncertain. Technological progress in carbon capture and storage, adaptation, renewable energy, and energy efficiency are uncertain too. Future international cooperation and implementation of international agreements in controlling climate change may vary over time, possibly due to economic risks, natural disasters, or social conflict. In the face of these uncertainties, policymakers have to provide a decision that considers important factors such as risk aversion, inequality aversion, and sustainability of the economy and ecosystem. Solving this problem may require richer and more realistic models than standard IAMs, and advanced computational methods. The recent literature has shown that these uncertainties can be incorporated into IAMs and may change optimal climate policies significantly.(2017) argue that policymakers need a numerical value for the social cost of carbon (SCC) for policy evaluation and implementation, and producing a credible numerical value requires sophisticated computer models, i.e. IAMs. Brock and Hansen (2018) stress: "Defenses for policies that combat climate damage externalities induced by human activity need not require precise knowledge of the magnitude or timing of the potential adverse impacts. ...Waiting for precise knowledge of the eventual consequences of continued or expanded human induced CO2 emissions could make mitigation or adaptation extremely costly." Goulder (2020) calls for urgent and stronger policy action to address global climate change. This review focuses on recent work about the role of uncertainty in controlling climate change. Here I use a broad perspective...

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Policy sequencing toward decarbonization

Cited by 303 publications

References 49 publications

The economics of renewable energy support

The economics of renewable energy support

Fast track or Slo-Mo? Public support and temporal preferences for phasing out fossil fuel cars in the United States

The Role of Uncertainty and Risk in Climate Change Economics

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