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Finished PhD Theses

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  • Hauke Ward

The Role of Efficient Technology for Achieving Climate Change Mitigation and Development

Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. 

Abstract:

This thesis is motivated by a fundamental conflict between different dimensions of sustainable development, i.e. between climate change mitigation and development through economic progress. This conflict is of special relevance for developing countries. On the one hand fast economic development, connected to emitting greenhouse gases, could help to improve their peoples’ living conditions substantially and increase their resistance to impacts by climate change. On the other hand these countries are projected to be most severely impacted by climate change and apply the least efficient production technologies. Hence, limiting the amount of greenhouse gases that can be released to the atmosphere can negatively influence their future (economic) development opportunities. This thesis investigates how technology could help diminishing this conflict.

The central parts of this thesis investigate technology at different levels, which are the micro and the macro level, and in different roles, which are technological development, technological application and  technological transfer. They reveal different relevant insights for the role of technology in the context of climate change mitigation and development. First, energy intensive manufacturing sectors hold key positions within economic development processes, potentially providing development bottlenecks. Second, from a global perspective, an ongoing shift in production capacities towards less efficient production locations is observable. This trend contributes to increasing energy consumption. Third, assessing the influence of alternative technologies on GHG emissions is challenging in the absence of complete system assessment tools (at the micro level) and sufficiently detailed data. Fourth, for judging the impacts of alternative technologies, the total amount of applied processes, as for instance welding processes, within an economy and the underlying economic network need to be considered. Fifth, already existing efficient technologies could contribute to reducing emissions significantly if they could be made more accessible.

Investigating sectoral structural change within economic development processes empirically to explore feasible pathways for developing countries, robust patterns are identified in which energy intensive manufacturing sectors hold key positions. The results indicate that a successful diversification of agricultural based economies towards more productive (hightech-) industrial and service sectors, as well as self-sustaining economic progress require the accumulation of specific light manufacturing sectors, such as wood products, textile and leather industries. The results suggest that leapfrogging energy intensive industrial states in development processes is very difficult.


Large differences in production technologies across countries have been identified in the literature. This thesis assesses how the recent economic performance of fast growing developing countries and shifts in the global production network have impacted global sectoral energy consumption. Results show that for the majority of global sectors the production
shifts towards less efficient production locations. This delocalization contributes to increasing sectoral energy consumption. In addition, for some sectors these developments are acccompanied by declining energy intensity improvement rates, indicating that delocalization induces relevant second order effects.

This thesis assesses state of the art technology assessment tools, which are inter alia applied to analyze the overall impact of (newly developed) technological alternatives. Specifically, this thesis investigates caveats related to the application of system boundaries within process life cycle assessments (PLCA). The results shows that a definite judgment on the magnitude of so called truncation errors, which potentially bias conclusions of PLCA, is not possible. Truncation error estimations are sensitive to modeling choices. Hence, total estimated impacts associated to products and processes by PLCA are subject to some uncertainty. An alternative assessment tool for assessing (innovative) technologies is proposed.
In contrast to currently applied technology assessment tools, which are designed to judge on single processes, it allows to consider the network characteristics of global supply chains and the total amount of processes present within an economy. This tool is developed to depict possible overall impacts of the application of innovative technological alternatives
more precisely. Such a tool is important to adequately inform decision makers and enable efficient technological progress.


Finally, this thesis investigates global emission mitigation potentials given by differences in industrial production technologies across countries. It assesses to what extend global emissions could be reduced, if more efficient technologies were made more accessible. An optimization framework is applied that considers multiple production inputs, supply chains and their interactions. The results revise mitigation potentials by better access to technology upwards. Access to second-tier technologies could already reduce annual greenhouse gas emission significantly.

This thesis reveals the multidimensionality of technology in the context of climate change mitigation and development. It depicts large differences in specific  dimensions of sectoral production technologies, such as energy intensity, where inefficient technologies are majorly located in developing countries. This thesis shows the necessity to consider the highly complex global economic network and multiple production inputs when judging on efficiencies of technology (which can be challenging). It also reveals that differences in technologies are a mixed blessing, as these offer large mitigation potentials on the one hand, but are inter alia responsible for emission increases by delocalization of production capacities on the other hand. Considering the multi-dimensionality of technology in the global production network, the sectoral development network, as well as different political goals can help to facilitate the design of effective and targeted climate and development policies.

  • Johanna Wehkamp

Institutional and Fiscal Policies for Forest Conservation

Technical University Berlin, Fakultät VI - Planen Bauen Umwelt.     | Scientific Defense

Abstract:

Tropical deforestation contributes to climate change and entails further environmental externalities such as biodiversity loss and soil erosion. Consequently, the preservation of the world's remaining tropical forests is the objective of international and national policies.

Preventing deforestation requires identifying the structural causes of deforestation. Reforms of political institutions and scal policies bear the potential to reduce deforestation more structurally than localized protected areas. Such eorts are particularly relevant in countries with weak political institutions, low levels of economic development, and an economic specialization in the agricultural sector.

The first part of this dissertation contributes to the understanding of the role of political institutions in deforestation processes with chapter 2 and 3. Chapter 2 presents the results of a meta-analysis of the empirical cross-country literature on the effect of governance improvements on deforestation. The analysis finds that the choice of the governance measure is the main source of variation that explains diverging study outcomes. In particular, it can be shown that variables that measure the specific effects of environmental governance increase the likelihood of a study to find a deforestation reducing outcome, whereas the general governance variables democracy and civic rights decrease the likelihood. Furthermore, it can be shown that additional elements of study design, notably the choice of the control variable and the estimation technique, significantly in
uence the study outcome. Chapter 3 uses a forest model in order to analyze whether the model's ability to correctly predict past deforestation trends can be improved by taking differences in the quality of political institutions across countries into account. An index measuring the ability of a country to guarantee the sustainable management of natural resources is constructed. Subsequently, it is tested empirically whether the index can explain the gap between modelled and observed deforestation trends. The results show that building the indicator into the model can reduce this gap and thus improve the model.

The second part of this dissertation analyzes forest conservation policy options for countries with weak political institutions with chapter 4 and 5. Chapter 4 uses content analysis to analyze how African policy makers perceive deforestation drivers. It can be shown that policy makers emphasize the role of institutional and policy drivers of deforestation. Furthermore, it can be shown that these problems correspond to concrete opportunities for interventions, such as increased funding for forest sector administrations, improved alignment of different policies, or land tenure right reforms. Chapter 5 uses a theoretical model to analyze the eects of a policy mix that combines export tariffs on agricultural commodities with public investments. Public investments are dened as investments that increase agricultural productivity. The model shows that export tariffs and public investments can be combined, such that the output level in the agricultural sector remains constant, while deforestation and domestic food prices are reduced.

Common insights and the broader significance of the research conducted in the context of this dissertation are discussed in the last chapter. In particular, it is discussed how international forest conservation programs can support institutional and fiscal reforms for forest conservation.

  • Fabian Joas

Challenges of the Energiewende from a Policy Analysis Perspective: Understanding the goals and improving the policy instruments of Germany's energy transition

Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link  | Scientific Defense

Abstract:

Germany is currently restructuring its energy system, an endeavor its chancellor, Angela Merkel, called the project of the century. This Energiewende has moved into rough waters in recent years. The relatively high and rapidly growing shares of fluctuating renewable energy sources (mainly wind and photovoltaic) have led to numerous technical and socio-economic challenges. The unclear and sometimes contradictory policy goals of the Energiewende as well as suboptimally designed policy instruments in key areas of the Energiewende are the two major areas of concerns of this dissertation.

The aim of this dissertation is to contribute to the solution of selected challenges of the Energiewende in the context of goals and policy instruments.

In this regard, the following four research questions are addressed:

  1. What are the goals of the Energiewende and how do they interact with the design of policy instruments?
  2. What are the impacts of the German nuclear phase-out on the electricity market and the security of supply?
  3. How do different designs of support mechanisms for renewable energy affect the riskdistribution between society, investors in renewable energy and investors in conventional power plants?
  4. What is the impact of ex-post transaction costs on the cost-effectiveness of selected climate policy instruments?

The main results and the subsequent policy conclusions of this thesis can be summarized as follows:

The research on the goals of the Energiewende was based on a survey among elite policy actors, which showed that climate protection is the most important goal of the Energiewende. However, climate protection is neither the only goal, nor an indispensable one. Additional goals such as the nuclear phase-out, import independence from fossil fuels and job creation also play an important role. A large majority agrees that the Energiewende would make sense even if climate change did not exist.

The following policy conclusions can be derived: first, there should be a clear, transparent and public debate on the goals of the Energiewende, i.e. a debate on what the Energiewende is actually bound to achieve. Second, economic policy analysis of the Energiewende should acknowledge the multiplicity of political goals and take them into account in their models.

Regarding the phase-out of the German nuclear power plants it is found that the precise date for the complete shut-down of Germany’s nuclear power plants has a relatively small effect on the wholesale electricity price and security of supply.

The following policy conclusion can be derived: the German nuclear phase-out will neither have a substantial effect on the wholesale electricity prices, nor on the security of supply.

Regarding the design of RES-support schemes it is found that the distribution of long-term electricity price risk between society and investors strongly depends on various set ups. A design that exposes RES-investors to higher risks may result in more efficient investments. However, more risks for RES-investors means that small actors (e.g. cooperatives) have less opportunities to invest in the Energiewende, because they are less capable to hedge long-term price risks efficiently.

The following policy conclusion can be derived: the question whether investors in RES, investors in conventional power plants or society should carry the long term electricity price risk is a political (i.e. distributional) issue, which crucially depends on political goals such as actor diversity.

On the question of transaction costs of climate policy instruments: the ex-post transaction costs are relatively low for instruments such as emissions trading systems and affect the costeffectiveness only slightly.

The following policy conclusion can be derived: Given the minor role of ex post transaction costs, they can be neglected as a source of significant distortions. However, this statement only refers to regions with strong institutions (such as the EU or the US). The focus in policy instrument design should be on properties that fundamentally influence cost effectiveness as well as equity and political economy considerations.

  • Miodrag Stevanovic

Direct and Indirect Climate Change Impacts in the Land-Use Sector

Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link       

Abstract:

Rapid exploitation of fossil resources has resulted in a massive release of greenhouse gases (GHG) into the atmosphere. This anthropogenic perturbation of the complex climate system could result in a change of global climate patterns unprecedented in the past millennium. As such, further climatic change poses a serious threat to a broad range of natural systems and economic sectors. The land-use sector, with agriculture in particular, is greatly challenged by the new weather conditions. Hence, adequate action is required in order to adapt and also to prevent potential negative impacts on the sector’s services.

This thesis aims to assess the direct and indirect impact of climate change in the land-use sector, and to evaluate the associated economic distributional effects. Direct economic impacts from climate change in the agricultural sector are manifested through alterations of crop yields and consequent shifts in agricultural markets including changes in consumer and producer rents. Beyond agriculture, changes in carbon stocks in natural vegetation and soils are also directly affected by climate change. At the same time, they offer a great GHG reduction potential in a land-based climate change mitigation policy. Mitigation measures are needed in all sectors, but they could also lead to negative economic effects and manifest as indirect impacts of climate change, since a comprehensive mitigation policy could rebound in agricultural markets by adding more pressure to production activities. Aside from the aim of assessing impacts, this thesis has a second goal, that of identifying those measures that could reduce the magnitude of such economic consequences.

The assessment of direct and indirect climate change economic impacts is accomplished in a broad scenario analysis employed in the Model of Agricultural Production and its Impacts on the Environment (MAgPIE). MAgPIE is a partial equilibrium model of the agricultural sector that optimizes land-use patterns such that agricultural demand is fulfilled at the minimal production cost. Biophysical inputs for MAgPIE with climate change impacts (crop yields, water availability and carbon content) come at a high spatial resolution, and as such influence production systems subject to regionally defined economic constraints. For this thesis, the existing framework is extended by an analysis of market shocks and shifts in economic surpluses.

The main findings of the thesis suggest that a strong climate change effect on crop yields could cause significant global agricultural welfare loss by the end of the century. Geographic regions will be differently affected by climate change, with more losses in tropical areas. Additionally, the weight of economic impacts will be higher for food consumers than for food producers. However, a land-use based mitigation policy could greatly contribute to the reduction of the direct impacts. Still, achieving the land-based mitigation potential could considerably affect land-use and the dynamics of terrestrial carbon stocks. Under a GHG emission tax policy, land-use change carbon emissions could be almost entirely avoided. However, residual emissions from agricultural production systems (methane and nitrous-oxide gases) would still remain even if emission taxing mechanisms were applied, while the negative mitigation policy effects would reflect strongly in higher production costs and consequently increasing food prices.

Particular measures can be implemented to alleviate the negative impacts from climate change and mitigation action. More openness in international agricultural trade could considerably reduce global and regional losses. Food demand management, changing diet patterns and reducing waste, all point to ways not only of reducing GHG emissions, but also of relieving the pressure of agricultural markets. GHG reduction measures can also be diversified in order to prevent impacts of a mitigation policy; for example a lower than optimal GHG tax for the non-CO2 emissions in the agricultural sector would trigger emissions reduction to the full potential without threatening food price stability. In the context of food security, these measures should be an integral part of any policy portfolio aiming at both the mitigation of climate change and the avoidance of direct and indirect climate change impacts on the stable utilization of food.

  • Anne Zimmer

Impediments, incentives and interrelations with other objectives – On the intricacy of climate policy implementation

Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link       

Abstract:

The Paris Agreement on climate change mitigation – celebrated as a historic breakthrough – relies on the voluntary implementation of adequate climate policy measures on the national and sub‐national levels. The compliance with mitigation pledges will crucially depend on the interplay of different incentives and political realities in the emitting countries. It is therefore of fundamental importance to gain a better understanding of what determines national policy making, how incentives can be fostered and how obstacles for policy implementation can be identified and overcome. This thesis is dedicated to the challenges of national climate policy implementation, the politics of climate change and the role of non-climate incentives.

When putting climate policy into practice policy makers are confronted with a variety of real‐world imperfections that complicate the implementation of policies. Economic models providing advice for climate policy makers, in contrast, tend to assume idealized conditions and often center their analysis on the climate externality only. Developing a typology, three different categories of real‐world impediments are identified and discussed. First, barriers that impede the formulation and implementation of optimal climate policies on the level of governments and institutions. Second, obstacles impacting the behavior of households and firms when responding to implemented policies. And third, market imperfections and distortions affecting both policy implementation and responses of economic agents. The applicability of the typology is illustrated in a case study on China. Moreover, common assumptions of (climate‐) energy-economy models are contrasted with the identified impediments and implications with respect to the interpretation of model results are discussed.

To gain more insights into the challenges of climate policy formulation and implementation, a case study on Vietnam analyzes the drivers of climate‐related policies in a Non‐Annex‐I country. In the absence of a binding international agreement, such voluntary mitigation efforts seem to contradict conventional collective action theory that predicts free‐riding. Based on qualitative interviews with Vietnamese policy makers and development agencies a policy analysis is conducted investigating the factors that motivated Vietnam to strive for a low‐carbon economy. It is found that, while Vietnam's high vulnerability to climate impacts has contributed to put climate change on the political agenda, the recent climate policies were mainly driven by non‐climate objectives such as restructuring of the economy, addressing energy security concerns and gaining access to finance and technology.

The effectiveness of climate policies with respect to yielding emission reductions will depend on the response of consumers to these policies. Focusing on road transport in Europe, an econometric analysis of the fuel consumption response to pricing policies is conducted. The dynamic panel data analysis provides robust estimates for petrol and diesel price elasticities, accounting for underlying dynamics, dieselization, and fuel price endogeneity. Based on these estimates, the potential of fuel tax reforms to address the two objectives of curbing harmful air pollutants from road transport as well as contributing to climate change mitigation is assessed. It is shown that both (i) a repeal of the preferential tax treatment for diesel and (ii) an introduction of a carbon content‐based tax, could contribute substantially to achieving the EU climate policy goals for 2020 while at the same time avoiding considerable amounts of health damaging air pollutant exhaust.

  • Jan Siegmeier

Public Economics and Climate Change Mitigation: The Role of Rent Taxation and Infrastructure Policy

Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link     

Abstract:

Climate change mitigation under the recent Paris Agreement is based on voluntary, 'nationally determined contributions'. Thus, it is crucial to identify and understand all relevant domestic incentives for emission reductions.
This thesis shows that national-level climate policy has important interactions with fiscal instruments, and that careful, integrated policy design is needed to reap their benefits. I first provide an overview of such effects and find that apart from the potential to cut taxes with the help of carbon pricing revenues, several other effects have been underappreciated. I then focus on two classes of interactions for a detailed analysis:
First, climate policy may contribute to the public budget in at least two ways, both involving rent taxation: Carbon pricing acts as a tax on fossil resource rents, and climate policy may increase rents from fixed factors such as land, which can also be taxed. I show that rent taxation in the context of climate policy may entirely finance public investment, may have beneficial macroeconomic impacts on capital accumulation, and has implications for the choice and design of carbon pricing instruments. Specifically, I prove that such taxes on rents (1) can be sufficient to nance the optimal level of productive public capital and (2) increase aggregate private investment and thus efficiency if capital was otherwise underaccumulated. The efficiency gains from rent taxation are inseparable from its redistribution effect, and their size can be increased up to the social optimum by redistributing tax revenues to fundless younger generations. Furthermore, I show that (3) auctioned carbon emission permits are preferable to a carbon tax in this context because they allow for a separate optimization of both climate protection and rent collection.
Second, public spending plays a crucial role for decarbonization. Using the example of different types of transport infrastructure, I demonstrate that public spending should often be used to actively shape private behavior and reduce greenhouse gas emissions. It should not just 'follow' private demand affected by carbon pricing. Specifically, I assume that dierent public goods complement clean and dirty private goods, respectively. It can then be shown that changes in the composition of public spending should be used to induce demand shifts when the carbon price is too low. Nevertheless, when either the carbon price or the composition of public spending are restricted, the other instrument should also be weakened, unless environmental quality is very important for social welfare.
These results imply that climate and fiscal policy at the national level should often be evaluated and designed together, in order to realize beneficial interactions between both fields and to help prevent potentially catastrophic climate change at a global level.

  • Blanca Fernandez Milan

Making urban policies sustainable: long-term benefits of urban planning and fiscal policies

Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link  |  Scientific Defense

Abstract:

Humanity is urbanizing rapidly. By now every second world citizen lives in cities. Scenarios suggest that by the middle of this century, almost 70 per cent of the global population will be urban. At the same time, cities constitute both sources but also potential solutions to climate change and other sustainability challenges. While there is an increasingly amount of research dealing with specific aspects of urban sustainability, new ap proaches that merge different knowledges have great potential in finding optimal, or at least appropriate, pathways that could minimize the negative impacts as well as maximize the positive outcomes of the urbanization process. The fields of urban and public economics provide a useful framework to analyse urbanization dynamics in terms of its drivers and impacts. Climate change and sustainability literature provide valuable insights to understand urbanization effects other than local ones. The combination of these literatures has great potential to assist local policy-makers in the development of accurate planning interventions for achieving long-term urban sustainability. The research presented in this thesis identifies public interventions that foster less carbon-intense urban forms, enhance fiscal stability and promote social equity simultaneously. Particularly, two mechanisms are analysed to achieve these outcomes. The first one considers urban planning -including land use and fiscal policies- as a steering mechanism that accounts for externalities arising from urban development. The second one looks at institutional and governance structures that maximize the beneficial effects of public interventions. A combination of theoretical and empirical research is conducted to determine instrument designs that perform better on the above objectives. Having this information at hand, specific policy suggestions on how to maximize positive intervention outcomes are proposed and further discussed. Understanding the interactions between different planning tools, policy agendas and urban contexts is a sine qua non condition to long-term sustainability not only in cities, but also worldwide.

  • David Klenert

Common goods & distribution: Public finance and environmental policy in an unequal world

Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link  |  Scientific Defense    

Abstract:

Tax policy in the 21st century faces three key challenges: mitigating inequality, the possibility of high levels of global warming through the unregulated release of greenhouse gases into the atmosphere and a lack of investment in infrastructure. Global warming and underfinanced infrastructure are a consequence of mismanaged common goods. This thesis argues that policies regulating the use and the supply of these common goods can also have beneficial effects on the distribution of wealth and income. For that purpose I analyze the distributional effects of different policy designs which regulate the use and supply of common goods. The thesis consists of two parts each corresponding to one common good: In the first part, I study policies that manage the common good of the atmosphere in its function as a carbon sink and their distributional impacts. Such climate policies can affect poor households disproportionally since they spend a higher share of their income on carbon-intensive subsistence goods. The overarching research question in Part I is: how can climate policies be designed such that they are distributionally neutral or progressive? In this context I also discuss the following, more general question: to what extent can interactions between public and climate policies enhance welfare? Part II of this thesis focuses on infrastructure in a broad sense including transport and energy infrastructure as well as investment in the education sector. Infrastructure is of major importance for an economy's growth trajectory, but also underfinanced in large parts of the world. I therefore analyze the equity and efficiency impacts of different financing mechanisms for public investment in infrastructure. The main research question is: how can public investment in infrastructure be financed to be distribution-neutral or even inequality-reducing? I further use a model in which wealth is disaggregated into physical capital and land, and in which households differ in the strength of their savings motive, to answer the following question: which combination of wealth-based taxes can reduce inequality without harming efficiency? This thesis analyzes different design options for policies that regulate common goods in terms of their equity and efficiency implications. The main finding of this thesis is that, when equity considerations are included in the assessment of policies which regulate common goods, these policies can be designed to be distribution-neutral or even progressive. It thus provides additional reasons for implementing stricter common good policies, such as a higher carbon price and increased public investment in infrastructure. It further argues that accounting for interactions between public and climate policies is needed for a sound appraisal of second-best policies. Finally, this thesis demonstrates that wealth inequality can be reduced without harming economic output.

  • Paul Nahmmacher

Strategies for a future European power system with high shares of renewable energy: A model-based analysis focusing on uncertainty

Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link

Abstract:

The European electricity system is currently facing a major transformation, with renewable energy (RE) technologies being expected to constitute an important part of the future generation mix. In light of the recent debate on the European Union’s (EU) energy and climate policy until 2030, this thesis contributes both to the academic and public discourse about RE targets and infrastructure needs, and to the methodological advancement of power system models. In particular, I focus on two major aspects: (i) the efficient representation of the RE’s temporal variability in large-scale power system models, and (ii) the explicit consideration of uncertainty in analyzing investment strategies for the future European power system.
In the first part of this thesis, I present the long-term investment model for the European electricity system LIMES-EU. The model constitutes the methodological basis of the thesis; it facilitates the analysis of technically feasible and economically viable investment pathways for individual countries and for Europe on aggregate. LIMES-EU simultaneously optimizes investment and dispatch decisions for generation, storage and transmission technologies in an intertemporal way from 2010 to 2050. Despite the model’s long-term focus until 2050, it effectively accounts for the short-term variability of electricity demand and infeed from wind and solar power plants. The fluctuations are reflected by modeling the operation of technologies for a set of representative days. These days are selected with a novel and computational efficient approach that is suitable for input data with a large number of different fluctuating time series (i.e. multiple different RE technologies and/or regions). With the approach that has been developed for this thesis it is possible to reflect the characteristic fluctuations of the input data already with a small number of model days. To enable its applicability for other models, it is based on an established clustering algorithm and transparently documented.
The second part of the thesis provides an in-depth analysis of cost-efficient future investment strategies for the European power system in order to reach the EU’s long-term decarbonization targets until 2050. The analysis includes an explicit consideration of uncertainty and comprises both aggregate European and national results. Thereby, the work adds important aspects to the European Commission’s official impact assessment on the 2030 policy framework as this impact assessment completely disregards the existence of uncertainties and provides only few results on national level. A major focus of the analysis is on the cost-efficient RE expansion until 2030. Their optimal share in the 2030 generation mix varies considerably across the studied scenarios that account for various uncertainties about future techno-economic developments, for example with regard to fuel prices and investment costs. The national results show a strong difference in optimal RE deployment across countries, which is caused by the unequal distribution of RE sources. A cost-optimal RE expansion would result in large international transmission needs and would make some countries importing a large share of their electricity demand from foreign power plants. In addition to determining cost-efficient investment pathways for different future scenarios, the thesis provides an analysis of investment strategies that help to increase the robustness of the power system, i.e. result in a system that performs reasonably well for a large variety of possible futures. The performance of different systems under short-term shocks is tested in a total of more than 40,000 model runs. The analysis shows, that despite the benefits of a further integration of the European electricity system, strategies promoting the capability of countries to produce at least 95% of their electricity demand domestically significantly help to increase the robustness of the European power system.

Rents, Taxes, and Distribution: Towards a New Public Economics of Climate Change

Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link  | Scientific Defense

Abstract:

Economists commonly perceive climate change as a negative environmental externality, and in the political arena, environmental ministries are in charge of finding solutions to the problem of climate change. This thesis departs from the common practice of framing climate change as a problem of environmental pollution. Instead, it takes the perspective of a finance minister, based on the premise that interactions of climate policy with the broader fiscal system cannot be omitted from the economics of climate change. To analyze the manifold interaction effects of climate policy with the broader fiscal system, novel general equilibrium models of intermediate complexity are developed and solved numerically.
This thesis shows that even in the absence of any environmental motive, governments benefit from implementing carbon taxes unilaterally. The reason is that international capital mobility puts downward pressure on corporate taxes, and public capital stocks are thus underfinanced. Unilaterally taxing carbon can solve this problem by enabling governments to appropriate rents associated with the ownership of fossil resources. If the rents are then invested in productive public capital, national welfare increases. As an additional unintended effect, resource owners postpone extraction, and the level of cumulative emissions is reduced – no green paradox occurs. Instead, fiscally motivated carbon taxation constitutes a viable green policy, and could be, moreover, an alternative entry point for the international climate negotiations under the UNFCCC. However, if carbon taxes are implemented unilaterally, jobs in energy-intensive sectors may relocate abroad. This thesis shows that governments can mitigate adverse distributional effects on these sectors by implementing sectoral labor tax cuts instead of carbon tax exemptions. Addressing distributional questions more broadly, this thesis further shows that governments have substantial freedom to reduce wealth inequality without sacrificing output by implementing combinations of taxes on land rents and bequests.
Finally, the thesis provides a systematical discussion of hitherto identified interactions between climate change mitigation and public finance, and thus puts the other main results into perspective. Thereby, this thesis takes first steps towards a new public economics of climate change.

At the Frontiers of Integrated Assessment of Climate Change: Distribution, Technology policy, and Land

Technical University Berlin, Fakultät VI - Planen Bauen Umwelt.

Abstract:

Integrated Assessment Modeling is the prevailing paradigm for the assessment of climate change impacts, mitigation policies, and transformation pathways. Model results were a decisive impulse for the international community to commit itself to stabilize global warming at well below 2°C temperature rise. However, climate policies in place or pledged as of 2015 fall short of what science finds as cost-effective transformation pathways for the 2°C target.
The recurring themes of this thesis are the distributional impacts and the distributional conflicts that are at the heart of climate change, but often hidden in Integrated Assessment Models (IAM). Along these lines, I extend and complement current IAMs, covering the topics of international technology policy, distributional implications of mitigation for developing countries, and the role of land in climate impacts.
In a first contribution, I develop a solution methodology for a global IAM with high technological detail in the energy system that allows for finer regional resolution and the inclusion of non-cooperative regional interactions. Based on this methodology, I derive optimal climate and technology policy for the 2°C target in another contribution, including spillover effects from global learning-by-doing in low-carbon technologies: While carbon pricing is by far the most important policy instrument, global learning effects in low-carbon technologies may provide an economic rationale for significant low-carbon subsidies for solar technologies and advanced vehicles under an international technology protocol.
In another contribution, I focus on the non-environmental incentives for Sub-Saharan Africa as an aggregate region to join a global climate stabilization agreement: I find that while there are significant costs from a reduction in economic growth, those may in some scenarios even be overcompensated by revenue from selling emissions permits and biomass on international markets.
I argue that climate damages on agricultural land are not fully reflected in current IAMs. Land-biased damages may have large economic impacts of due to distortionary land rents, as I demonstrate in a small IAM that considers the intergenerational distribution of wealth explicitly. In addition, I find that land-biased climate damages decrease the incentive for generations to enact climate policy – potentially aggravating the intergenerational distributional conflict that climate change is.
A final contribution on fiscal policy for wealth inequality reduction in rich countries argues that distinguishing life-cycle and bequest savings motives and different types of wealth is crucial: Taxes on capital returns, land rent, and bequests have very different redistributive power and efficiency costs, and in sum, leave room for governments to reduce wealth inequality without sacrificing economic output.
In conclusion, this thesis tries to bring the issue of distribution into the focus of Integrated Assessment Modeling, and asserts that understanding distributional conflicts will be central to further strengthening climate policy.

  • Godefroy Grosjean

Reforming the European Union Emissions Trading System (EU ETS): An Institutional Perspective

Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link     

Abstract:

Given the need to reduce greenhouse gas emissions to decrease the risk of dangerous climate change, economists have often argued in favour of carbon pricing. Carbon pricing can essentially take two forms: an emissions trading system or a carbon tax. The European Union chose the former option and implemented the EU ETS in 2005, the first large scale carbon market. As a first mover in experimenting with such regulatory instruments, the EU ETS case offers qualitative and quantitative insights of foremost importance for emerging carbon markets worldwide.
This thesis is divided into two parts. Part I provides ex-post learnings on the EU ETS price formation and policy design. Part II offers an ex-ante perspective by exploring the expansion of the European carbon market. Both parts pay particular attention to a central feature of the EU ETS: its political nature as a governmentcreated market. This institutional perspective on the EU ETS, which seeks to take into consideration the impact of politics and institutions on market functioning, is at the heart of this thesis. It brings a new lens to examine emissions trading as well as draws on the experience of other policy fields, notably monetary policy.
Following the drop of permit prices in the EU ETS, intense discussions emerged on the need to and modality for reforming the market, which is the focus of Part I of this thesis. Yet, evaluating the need to reform first implies understanding the goals of the EU ETS and whether market outcomes are likely to deliver on their promises. Chapter 2 lays the groundwork for the remaining discussions of the thesis by clarifying the different implicit and explicit objectives expected from the EU ETS. Although cost-effectiveness is often proclaimed to be the main goal of the EU ETS, stakeholder opinions diverge regarding the appropriate time frame for this objective, some focusing on short-term while other having a long-term perspective. In addition, certain stakeholders have multiple objectives, for instance, addressing the social cost of carbon.
Based on economic theory, Chapter 2 then provides a comprehensive review of the drivers of the price collapse in the EU ETS, classifying them into three categories: (i) exogenous demand shock, (ii) lack of policy credibility and (iii) market imperfections. From this classification, a new framework to map the reform option space is developed. It carefully examines which policy options represent potential solutions depending both on what drives the price as well as on the objective intended for the EU ETS. Drawing on the analogy to monetary policy, this mapping of the reform option space introduces the concept of delegation in the context of emissions trading. Delegation reflects the extent to which the governance of the market is relinquished to a rule-based adjustment mechanism or an independent body with varying levels of discretionary power.
Complementing the qualitative analysis of Chapter 2, Chapter 3 offers an empirical analysis of price formation. It shows that, contrary to conventional wisdom, demand-related fundamentals such as fuel prices or the economic downturn only explain a fraction of the carbon price drop. Importantly, chapter 3 provides preliminary evidence that regulatory uncertainty and the lack of policy credibility played a much larger role than previously assumed in driving down the price. Chapter 4 is a direct follow-up, closing the gap on the influence of regulatory events in price formation. Using an empirical event study methodology, the chapter carefully investigates how the political process of the cap adjustment has shaped market outcomes in the European carbon market. The findings show that the tedious process of achieving reform unveiled the lack of political consensus on the EU ETS goals; thereby increasing political uncertainty and contributing to the price decline. These empirical findings have critical implications for the reform of the EU ETS – instruments that do not attempt to anchor long-term regulatory credibility are unlikely to be successful in bringing the price closer to its long-term, socially-optimal path. In this context, though delegation is unlikely to be a silver bullet, it could strengthen the credibility of political commitment by locating the governance of the market outside the political sphere. It could likewise reinforce the flexibility of responding to “unknown unknowns”.
Supplementing the previous chapters, Chapter 5 provides a comprehensive policy analysis of the specific reform option for the EU ETS proposed by the European Commission in 2014 following the price collapse: the Market Stability Reserve (MSR). It is argued that the MSR is unlikely to enhance long-term commitment credibility, raising doubt on its ability to trigger low carbon investments. This policy evaluation is embodied in a broader reform context taking both an ex-post and exante perspectives. It thereby bridges Part I and II.
The second half of this thesis, Part II, offers a forward-looking perspective on the expansion of carbon markets. Chapter 6 investigates the sectoral expansion of the EU ETS towards agriculture, which has often been perceived as challenging. Implementation barriers are regularly cited as impeding carbon pricing in the sector, in particular transaction costs stemming from sector specificities, risks of leakage and distributional impacts on farmers, often perceived as major veto-players. However, the importance of the barriers hinges critically on the precise policy design. Chapter 6 therefore offers the first synthesis of literature on the pricing of agricultural emissions with the rich body of literature on the design of carbon markets. The chapter provides a new perspective on carbon pricing in European agriculture by disentangling the key dimensions of policy design in the light of implementation barriers. In particular, it investigates the role of policy coverage, instrument choice and transfers to farmers in overcoming policy obstacles. First, it is shown that a policy coverage targeting large farms and few emission sources could include a significant share of agricultural emissions, while reducing transaction costs. Second, it is argued that the distributional impacts and leakage risks are contingent upon the policy being voluntary or mandatory. From this perspective, a voluntary instrument can be attractive, but comes at the cost of possible subsidy lock-ins and carbon price Contents v distortion. Third, the role of the Common Agricultural Policy and its potential interaction with carbon pricing is highlighted as being pivotal in determining political feasibility.
Chapter 7 focuses on the other critical side of carbon pricing, going beyond jurisdictional borders. In principle, linking could lead to efficiency gains and reduce the cost of compliance for entities covered under a trading system. Taking the example of REDD+ offsets (Reducing Emissions from Deforestation and Forest Degradation), Chapter 7 investigates the trade-offs between the opportunities of allowing an import of cheaper offsets in carbon markets and the risks it entails in terms of investments. It is shown that a well-designed policy could provide a risk-hedging opportunity for compliance entities while having limited impact on low carbon investment.
In sum, this thesis concentrates on investigating the conditions under which the EU ETS requires policy intervention. It offers an institutional view on the EU ETS reform. Drawing on empirical results, it demonstrates the role of political commitment in price formation. It then analyses the pros and cons of delegation in carbon markets to overcome time-inconsistency and lack of policy credibility (Part I). Part II delivers insights to broaden carbon pricing in the European Union and beyond in the future. Focusing on pricing agricultural emissions, it provides a framework to disentangle the different dimensions of policy design and conceptualize policies that reduce implementation barriers. Finally, Part II examines the trade-offs associated with various policy options to link carbon markets to a forestry offset scheme.

  • Linus Mattauch

Rent and Redistribution. The welfare implications of financing low-carbon public investment

Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link  |  Scientific Defense     

Abstract:

Climate policy is more than carbon pricing: successful decarbonization of a national economy creates new rents and affects existing ones, requires public investment, has distributional implications and changes preferences.

This thesis argues that economic theory would be better equipped for analyzing the macroeconomic trade-offs of climate change mitigation if it put greater emphasis on three principles: first, a distinction between rents, derived from fixed factors of production, and capital, that can be accumulated, is needed to understand the impact of climate policy on the wealth distribution. Second, for both rent taxation and financing low-carbon public investment, there is no standard equity-efficiency trade-off. Instead, both rent appropriation and public investment can enhance efficiency and reduce inequality at the same time, when designed appropriately. These first two points are substantiated by incorporating fixed factors of production and household heterogeneity in preferences and income sources into otherwise standard models of economic growth, both of the infinitely-lived agent and the overlapping-generations type. Third, to evaluate consumption decisions, a distinction between welfare as subjective well-being and welfare as the satisfaction of preferences is vital. This follows from applying the behavioral account of decision-making to consumer choices in carbon-intensive sectors such as transportation.

Specifically, the following results are shown: (1) It is proved that to reach socially optimal outcomes, if there are any rents from (quasi-)fixed factors such as land or the atmospheric sink, these should be taxed and the revenue should be invested into productive public capital or redistributed to poor, newborn generations. (2) Simulations indicate that the timing of public investment relative to the timing of an increase in the carbon price or in technology subsidies matters for avoiding a lock-in. (3) If there are two cohorts of wealth owners in the economy, those who save dynastically and those who save in a life-cycle manner, capital taxation has a special role for changing the wealth distribution provided the revenue is used for public investment. It is proved that capital taxation can be Pareto-improving and inequality-reducing. In contrast, consumption and labor taxation are more efficient, but do not reduce inequality. (4) Given that the transport infrastructure and other contextual factors largely influence actual mobility behavior, evaluating the welfare gain of low-carbon public investment needs to differentiate between subjective well-being and preference satisfaction as distinct welfare conceptions.

These results can be seen as steps towards evaluating the extent of the validity of the two major societal narratives about capitalism, which is considered to be either liberation or exploitation, for the transition to a low-carbon economy.

The effect of near-term climate policies on the achievability of ambitious long-term climate targets

Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link  |  Scientific Defense

Abstract:

To keep the risks of climate change in check, the international community has agreed on the long-term target of limiting the increase of global mean temperature to no more than 2 C above pre-industrial levels. This target is, however, so far not underpinned by commensurate near-term policy measures. Given the commons nature of the climate problem, the solution will eventually require concerted actions on the international level. To this end, negotiations have been conducted under the United Nations Framework Convention on Climate Change, but so far only made little progress towards tangible emission reductions consistent with the 2 C limit. Instead, policy initiatives enacted so far have been regionally fragmented, incomprehensive and generally not ambitious enough to reach the stated 2 C targets in a cost-effective manner.

Starting from this observation, this dissertation aims to answer the following three main questions: 1. What are the implications of a further delay of comprehensive climate policies? 2. What are the crucial determinants of adverse lock-ins and path-dependencies in the energy system induced by delayed action? 3. Which policy portfolio can keep the door to achieving ambitious targets at moderate costs open?

The answer to the first question is an important prerequisite to informing policy makers about the appropriate policy stringency today, weighing current and future risks and opportunities against each other. To provide a comprehensive evaluation, our analysis not only considers the traditionally used aggregated cost metric, but complements it with three other metrics that better represent the distributional and dynamic dimension of the problem. The answer to the second question helps to identify the most adverse impacts of delayed climate policies on the energy system's climate change mitigation potentials. It thus also informs the choice about priorities for policies to bridge into a low-carbon future, as addressed in the third question. The idea here is to go beyond a one-dimensional option space of more or less near-term policy ambition, but to explore to which extent different policy instruments have a beneficial effect beyond their near-term effect on emissions, thus helping to keep long-term targets within reach. As recent experience has shown, governments have much less difficulty to implement technology policies than to implement carbon pricing. Therefore we analyze different policies regulating high-carbon and supporting low carbon technologies as well as a reform of subsidies and taxes for fossil fuels. Beyond the evaluation of the individual effects of these policies, an important contribution is to quantify the interactions among these instruments, as well as the interactions of these with two carbon pricing mechanisms, a carbon tax and a cap-and-trade scheme.

The research presented here is mainly based on the analysis of quantitative scenarios of large scale detailed numerical models of the global energy-economy system. This dissertation makes use of both the detailed analysis of larger number of scenarios produced from one model as well as the comparative analysis of harmonized scenario sets across different models. Five different research articles published in peer-reviewed scientific journals form the core five chapters of this thesis, preceded by an introduction chapter laying out the wider background and methods. A discussion with the overall conclusions from the aggregate research plus an outlook to future research concludes.

Land-based climate change mitigation: modeling bioenergy production, afforestation and avoidance of deforestation

Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link  Scientific Defense       

Abstract:

Global food demand is projected to increase in the coming decades due to a growing and more affluent world population. In addition to agriculture, ambitious climate targets could further increase anthropogenic land-use in the course of the 21st century. Currently, bioenergy use in combination with Carbon Capture and Storage (CCS), afforestation and avoidance of deforestation are the most discussed land-based mitigation options. To evaluate these land-based options, it is crucial to investigate their mitigation potential and land requirement under consideration of interactions with the traditional agricultural sector. For instance, land-based mitigation might compete for land with food crop production, which could trigger investments in agricultural R&D targeted at yield increases.

Thus, the overarching research question of this thesis is: What is the global potential of land-based carbon mitigation in the 21st century, what are the associated land requirements and what are the implications for the agricultural sector? The overarching research question is subdivided into five specific research questions: (1) What is the carbon mitigation potential of global forest and land-use protection schemes? (2) How much bioenergy can be supplied at what price, with and w/o GHG emissions pricing in the land system? (3) How does irrigation in bioenergy production affect land and water resources, and what are the impacts on bioenergy prices? (4) How much land do afforestation and bioenergy with CCS require for how much carbon dioxide removal (CDR) from the atmosphere? (5) What are the direct and indirect effects of moderate climate change on terrestrial carbon stocks and what are the implications for land-based carbon mitigation?

To answer these research questions, this thesis employs methods of model-based computer simulation and scenario analysis. Central to this thesis is the Model of Agricultural Production and its Impacts on the Environment (MAgPIE), a spatially explicit economic land-use model with global coverage for simulations up to the year 2100. MAgPIE optimizes land-use patterns with the objective of minimizing global agricultural production costs and calculates the associated GHG emissions. Furthermore, MAgPIE derives economic indicators, e.g. bioenergy prices. The model simulations are subject to socio-economic assumptions, such as future food demand, and climate policy assumptions, such as bioenergy demand and GHG prices. Under carbon pricing, the model features endogenous abatement of carbon dioxide (CO2) emissions through reduced deforestation. For this thesis, the existing model has been extended by large-scale afforestation as option for CDR.

(1) The MAgPIE results indicate that a price on CO2 emissions from deforestation substantially reduces land-use change emissions. However, due to partial displacement of agricultural expansion to non-forest land types, land-use change emissions are still considerable. More comprehensive land-use protection schemes can further reduce land-use change emissions, but require larger productivity increases in the agricultural sector. (2) Without GHG emissions pricing, supply prices for modern bioenergy increase almost linearly with bioenergy demand. This relationship becomes non-linear under GHG emissions pricing in the land system since the price on CO2 emissions reduces the availability of forests for agricultural expansion. (3) Prohibition of irrigated bioenergy production can avoid additional pressure on global blue water resources, but considerably increases land requirements for bioenergy production, which is reflected in higher bioenergy supply prices. (4) The cumulative CDR per unit area from bioenergy use with CCS is 4-5 times higher compared to large-scale afforestation, since one unit of land can be used several times for bioenergy production but just once for afforestation. However, bioenergy with CCS is only cost-effective at relatively high carbon prices. (5) Moderate climate change (RCP2.6) has beneficial effects on global agricultural yields, which reduces agricultural land requirements and in consequence deforestation. Thus, direct climate impacts on agricultural yields indirectly affect the terrestrial carbon balance. However, such beneficial climate impacts on terrestrial carbon stocks only marginally increase the potential of land-based carbon mitigation since the potential is already large without further climate change.

  • Markus Bonsch

Land and water for agriculture - future prospects and trade-offs

Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link     

Abstract:

Land and water are among the most vital resources for human wellbeing and terrestrial life in general. Therefore, sustainable management strategies for land and water need to be developed in order to sustain a growing world population and important natural ecosystems. Agricultural activity for food, material, and energy production constitutes the most profound anthropogenic influence on global land and water resources. Thus, agricultural land and water-use is a key determinant of the sustainability of resource management strategies.

The main research objective of this thesis is to explore, how agriculture might affect global land and water resources in the future. In individual studies, projections of agricultural land and water-use are developed, considering important drivers such as population growth, economic development, bioenergy demand, terrestrial climate change mitigation strategies, and sustainable water-use strategies. In a synthesis, the results of the individual studies are combined in order to answer the following research questions: (1) How do different agricultural strategies compare in terms of environmental implications for land and water resources and required transformation of the system? (2) How large is the operating space for land and water management strategies in agriculture? Methodologically, this thesis relies on the Model of Agricultural Production and its Impacts on the Environment (MAgPIE). MAgPIE can be used to derive scenarios of future agricultural activity by considering socioeconomic drivers and biophysical constraints in a cost optimization framework. For this thesis, the model was extended by a detailed water sector that features an improved representation of water availability, irrigation infrastructure, non-agricultural water demand, and environmental water requirements.

Results indicate that protecting freshwater ecosystems from degradation due to agricultural activity can be achieved without fundamental trade-offs in terms of cropland expansion into terrestrial ecosystems. Terrestrial climate change mitigation strategies will likely require a fundamental transformation of the agricultural system. Environmental consequences differ between mitigation strategies. While afforestation and strategies to avoid land-use change emissions can help to protect or even create important terrestrial ecosystems, large-scale bioenergy production can put a severe threat to terrestrial and freshwater ecosystems. Pronounced trade-offs between land and water for bioenergy production suggest that it is crucial to consider both, land and water-use, when aiming at sustainable bioenergy production.

Based on the here presented results, there is hope that the operating space for agriculture is large enough to support a variety of management strategies. On the one hand, resource constraints still leave ample space for increasing land and water inputs for agriculture. On the other hand, the system seems flexible enough to allow for increasing food production with a reduced environmental footprint in terms of land and water appropriation.

Designing International Climate Agreements: An Economic Analysis of Free-riding Incentives

Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link  |  Scientific Defense

Abstract:

International environmental agreements have been and are negotiated to facilitate mitigation efforts on climate change. To avoid severe impacts, global cooperation is required as the reduction of greenhouse gas emissions represents a global public good. However, free-riding incentives impede the voluntary contribution of abatement by sovereign countries. The present thesis studies how climate cooperation could advance under different treaty designs in the face of free-riding incentives.

The thesis uses integrated assessment models to quantify regional differences with respect to costs and benefits from mitigating climate change and identifies regions that gain from cooperation as well as potential losers. Within the numerical models, transfers are found to enhance cooperation such that stable agreements could close the gap between full cooperation and no cooperation roughly half with respect to global welfare. The magnitudes of transfer payments show comparably moderate magnitudes resulting from modeling assumptions on costs and benefits of mitigation. Following this assessment, the thesis studies the implementation of payments. Adverse effects of transfers are identified which have the potential to impede cooperation on climate change. Moderate magnitudes of transfers are found to be of advantage by limiting the potential adverse effects on recipient countries, for which negative consequences could especially be relevant when transfers are based on equity considerations.

Defining the obligations of a treaty in a more moderate way might enhance cooperation also with respect to two other design options: (i) including unrestricted emissions trading with countries that do not have abatement targets and (ii) formulating the obligations of a treaty in emission assign ments. The thesis finds that both treaty design options imply additional welfare gains for which the coalition pays and that no country can be excluded from. While global welfare is enhanced, free-riding is likely to become more attractive. In turn, (i) restricting the amount of emission permits in the market for the coalition or (ii) basing a treaty on emission taxes may enhance the participation in the agreement because welfare gains for free-riders are reduced. However, the thesis finds that both agreements under ambitious or moderate obligations could be more successful with respect to global welfare depending on modeling parameters.

Bioenergy Markets in a Climate Constrained World

Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link  |  Scientific Defense

Abstract:

Avoiding dangerous climate change requires substantial emission reductions in the energy and the land-use sector. Within the portfolio of decarbonization options bioenergy assumes a unique role because it can reduce emissions in two special ways. First, due to its versatility it can provide low-carbon energy as substitute for fossil fuels in all energy sectors. Second, due to its carbon content bioenergy combined with carbon capture and storage (CCS) can provide negative emissions that allow compensating emissions across sectors and time, which is of special interest for achieving low-stabilization targets. However, biomass cultivation requires fertile land giving rise to concerns about adverse effects, such as land-use change emissions, biodiversity loss, and competition with food production. Scrutinizing the bioenergy assessment carried out by The IPCC Special Report on Renewable Energy Sources and Climate Change Mitigation (IPCC 2011b) it became apparent that the available long-term scenarios assessing bioenergy as a mitigation option only cover these adverse effects to a minor degree. This thesis aims at improving the bioenergy assessment by addressing potential consequences of and requirements for bioenergy deployment in the energy sector and the land-use sector.

Using an integrated model framework of energy-economy-climate and land-use this thesis investigates the role bioenergy can play in achieving ambitious long-term climate change mitigation targets taking into account emissions from agriculture and land-use change. It explores the global biomass potential and corresponding supply prices and investigates how pricing land-use and land-use change emissions affects the biomass potential and resulting emissions. It analyzes how mitigation strategies and costs depend on constraints on the supply and demand side of bioenergy. It investigates how bioenergy contributes to the transformation and decarbonization of the energy system in general and identifies the economic drivers behind the choice of bioenergy conversion technologies in particular.

Results show that bioenergy with CCS (BECCS) is a crucial mitigation option with paramount importance particularly for achieving stringent climate change mitigation targets. If CCS is available, bioenergy is exclusively used with CCS in mitigation scenarios and it is predominantly used to produce liquid fuels for the transportation sector. Since biomass is mainly supplied by lignocellulosic perennial grassy feedstock this requires robust gasification technologies to be available that can cope with the heterogeneous grassy feedstock. Modern bioenergy deployment increases rapidly after 2030 to around 300 EJ/yr. Mitigation costs rise sharply if bioenergy or CCS is constrained. This indicates that without bioenergy or CCS, it is difficult to achieve low stabilization targets.

Grassy biomass feedstock can be produced at prices above 5 $/GJ. Pricing emissions in the land-use sector increases bioenergy supply prices (by 5$/GJ in 2055 and by 10$/GJ in 2095) due to land exclusion of high-productive forest land and due to nitrogenemissions from bioenergy production. Carbon taxes on land-use change emissions are found to effectively prevent deforestation and thereby significantly reduce total land-use change emissions. However, land reduction due to GHG taxes is compensated by intensification and expansion into land that is not under emission control, the latter of which increases land-use change emissions from biomass production. This indicates that bioenergy demand and GHG taxes at the same time (as typical for low-stabilization scenarios) put substantial pressure on the land-use sector and could induce leakage of bioenergy or food production into land with high carbon content that is not under emission control. Average yields that would be required for large-scale bioenergy production in 2095 are roughly between 500 and 600 GJ/ha for the major producer regions. Results further indicate that the competition for water between agriculture, private households, and industry is likely to increase heavily in many regions, particularly if forests are protected and bioenergy is used for climate change mitigation.

In climate mitigation scenarios, the value of bioenergy is found to be determined by both its energy value and the value of potential negative emissions. Results show, that the availability of BECCS creates a strong link between carbon prices and bioenergy prices. This lets the carbon value of biomass exceed its pure energy value in low stabilization scenarios with BECCS availability. Rising carbon prices thus induce investments in technologies that would not be built for the purpose of energy production. Furthermore, through this price link stringent climate protection targets induce a high willingness-topay for bioenergy that exceeds by far bioenergy supply prices identified previously.

Bioenergy is so valuable because its negative emissions increase the amount of permissible carbon emissions from fossil fuels and therefore allow postponing emissions reductions in the short-term and the preservation of some residual emissions in the long run. For a given climate target, bioenergy thus acts as a complement to fossils rather than a substitute. However, this makes the prolonged short-term deployment of fossil fuels dependent on the long-term potential of biomass and the availability of CCS. Thus, uncertainties about the long-term developments of (i) conditions in the land-use sector (land availability, yields etc.) and (ii) CCS technology are highly relevant for short-term decisions about emission reduction.

The Economics of Wind & Solar Variability - How the Variability of Wind & Solar Power affect their Marginal Value, Optimal Deployment, and Integration Cost

Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link  |  Scientific Defense

Abstract:

Variable renewable energy sources (VRE) for electricity generation, such as wind and solar powerare subject to inherent output fluctuations. This variability has significant impacts on power system and electricity markets if VRE are deployed at large scale. While on global average, wind and solar power currently supply only a minor share of electricity, they are expected to play a much larger role in the future − such that variability will become a major issue (which it already is in some regions). This thesis contributes to the literature that assesses these impacts the “system and market integration” literature.

This thesis aims at answering the question: What is the impact of wind and solar power variability on the economics of these technologies? It will be laid out that the impact can be expressed in (at least) three ways: as reduction of value, as increase of cost, or as decrease of optimal deployment. Translating between these perspectives is not trivial, as evidenced by the confusion around the concept of ‘integration costs’. Hence, more specifically: How does variability impact the marginal economic value of these power sources, their optimal deployment, and their integration costs? This is the question that this thesis addresses.

This study comprises six papers, of which two develop a valuation framework that accounts for the specific characteristics of the good electricity, and the specific properties of wind and solar power versus “dispatchable” power plants. Three articles then assess quantitative questions and estimate marginal value, optimal deployment, and integration costs. These estimates stem from a newly developed numerical power market model, EMMA, market data, and quantitative literature reviews. The final paper addresses market design.

In short, the principal findings of this thesis are as follows. Electricity is a peculiar economic good, being at the same time perfectly homogenous and heterogeneous along three dimensions - time, space, and lead-time. Electricity’s heterogeneity is rooted in its physics, notably the fact it cannot be stored.(Only) because of heterogeneity, the economics of wind and solar power are affected by their variability. The impact of variability, expressed in terms of marginal value, can be quite significant: for example, at 30% wind market share, electricity from wind power is worth 30-50% less than electricity from a constant source, as this study estimates. This value drop stems mainly from the fact that the capital embodied in thermal plants is utilized less in power systems with high VRE shares. Any welfare analysis of VRE needs to take electricity’s heterogeneity into account. The impact of variability on VRE cannot only be expressed in terms of marginal value, but also in terms of costs, or in terms of optimal deployment. The mentioned value drop corresponds to an increase of costs by 30-50%, or a reduction of the optimal share by two thirds.

These findings lead to seven policy conclusions:

  1. Wind power will play a significant role (compared to today).
  2. Wind power will play a limited role (compared to some political ambitions).
  3. There are many effective options to integrate wind power into power systems, including transmission investments, flexibilizing thermal generators, and advancing wind turbine design. Electricity storage, in contrast, plays a limited role (however, it can play a larger role for integrating solar).
  4. For these integration measures to materialize, it is important to get both prices and policies right. Prices need to reflect marginal costs, entry barriers should be tiered down, and policy must not shield agents from incentives.
  5. VRE capacity should be brought to the system at a moderate pace.
  6. VRE do not go well together with nuclear power or carbon capture and storage − these technologies are too capital intensive.
  7. Large-scale VRE deployment is not only an efficiency issue, but has also distributional consequences. Re-distribution can be large and might an important policy driver.

Agricultural nitrogen pollution: the human food-print

 Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link  |  Scientific Defense

Abstract:

The provision of sufficient food for a growing world population is one of the most basic needs of humanity. The agricultural sector, which has the function to provide this food, is at the same time the main interface between anthropogenic and natural systems. The continuous expansion and intensification of agriculture has driven the nitrogen cycle, a central Earth-system process, out of the state it was residing in during the geological Holocene epoch. This disturbance leads to a number of undesirable feedbacks on human society, lowering the benefits of a multitude of ecosystem services and harming human health.

The overarching topic of this dissertation is how future food demand changes the global nitrogen cycle and nitrogen pollution. The research questions are: (1) What are plausible scenarios for global food demand in the 21st century? (2) What is the current state of the agricultural nitrogen cycle? (3) How will the nitrogen cycle evolve into the future? (4) Which additional pressure on the nitrogen cycle might evolve from the production of bioenergy? (5) How would the adoption of nitrogen mitigation action in food demand and in agricultural production change the nitrogen cycle and nitrogen pollution?

To answer these questions, this dissertation develops a new, simple and transparent method to create long-term scenarios of global food demand. These scenarios are subsequently used by the Model of Agricultural Production and its Impact on the Environment (MAgPIE). The model is a hybrid between a socio-economic and a biophysical land-use model that can be used to derive scenarios of the future development of the agricultural sector. The existing model was extended by a nitrogen mass-balance module, simulating the major nitrogen flows on cropland soils, in livestock production, in food processing and in household consumption. Finally, this extended model is used to create long-term scenarios of the agricultural nitrogen cycle and nitrogen related pollution, and to analyze the effect of nitrogen mitigation measures.

Reference scenarios without mitigation action indicate that until 2050, growing demand for food will expand most nitrogen flows in the agricultural sector, with global nitrogen pollution rising to unprecedented levels. An extension of bioenergy production would add additional pressure on the nitrogen cycle. Diverging from business-as-usual projections, this study shows that reduced food waste and livestock consumption, in combination with strong efficiency improvements in agricultural production, could reduce nitrogen pollution below current levels. However, even under such ambitious mitigation actions, the global nitrogen cycle will not return to pre-disturbance Holocene conditions and the remaining nitrogen pollution will continue to be detrimental to human welfare.

Achieving stringent climate targets: An analysis of the role of transport and variable renewable energies using hybrid energy-economy-climate models

Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link  |  Scientific Defense

Abstract:

Anthropogenic climate change is threatening the welfare of mankind. Accordingly, policy makers have repeatedly stated the goal of slowing climate change and limiting the increase of global mean temperature to less than 2°C above pre‐industrial times (the so‐called “two degree target”). Stabilizing the temperature requires drastic reductions of greenhouse gas (GHG) emissions to nearly zero. As the global system of energy supply currently relies on fossil fuels, reducing GHG emissions can only be achieved through a full‐scale transformation of the energy system. There are many possible paths to realize such a decarbonization, resulting in a variety of distinct energy‐economy systems. Different transformation paths require different technologies and system changes, and will result in different socio‐economic and environmental impacts.

This thesis investigates the economic requirements and implications of different scenarios that achieve stringent climate mitigation targets1. It starts with the analysis of characteristic decarbonization patterns and identifies two particularly relevant aspects of mitigation scenarios: deployment of variable renewable energies (VRE) and decarbonization of the transport sector. To investigate the role of renewable energies, we performed both a comparative study across seventeen integrated assessment models (IAMs) as well as a detailed deep‐dive with the IAM REMIND. For the transport sector, we undertook a comparative study of five IAMs. Finally, we turned towards one of the most relevant questions for policy makers and analyzed the trade‐off between the stringency of a climate target and its economic requirements and implications. All analyses are based on the improvement, application, comparison, and discussion of large‐scale IAMs.

We started by developing the novel “mitigation share” metric and applying it to scenarios produced with REMIND. This metric allowed us to identify the relevance of specific technology groups for mitigation and to improve our understanding of the decarbonization patterns of different energy subsectors. It turned out that the power sector is decarbonized first and reaches lowest emissions, while the transport sector is slowest to decarbonize. For the power sector, non‐biomass renewable energies contribute most to emission reductions, while the transport sector strongly relies on liquid fuels and therefore requires biomass in combination with carbon capture and sequestration (CCS) to reduce emissions.

The subsequent comparison of seventeen IAMs used by different research groups worldwide generally confirms the findings from the previous analysis: For most models, the deployment of renewable energy sources increases substantially with the stringency of climate policy. In most of the low stabilization scenarios that have a high likelihood of achieving the 2°C target, renewable energy becomes the dominant source of electricity. Furthermore, the models with high renewable shares also show particularly high contributions from the VRE wind and solar. At the same time, the model comparison reveals large differences between actual technology deployment levels in the different models.

An in‐depth investigation of the solar power technologies photovoltaics (PV) and concentrating solar power (CSP) in REMIND confirms the dominant role of these variable renewable energies for the decarbonization of the power sector. Recent cost reductions have brought PV to cost‐competitiveness in regions with high midday electricity demand and high solar irradiance. The representation of system integration costs in REMIND is found to have significant impact on the competition between PV and CSP in the model: the low integration requirements of CSP equipped with thermal storage and hydrogen cofiring make CSP competitive at high shares of variable renewable energies, which leads to substantial deployment of both PV and CSP in low stabilization scenarios.

A cross‐model study of transport sector decarbonization reveals a number of different decarbonization routes, as well as the need for future model improvement to ensure that all decarbonization options along the chain of causality are well represented. Our research confirms the earlier finding that the transport sector is not very reactive to intermediate carbon price levels: Until 2050, transport decarbonization lags 10–30 years behind the decarbonization of other sectors, and liquid fuels dominate the transport sector. In the long term, however, transportation does not seem to be an insurmountable barrier to stringent climate targets: As the price signals on CO2 increase further, transport emissions can be reduced substantially – if either hydrogen fuel cells or electromobility open a route to low‐carbon energy carriers, or second generation biofuels (possibly in combination with CCS) allow the use of liquidbased transport modes with low emissions.

The last study takes up the fundamental question of this thesis and analyses the trade‐off between the stringency of a climate target and the resulting techno‐economic requirements and costs. We find that transforming the global energy‐economy system to keep a two‐thirds likelihood of limiting global warming to below 2°C is achievable at moderate economic implications. This result is contingent on the near‐term implementation of stringent global climate policies and full availability of several technologies that are still in the demonstration phase. Delaying stringent policies and extending the current period of fragmented and weak action will substantially increase mitigation costs, such that stringent climate targets might be pushed out of reach. Should the current weak climate policies be extended until 2030, the transitional mitigation costs for keeping the 2°C target would increase three‐fold compared to a world in which global cooperative action is decided on in 2015 and where first deep emission reductions are achieved in 2020. In case of technology limitations, the urgency of reaching a global climate agreement is even higher.

In this thesis, we performed a comprehensive analysis of stringent mitigation scenarios and their economic implications, with a special focus on VRE deployment and transport decarbonization. Based on extensive modeling work and global cross‐model analyses, this thesis provides crucial insights and identifies strategies for achieving stringent mitigation targets.

Challenges for low stabilization of climate change: The complementarity of non-CO2 greenhouse gas and aerosol abatement to CO2 emission reductions

Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link  |  Scientific Defense

Abstract:

In the Copenhagen Accord it was recognized that global mean temperature should not exceed 2C above  preindustrial levels. Reaching this target will require deep cuts in CO2 emissions. However, reducing CO2 emissions alone will not be enough. To reach stringent climate targets, other substances have to be taken into account as well. In this thesis, I analyze potential bottlenecks for reaching low stabilization targets. My focus is on the complementarity of non-CO2 greenhouse gas and aerosol abatement to CO2 emission reductions.
Greenhouse gas emissions rise particularly fast in developing countries. These countries want to sustain their economic growth and reach self-sucient energy levels, which has historically lead to higher emissions. Without climate policies, currently used integrated assessment models continue this historic pattern. In case of stringent climate policies however, models break with this historical pattern and assume sustained economic growth with very low energy levels. These model results seem to be either not realistic or driven by strong implicit assumptions. In order to determine residual CO2 emissions we need to either understand or correct these results.

Long-lived non-CO2 greenhouse gases account for almost one quarter of anthropogenic greenhouse gas emissions. To achieve ambitious climate targets, these gases have to be reduced as well. The Kyoto protocol determined emissions reductions for CO2, as well as the well-mixed greenhouse gases CH4, N2O, hydrofluorocarbons (HFCs), peruorocarbons (PFCs), and SF6. In the Kyoto protocol, emission budgets were determined not for each separate gas, but in one single budget, leaving nations full exibility as to which greenhouse gas to reduce. This single budget required a metric to make the dierent gases comparable. In the Kyoto protocol a simple constant metric called the global warming potential was chosen. This metric has been challenged on various grounds and a number of alternatives have been proposed. We analyze dierent constant and time-dependent metrics with regard to their implications on global economic costs, transient emission pathways, and regional and sectoral impacts. We nd that although impacts on global costs are negligible, there are considerable eects on medium term emissions and regional wealth transfers.

In recent model intercomparisons, the possibility to generate negative CO2 emissions using a combination of bioenergy with carbon capture and storage has proven to be a crucial mitigation option. Low stabilization scenarios become much more costly when bioeenergy is limited or when carbon capture and storage (CCS) is not available. Moreover, bioenergy provides one of the rare alternatives to produce low-carbon liquids fuels. In our study, we analyze bioenergy deployment depending on the stringency of the climate target, the availability of CCS, and bioenergy supply.

Another important group of emissions determining today's radiative forcing are aerosols. They are not controlled under any climate treaty so far, and it seems far more likely that they will rather be subject to air pollution policies
than to climate policies. Yet since aerosols contribute substantially to anthropogenic forcing, the question arises how they interact with climate and climate policy. In the literature we nd dierent lines of arguments. Some argue that since overall aerosol forcing is negative, a fast reduction of aerosol emissions could lead to accelerated global warming. Others focus on black carbon, which is an important contributor to warming, and suggest that it
should be reduced rst as this would lead to synergies between air pollution policies and climate policies. With the model we are using we are able to consider interactions not only between air pollution policies and climate
policies, but also between the various aerosol species which are often times co-emitted. We nd that air pollution policies are hardly able to inuence long-term climate targets. On the other hand, climate policies eciently reduce air pollutants. Our results suggest that there are synergies rather than trade-os between air pollution policies and climate policies.

  • Falko Ueckerdt

Integrating variable electricity supply from wind and solar PV into power systems

Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link  |  Scientific Defense

Abstract:

In contrast to energy supply from fossil and nuclear power plants, wind power and solar PV are variable. Their output is beyond human control, dependent on weather, and cannot always be supplied on demand. Variability causes “integration costs” that occur at a system level in addition to generation costs of variable renewable energy (VRE).

This thesis aims to improve the economic evaluation of VRE in particular with respect to their variability and corresponding integration costs. Its three main ambitions are contributing to the understanding of i) the economics of variability, ii) the modeling of variability and iii) the short-term costs and distributional effects induced by VRE. It thereby tries to bridge the gaps between three research strands that evaluate VRE: the integration costs literature, the marginal economic value literature and the integrated assessment model (IAM) literature.

First and most fundamentally, I present a framework for the economics of variability. It is based on a new definition of integration costs that, in contrast to previous definitions, relates to economic theory more clearly and captures all costs of variability. The framework reveals an important new component of integration costs, termed “profile costs”. They account for the low capacity credit of VRE, reduced utilization of dispatchable plants and over-produced VRE generation. Previous integration costs studies neglected some or all of these aspects, and could therefore not link to the marginal value literature. The link developed in this thesis shows two equivalent perspectives on integration costs: From a cost perspective the costs of integration are added to those of generation resulting in system levelized costs of electricity (System LCOE), while from a value perspective integration costs reduce the marginal economic value of VRE. The new concept of System LCOE broadens the cost perspective of integration costs studies such that it is equivalent to the economic literature on marginal value.

Both perspectives can be embedded in a welfare-economic setting: equivalent first-order conditions determine the optimal deployment of VRE. If the System LCOE of VRE drop below the average System LCOE of a purely conventional power system, more VRE deployment increases welfare. Production-based LCOE, the widely used conventional metric (and other indicators like grid parity), are misleading because they neglect variability. A situation where the LCOE of VRE are below those of conventional plants does not imply that VRE deployment is efficient or competitive. By contrast, the metric of System LCOE allows evaluating and comparing technologies, and could replace incomplete indicators. It retains the intuitive and familiar format of LCOE and, in addition, accounts for the complex interaction of VRE with the power system.

Based on this framework the thesis quantifies integration costs for wind. From a literature review and own modeling it is shown that (marginal) integration costs increase with penetration and reach about 25–45 €/MWh at wind shares of about 30% (The higher values do neglect a number of integration options like the long-distance transmission, energy storage and changes in the temporal demand profiles). This is substantial compared to the average whole-sale electricity price or generation costs of wind of about 60 €/MWh. Integration costs for solar are of similar magnitude at high shares, mainly driven by profile costs, as indicated by comparing the integration challenges of wind and solar. Integration costs reduce the optimal and competitive share of VRE and can discourage high shares of VRE. However, the economic viability of VRE would increase if the full cost of conventional generation technologies were accounted for, foremost the climate change externality of fossil energy and the health risks of nuclear power. In addition, integration options might significantly reduce integration costs. This thesis helps identifying suitable integration options by revealing the most important integration challenges. A shift from capital-intensive base load plants to peak load gas plants substantially reduces profile costs. More fundamental changes in the energy system like a substantial change of demand patterns, long-distance transmission grid expansion or seasonal storage technologies could further reduce integration costs.

The second contribution of this thesis is the development of two approaches to improve the modeling of variability in IAMs based on the above insights into the economics of variability. The first approach suggests implementing System LCOE in IAMs to represent the full costs of VRE. Some IAMs already represent variability with simple cost penalties for VRE, yet System LCOE can improve this by providing cost penalties with a rigorous economic basis. System LCOE are system-dependent and thus need to be estimated with high-resolution models for a broad range of energy system configurations. To keep this parameterization manageable, variability aspects should be modeled explicitly in IAMs without using exogenous cost penalties, where possible. An option to achieve this is the second approach. which explicitly accounts for the most important integration costs component profile costs, by implementing residual load duration curves (RLDC) into REMIND-D, a multi-sector long-term model of the German economy. Hereby not only major integration challenges but also the optimal energy system’s response can be modeled endogenously such as changes in the conventional capacity mix or the deployment of hydrogen and methane storage facilities (power-to-gas storage). If implemented into IAMs, both approaches could increase the credibility of mitigation scenarios results in particular the economic potential of VRE.

In its third contribution this thesis shows that in the short term, when VRE are driven by support policies, particularly high integration costs can be induced. These costs are not only imposed by VRE’s variability but by an adverse combination of three aspects: variability, an unfavorable legacy power system, and a low capital turnover rate. This might create a barrier to reaching the long-term optimal deployment of VRE. Redistribution effects intensify this potential lock-in effect. VRE support induces redistribution flows from conventional producers to electricity consumers, which can be larger than the net system cost increase due to VRE. This gives conventional generators the incentive to oppose VRE support. If large redistribution flows are not desired by society or single actors, they can present implementation barriers to specific policy instruments. Combining two policies, renewables support and carbon pricing, might allow policy makers to reduce redistribution effects. This would reduce implementation barriers even if the policy mix might not be the first-best policy to internalize externalities such as the climate change externality.

  • Odette Deuber

Metric choice for trading off short- and long-lived climate forcers – A transdisciplinary approach using the example of aviation

Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link

Abstract:

With advancing climate change there is a growing need to consider short-lived climate forcers (SLCF) to achieve climate targets. Simple measures, so called climate metrics are required to compare the climate impact of perturbations with distinct different atmospheric lifetimes and atmospheric properties in view of defined policy targets. A multitude of emission metrics have been presented in the literature. However, only few scholarly papers exist which consider metrics from a meta-perspective, including atmospheric and economic sciences, and which allow a clearly structured discussion. Further, metric values for trading-off SLCF and CO2 are highly ambiguous. Metric design determines decisively the relative weighting of SLCF and CO2. This is particularly relevant for aviation, as SLCF contribute to a significant share to the sector's climate impact. Using a transdisciplinary approach, the articles enhance the understanding for the scientific, economic and policy aspects in climate metric design: in general, to evaluate short- and long-lived climate forcers and for the practical example of aviation-induced contrails and CO2.

The dissertation presents a physico-economic framework on climate metric design. It illustrates that from the economic perspective, that the Global Damage Potential can be considered as a first-best benchmark metric since it ensures that the trade-off between different forcing agents is efficient. Virtually all climate metrics can be constructed as variants of it. The framework facilitates a structured discussion on climate metrics from literature in a straightforward manner since it reveals comprehensively normative assumptions, simplifications and the types of uncertainties that are implicit to the choice of a climate metric.

A quantitative assessment focuses on a generic trade-off situation in aviation. It demonstrates the impact of individual physical metric choices on the point in time where the mitigation of a short-term effect (e.g. line - shaped contrails) at the expense of a counteracting long-term effect (e.g. CO2 emission) becomes preferable. The preferred mitigation strategy depends particularly on the evaluation horizon. At any stage, value judgements must guide the required policy decision on metric options.

Subsequently, the common characteristic of SLCF, the short atmospheric lifetime is used to present a generic approach for relating SLCF to CO2-induced forcing. This new approach provides metric-based CO2 equivalences for a wide range of parameter assumptions, independent from the SLCF agent and situation. Two alternative types of metric-based factors can be used to derive agent-specific CO2 equivalences, demonstrated by using the example of aviation-induced cloudiness.

A book article, finally, provides a review of the negotiation process in international aviation. It explores the political setting for including international aviation in a global climate regime. The article presents possible options and relates them to the negotiation positions of different actors. Special attention is paid to the global sectoral approach which could allow raising revenues for adaptation to climate change in developing countries.

When trading off SLCF and CO2 on the basis of emission-based global- and annual-mean metrics, the basic challenges of metric design persist, some of the critical design challenges, however, reinforce due to the nature of SLCF: the relative weighting of SLCF and CO2 is more sensitive to scientific uncertainties and normative value judgements with respect to the time frame and policy approach than to the selected metric approach (physical, physico-economic). It is expected to a large variability when scientific knowledge on the climate system and the small scale climate impacts of SLCF advances and the perceived urgency of near-term mitigation evolves.

Finally, in a climate regime which aims at limiting not only long-term climate change but also controlling the rate of climate change, a multi-gas strategy with a single metric for all types of climate perturbation comes to its limit. While in the considered approaches SLCF and CO2 are treated as substitutes, action on limiting short- and long-lived forcers are rather complements. This could be subject to further research.

  • Sylvie Ludig

Renewable energy and CCS in German and European power sector decarbonization scenarios

Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link

Abstract:

In order to avoid unmanageable impacts of anthropogenic climate change, it is necessary to achieve substantial CO2 emission reductions in all energy sectors. Due to salient decarbonization options such as renewable energy technologies and carbon capture and storage (CCS), the power sector plays a major role in climate change mitigation strategies. However, these options come with a set of challenges: the output of wind and solar energy varies in time and space and CCS faces technical challenges and public acceptance problems.

This thesis develops power sector decarbonization scenarios for the EU and Germany while taking into account both the interplay of renewable energy technologies and CCS as mitigation options as well as the technical challenges of renewable energy integration. More specifically, a series of model based studies address the respective roles of CCS and renewable energy technologies in emission reduction strategies while evaluating technical integration options such as transmission, storage and balancing technologies.

Results show that large-scale expansion of renewable energies will play the main role in power sector decarbonization scenarios, but the availability of CCS could lead to lower total costs and easier reaching of emission reduction targets through compensation of emissions generated by balancing technologies. Long-distance transmission enables better siting of renewable energy and thus higher achievable renewable shares in power generation and higher capacity factors. These indirect effects of delayed expansions induce additional power system costs, which are high relative to investment costs for new transmission lines. Results also reveal a preference for flexible technologies in combination with high shares of renewables for balancing purposes rather than inflexible baseload plants. The case studies presented for the German and European power sectors show that a largescale decarbonization is achievable through large shares of renewable energy technologies for electricity generation. CCS is not a prerequisite for successful CO2 emission strategies in neither area, but allows reaching mitigation targets at a lower cost. A portfolio of renewable energy integration
options is essential to manage temporal and spatial fluctuations; the optimal technology mix is determined by the underlying power system.

  • Kristina Bognar

Energy and water supply systems in remote regions considering renewable energies and seawater desalination

Technical University Berlin, Fakultät III - Prozesswissenschaften. Link

Second Supervisor

Abstract:

Increasing the integration of renewable energy sources into mainly fossil energy dominated infrastructures is a challenging goal for various reasons. Islands and remote regions for example, often depend on the import of fossil fuels for power generation. Due to the combined effect of high oil prices and transportation costs, energy supply systems based on renewable energies are already able to compete with fossil-fuel based supply systems successfully. Focusing on arid regions, fresh water scarcity, resulting from low natural water stocks or excessive groundwater usage, is a further limiting factor for development. Seawater desalination can be the solution in many cases. How seawater desalination and remote island-grids with a high share of renewable energies can enrich each other, is still not sufficiently investigated. To answer this and related research questions, a model for optimizing self-sufficient energy and water supply systems has been developed within this research work.

  • Steffen Brunner

Climate policy, the state, and the problem of credible commitment

Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link

Abstract:

This thesis explores the regulatory uncertainty that originates from the problem of credible commitment in climate policy. The state defines and transacts property rights in an environment where third-party enforcement, the possibility to have contracts enforced by an independent authority, is infeasible. In such a setting, the ability to credibly commit to the main tenance of established rights is essential if one wants to encourage other actors to cooperate. The thesis consists of four independent publications and an introductory and a concluding chapter to address these points.

Chapter 1 presents research context and questions and the thesis’ conceptual framework. Chapter 2 reviews design elements for domestic cap-and-trade systems and finds that regulatory uncertainty is an important source of investment hold-up and risk in carbon markets. Chapter 3 explores three sources of regulatory uncertainty: strategic interaction between the state and regulated firms, uncertainty over the costs of climate change damages and emissions abatement, and changing political preferences. The social benefit of commitment to long-term climate policy varies depending on the source of regulatory uncertainty. The chapter also qualitatively compares different commitment devices the state could use to reduce regulatory uncertainty. Chapter 4 presents a formalisation of one commitment device, the adjustment rule , in a game theoretic context and assesses its social benefit in comparison to commitment to a fixed policy target. Chapter 5 explores the drivers and forms of transaction costs in international climate finance. It shows how transaction costs in state-to-state transfers invalidate the assumed separability of allocation and efficiency in economic assessments of global mitigation costs. Finally, Chapter 6 summarises the main messages of preceding chapters and concludes with a discussion of the limits of a new institutional view on climate policy and its implications for the science-policy interface.

On the Exploration of German Mitigation Scenarios

Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link

Abstract:

The decisive mitigation of greenhouse gas emissions in order to avoid dangerous anthropogenic interference with the global climate system constitutes one of the greatest challenges of the 21st century. Germany is being observed by the global community on its unprecedented quest for decoupling a highly industrialized country’s economy from CO2 emissions and has ambitious long‐term mitigation targets. Due to the complex challenge of transforming Germany’s energy system, political actors frequently demand scientific expertise in the form of long‐term, model‐based mitigation scenarios. However, existing mitigation scenarios for Germany suffer from severe methodological shortcomings and are highly intransparent on their implicit normative assumptions. This is not reconcilable with the good principles for the science‐policy interface. Thus, the guiding theme of this thesis is to explore how implicit normative considerations in model‐based mitigation scenarios can be made explicit.

The first part of this thesis conducts an exploratory research that intends to overcome the current limitations in model‐based mitigation scenario development by applying a collaborative scenario definition and evaluation process engaging civil society stakeholders. Taking an analytical‐deliberative approach to participation, civil society stakeholders from the transport and electricity sector frame the definition of boundary conditions for the hybrid energy‐economy model REMIND‐D and evaluated the resulting scenarios with regard to plausibility and socio‐political implications. The developed mitigation scenarios for Germany achieve 85% CO2 emission reduction in 2050 relative to 1990. However, the scenario evaluation unravels that the technological solutions to the mitigation problem proposed by the model give rise to significant societal and political implications that deem at least as challenging as the mere engineering aspects of low‐carbon technologies. These insights underline the importance of comprehending mitigation of energy‐related CO2 emissions as a socio‐technical transition embedded in a political context. The second part of this thesis explores alternative German mitigation scenarios for identifying what kinds of energy strategies for transforming the German electricity sector towards high shares of renewable electricity generation (RES‐E) they embody and under which premises they are viable. It performs a comparative meta‐analysis of ten model‐based mitigation scenarios from six recent publications, including those developed in the first part of the thesis. The scenarios group into three different energy strategies that exploit the basic options of increasing RES‐E shares (domestic RES‐E production, energy efficiency improvements and RES‐E imports) to a different extent. Substantial behavioral, institutional and engineering barriers to implementation that apply to all suggested energy strategies are identified. Upon investigating the reasons why the different scenario projections diverge, it turns out that they are in many cases based on expert judgments rather than resulting from numerical modeling. These involve normative judgments and need to be made more explicit in future research.

In sum, this thesis reveals in exploratory research that the realization of a collaborative mitigation scenario definition and evaluation process, as a means to address normative considerations in model‐based mitigation scenarios explicitly, is possible in small scale and scope. Hence, the primary message for future research is that such a participatory process should be repeated in the form of a more comprehensive assessment of German mitigation scenarios, which requires refined participatory methods so as to keep transaction costs within boundaries. It is commendable to adapt the elaborated methods developed in the literature on inclusive risk governance, which extensively deals with the questions of whom to include in a discourse, for what reasons and by means of which methods.

    • Thomas Präßler

      Overcoming Barriers to Onshore and Offshore Wind Power Development - A Developers' Perspective on the Effect of Support Policies

      Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link

      Abstract:

      Climate change is on the verge of becoming a severe threat to mankind. It is widely acknowledged that the emissions of greenhouse gases need to be reduced drastically to prevent major damages to the environment and society. As the power sector is one of the biggest emission sources of greenhouse gases a step-change transformation of energy systems towards zero-carbon power generation will be indispensible. Renewable energy technologies (RETs) will play a pivotal role in this endeavor. As regulators across the globe take actions to foster the swift development and deployment of RETs it will be crucial to identify and employ smart energy policies to drive effective and efficient diffusion of RETs.

      Using onshore and offshore wind power as research cases, this dissertation strives to identify existing barriers to RET deployment and derive recommendations on which policy measures can be employed to overcome them. Throughout all three studies, the analyses adopt the perspective of the main addressees of policy instruments - developer and investor companies. The first study investigates the key barriers of onshore wind power development and reveals the preference values that developers place on various policy settings. The second study scrutinizes current barriers and deployment dynamics in developing offshore wind power. The third study analyzes the profitability prospects of various offshore wind power locations in Europe by modeling location-dependent costs, wind resources, and remuneration policy schemes.

      The main contributions of this dissertation lie in providing a rich set of new, empirical data for both onshore and offshore wind power; in expanding the scientific knowledge about developing the nascent offshore wind power technology; and in offering a framework that captures the determinants that developer companies use to assess policy regimes.

      The results indicate that regulators can address many barriers to developing wind power by means that go beyond monetary support. Developers highly value policy measures that mitigate risks, both concrete and perceived. Those include providing reliable, clear, and stable support schemes, permitting procedures, and grid access regulations. Furthermore, the studies indicate that the success of technology support does not only depend on the choice of the primary deployment policy instrument but rather on its specific implementation design and on suitable secondary regulatory aspects. Together these can have significant impact on how developers perceive the attractiveness of a given policy regime as a whole.

      Developing Countries in the Context of Climate Change Mitigation and Energy System Transformation

      Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link

      Abstract:

      This thesis addresses the role of developing countries in the context of climate change mitigation and energy system transformation. It starts from the hypothesis that mitigation of climate change might form a major dilemma for developing countries, as it potentially negatively affects their development.
      In order to provide robust costs estimates of mitigating climate change, three state-of the-art integrated assessment models are compared taking into account different dimensions that are relevant for the structure of mitigation costs: technologies, the stabilization target, and the timing of mitigation policy.
      First, it is found that renewable energy and CCS are most critical for achieving low mitigation costs. Second, a more ambitious climate stabilization target can significantly increase global mitigation costs. Third, delaying collective international climate policy until 2030 renders the stabilization of CO2 at 450 ppm impossible, while a delay to 2020 increases global costs by at least 50%. In this case, Europe and the US can benefit from early participation. Exporters of emission allowances, i.e. developing countries like India, in contrast, can profit from delayed action, as the value of their exportable carbon permits increases.
      Particular emphasis is put on China due to its outstanding success with respect to poverty alleviation in recent decades, going hand in hand with highly increased carbon emissions. Applying an extended Kaya analysis we can identify economic growth to be the major reason for emissions growth, outnumbering the continuous carbonization of the energy system. Numerical model results underline the importance of future decarbonization efforts in China for climate change mitigation on the global scale. Its current domestic climate policy is in line with model results for a medium ambitious stabilization target.
      Some argue that the production-based accounting scheme applied today by the United Nation’s Framework Convention on Climate Change (UNFCCC) disadvantages carbon-exporting developing countries and is thus not in line with its basic principles, such as ’common but differentiated responsibilities’. In this line of argument, changing towards a consumption-based accounting scheme might facilate the participation of developing countries. In this thesis it can be shown that in the presence of a global carbon market the role of the accounting scheme can be neglected, as soon as the initial allocation of emissions is negotiated. This puts in perspective recent calls from developing, carbon-exporting countries like China to change from the current production-based accounting scheme. Whether the accounting scheme is beneficial for carbon-exporting countries depends on the chosen allocation scheme. High transaction costs related to consumption-based accounting would favor the current, production-based, accounting scheme once a carbon market with binding caps is in place.
      Finally, the role of energy in development processes is assessed and found to be tremendously important. Countries that have achieved high or very high development levels all have crossed a certain threshold in energy consumption. One explanation for the existence of thresholds is identified to be the demand for energy-intensive goods in developing processes generated by the up-take of infrastructure. Scenarios by numerical models generally project that reductions of carbon emissions in developing countries will be achieved not only by means of decreasing the carbon intensity, but also by making a significant break with the historically observed relationship between energy use and economic growth. The existence of energy thresholds in development processes challenges the generally optimistic results of numerical models: on time scales acceptable for developing countries the decreases in energy consumption implied in numerous mitigation scenarios are unlikely to be achieved without endangering sustainable development objectives, such as universal energy access.

      “Refreshing Democracy”
      Economic Assessments for Climate Policy in the Light of Pragmatist Philosophy

      Munich School of Philosophy

      Abstract:
      The thesis analyzes and discusses the heated topic of economic advice for climate policy from a philosophical perspective. The guiding question is: What is an appropriate theoretical and normative framework for critically evaluating and improving the economic assessments by the IPCC? The backdrop of climate policy and of science in policy are explained in Part I. Part II then develops a general evaluative-normative viewpoint for the IPCC's role in policy-making in terms of the “pragmatic-enlightened model” (PEM) of the science-policy interface, based on Deweyan pragmatism. Also with the help of this general model, Part III critically explores the economics of climate change underlying the IPCC's recent assessment report AR4, as well as parts of this report itself. Finally, based on the findings of the previous Parts, Part IV presents elements of a tentative guideline, useful either for improving the IPCC's upcoming economic assessments of climate change, or for evaluating existing ones. If the IPCC followed these ideas, the IPCC would act as an “honest broker” of different viable policy options, which represent, inter alia, different ethical-political standpoints and crucial uncertainties, but also include a thorough analysis of the possible consequences of the technological, economic and other means to the respective policy target. Offering such scenarios - developed by sciences in close co-operation with policymakers and “the public” - with transparent value judgements could thus help the IPCC to regain legitimate trust as well as to refresh the idea and practice of a well-informed and rational democratic public debate.

      On Strategies for Avoiding Dangerous Climate Change: Elements of a Global Carbon Market

      Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link

      Abstract:

      What are the prospects for averting dangerous climate change and which strategies offer promising avenues for successfully tackling this global challenge? This dissertation looks at these questions from three interrelated angles:

      I begin with a study of the possibilities and limits of transnational cooperation in climate policy, in which I show that current trends in international negotiations are by no means reliable indicators of the potential for cooperation in the future. Building on an evaluation of traditional game-theoretic approaches, I expand the cooperation space by introducing elements of regime theory, where intertwined interests and the need for partners in changing coalitions leads to an increased propensity for working together. Yet even regime theory does not capture the full dynamism of interest formation at the national level: the aggregation of evolving individual preferences and changing normative worldviews leaves the distinct possibility of more cooperation in the future on condition that cosmopolitan principles gain stronger prominence.

      The thesis then investigates the normative underpinnings for avoiding dangerous climate change and looks at policy instruments for emissions management. The United Nations Framework Convention on Climate Change (UNFCCC) constitutes the foundation for international efforts in this area, substantiated more recently by international discussions on limiting global average temperature increase to no more than 2°C. I argue that from a risk management perspective and as a focal point, a common global target is useful to spur coordinated action. In view of the constraints for limiting global emissions and the need to involve developing countries, a comprehensive carbon market embedded in a policy mix to address further market failures appears best-suited to respond to a number of key policy criteria derived in the discussion, such as environmental effectiveness, cost effectiveness, and equity.

      The final part of the dissertation turns to developing an implementation strategy that seeks to address the normative criteria of the UNFCCC while remaining cognizant of the current fragmentation of international climate policy efforts. Following an evaluation of the existing international climate protection architecture as well as an analysis of competing academic proposals for integrated carbon market solutions, I put forward the concept of a Modular Carbon Market (MCM): formed by an eminent coalition of cooperating states, it would comprise emitters from industrialized countries but include in particular also large transition economies. I develop elements of an institutional structure for joint emissions management, notably the role of a future World Climate Bank in overseeing the carbon market and in distributing auction proceeds to participating countries. The thesis then examines the challenges of managing the climate rent in developing countries and concludes by embedding the use of quantity regulation as a framework for multilevel action.

      • Matthias Kalkuhl

      The Calculus of Climate Policy: Carbon Pricing and Technology Policies for Climate Change Mitigation

      Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. pdf

      Abstract:
      This thesis examines the role of carbon pricing and low-carbon technology policies for reducing CO2 emissions from burning fossil fuels. Policies are evaluated according to their impact on welfare, emissions, fossil resource rents and energy prices. For the economic analysis, small analytical partial equilibrium models and, most importantly, the elaborate numerical intertemporal general equilibrium model PRIDE (Policy and Regulatory Instruments in a Decentralized Economy) are developed and studied. A major focus of these models lies on the intertemporal incentive effects of policies on fossil resource extraction and investments into new low-carbon technologies. An innovative strength of the PRIDE model is to calculate the welfare-maximizing potential of policies like carbon taxes and emissions trading schemes as well as subsidies, feed-in-tariffs or portfolio standards for renewable energy and carbon capture and sequestration (CCS).

      The results indicate that a price on carbon emissions – established through a carbon tax or an emissions trading scheme – is the most important climate policy in the long run; reducing emissions permanently with subsidies on ‘clean’ technologies becomes very expensive. Technology policies, however, may have an important role in the short to medium run: First, technology policies addressing innovation market failures can increase welfare and reduce mitigation costs substantially even under a ‘perfect’ emissions trading scheme. Second, technology policies can serve as a temporary ‘second-best’ policy to reduce emissions when an ‘optimal’ carbon price cannot be established due to political economy reasons. Finally, technology policies may help to reduce the distributional conflict concerning fossil resource rents and the social conflict regarding increasing energy prices. The analytical and numerical results further highlight the relevance and the need of creating a global public institution that manages the use of the atmosphere and the associated ‘climate rent’ and fosters investments into low-carbon technologies.

      • Markus Haller

      CO2 Mitigation and Power System Integration of Fluctuating Renewable Energy Sources: A Multi-Scale Modeling Approach

      Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. pdf

      Abstract:
      Decarbonizing the electricity sector is of vital importance for mitigating greenhouse gas emissions due to increasing power demand, but also because of the broad portfolio of low carbon power generation options. Emission reduction policies are likely to incentivise an expansion of renewable power generation capacities far beyond current levels. This thesis investigates the question of how renewable power generation can contribute to mitigate CO2 emissions. It analyzes the system integration challenges that result from large shares of variable and spatially dispersed renewable power generation, how an expansion of long distance transmission and storage capacities can facilitate system integration, and how system integration issues – and the availability of integration options – affect long term strategies for power system decarbonization. More specific, it investigates if (and how) Europe can reach its ambitious power sector decarbonization targets by expanding renewable generation capacities. These questions are addressed in a series of model-based studies.

      Results show that power system decarbonization in general and expansion of renewable power generation in specific play a crucial role for economy-wide mitigation efforts. They also demonstrate that investment decisions in transmission, storage and generation capacities are tightly interrelated. Adequate expansion of transmission and storage facilitates the integration of renewable supply, and limiting the availability of these options affects deployment and spatial allocation of renewable generation capacities. It is shown that until 2050, Europe and the Middle East / North African (MENA) regions can achieve power system CO2 emission reductions of 90% (relative to 2010) by expanding renewable power generation – without relying on CCS or building new nuclear power plants. This target can be met without large-scale electricity transfers between Europe and MENA regions, but inside Europe, a clear pattern of importing and exporting countries emerges. Meeting the 90% emission reduction target leads to an increase of average electricity prices to 8.7 ct/kWh, if transmission and storage capacities are adequately expanded (compared to 6.8 ct/kWh in the baseline scenario). If transmission capacities are limited to current levels, electricity prices increase to 10.1 ct/kWh, and the requirements for storage capacities increase significantly.

      Cost-efficient expansion pathways until 2050 are far from linear: Until 2030, the system is characterized by a mixture of wind and fossil generation, followed by a switch to a wind and solar based generation mix. This transition on the generation side results in different integration challenges, and it changes the interregional patterns of power transfer and the way the existing transmission infrastructure is used.

      Feasible mitigation levels that can be achieved by renewable generation capacities are shown not to be limited by their technical potential, but by system integration issues. Electricity prices escalate if emission caps exceed a certain limit. In the presented scenarios, this threshold varies between 70% and 95% CO2 reductions, depending on the availability of transmission and storage expansion. This shows that a coordinated expansion of renewable generation capacities and system integration options is crucial for achieving ambitious decarbonization targets.

      • Alexander Lorenz

          Uncertainty & Learning in Global Climate Analysis
          Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. pdf

          Abstract:
          Climate change, the 21st centuries challenge for cooperative human decision making, is surrounded by large uncertainties concerning the scientific understanding of the climate system, of climate change induced changes of natural and social systems and of the impacts of those changes on human economic activities and human welfare in general. Parts of these uncertainties will be resolved as science advances and new observations are made. This learning will allow to refine the decisions undertaken to cope with the climate problem.
          This thesis is dedicated to examine the role of uncertainty and future learning in the formal assessment of optimal global mitigation strategies for global warming. The central contributions of this study are contained within three research articles.The first article investigates the validity of the cost-effectiveness framework when applied to the case of climate targets under uncertainty and future learning. The study highlightens two major conceptual problems of this formalism, namely the possibility of negative value of information and infeasibility of the whole decision criterion. As a consequence an alternative decision framework is proposed, the so called cost-risk analysis, that avoids those conceptual problems but still remains based on climate targets.

          The second article is motivated by the clash between the general scientific intuition that epistemic uncertainties about the climate system and climate damages should play a major role in determining optimal mitigation policies (and the resulting welfare gain compared to doing nothing) and the results from the integrated assessment models that show only insignificant influence of those uncertainties. We introduce a method of assessing the importance of uncertainty both in its impact on optimal policy and in its impact on the welfare gain from acting upon climate change. We then use a representation of the integrated assessment model MIND that allows to link the decomposed value of climate policy to the structural form of the functions representing the climate cause-effect chain, thereby understanding the negligible effect of uncertainty from the model structure. Finally we propose some changes to the model structure that result in large impacts from including uncertainty. The third article investigates the circumstances under which the anticipation of future learning about tipping-point-like threshold climate damages would be important for the determination of near term mitigation decisions. We show that this is only the case if the learning occurs within a narrow anticipation window. In this case far stronger near term mitigation is optimal to keep the option open to avoid the threshold in case it turns out to lead to severe damages. The location and width of this window is found to be sensitive to the DM’s flexibility to reduce emissions. If reducing this flexibilitiy in the MIND model, may this represent political or social barriers, the anticipation window moves towards the present and broadens considerably, thereby increasing the importance of including future learning into the analysis of climate change.
          The articles are put into perspective by an introduction into the field that lays out the general linking research questions and general conclusions.

          • Matthias Schmidt

          Climate Policy under Uncertainty
          Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. pdf

          Submission:
          August 2011

          Abstract:
          The challenges posed by climate change are unprecedented in scale and scope. Climate change is global in its origins and impacts. It involves time horizons of hundreds of years and many generations. And, last but not least, it is surrounded by great uncertainty, which is the focus of this thesis. More specifically, this thesis intends to contribute to the identification of climate policies that do justice to the pervasiveness of uncertainty in climate change. In its core it contains four research articles.
          The first article shows that the combination of uncertainty about climate damages with the fact that climate damages will be distributed heterogeneously across the population can be an argument for substantially stricter climate policy, i.e. stronger emissions reductions. The article also discusses how insurance and self-insurance can, at least theoretically, mitigate this result and thus permit weaker climate policy.
          The second article highlights some major conceptual problems of cost-effectiveness analysis of climate policies for given climate targets. The problems occur once it is taken into account that uncertainty will be reduced in the future, which is an important aspect of climate change. In consequence, we propose an alternative decision criterion that avoids the problems by including a trade-off between the probability of violating the target and aggregate mitigation costs.
          The third article investigates the circumstances under which learning about tipping elements in the climate system is an argument for stricter or weaker climate policy. It shows that learning is an argument for stricter policy if it is expected to happen in a narrow “anticipation window” in time, and that it can be neglected otherwise.
          The fourth article reviews approaches to uncertainty in integrated assessment models of climate change with corresponding results. The complexity of the matter demands a variety of complementary approaches and a later synthesis of results. This article intends to summarize and structure this process and the respective literature.
          The research articles are framed by an introduction to the field and general conclusions.

          Reframing International Climate Policy: Essays on Development Issues and  Fragmented Regimes
          Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. pdf

          Submission:
          Juni
          2011

          Abstract:
          The research presented in this thesis is based on the hypotheses that (a) one of the main reasons why recent climate negotiations have failed to achieve significant progress is that they have not paid sufficient attention to the priorities of developing countries, and that international climate policy will increasingly be conducted within fragmented regimes in which the spatial or temporal flexibility to reduce greenhouse gas emissions is constrained.
          Our empirical estimates for a cross-section of countries suggest that leapfrogging to more efficient and cleaner technologies in poor countries does not occur automatically and that without binding commitments to reduce GHG emissions, continued economic growth can be expected to bring energy consumption and carbon emissions in emerging and developing countries close to levels prevailing in industrialized countries.
          For the case of China, we identify economic growth as the dominant factor behind increasing carbon emissions. Using an extended Kaya-decomposition, we find that the effect of economic growth exceeds the impact of the pronounced shift to coal that has taken place in China’s energy systems in 1971-2007 by one order of magnitude. Numerical model results reaffirm China’s important role for a global, cost-efficient mitigation effort and underline the importance of lowering the carbon intensity of energy production to achieve emissions reductions in China.
          Comparing the results from three state-of-the-art climate-energy-economy models emphasizes the importance of spatial and temporal flexibility of mitigation efforts:
          postponing a global climate agreement to 2020 could raise the costs of a 450ppm CO2-only target by at least about half; with a delay to 2030 it may become infeasible to achieve. We also show that for individual regions early action can in fact reduce mitigation costs if the effect of avoiding lock-in of carbon-intensive energy infrastructure prevails over the higher costs associated with the additional mitigation burden borne by early movers.
          In the absence of a global climate agreement a global carbon market could emerge in a bottom-up fashion by linking of emissions trading systems. In this scenario the occurrence of carbon leakage actually depends on which industries are linked under a joint permit market: a symmetric link from the EU to a system without full cap bears some negative implications but can still increase welfare if the gains-from-trade dominate. In the case of
          asymmetric linking (i.e. when the respective output goods are imperfect substitutes) leakage is prevented and may even become negative.
          The occurrence of carbon leakage in a fragmented climate regime does not automatically justify the use of trade measures, such as border tax adjustments. We show that neither production- nor consumption-based approaches of accounting for carbon emissions constitute optimal policy instruments. Whether a consumption-based policy prevents or reduces leakage depends on specific parameter values. Empirical data suggest that if the EU or the US were to apply border tax adjustment on imports from China, carbon leakage would in effect increase.

          Investments in Liberalized Electricity Markets and the Low-Carbon Energy Transition: A Mixed-method Analysis of the German Case
          Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. pdf

          Submission:
          Juni
          2011

          Abstract:
          Because of the high number of low-cost mitigation options the power sector will play an important role in combating global climate change. Given the current worldwide trend of liberalization, the main challenge is to incentivize investments in low-carbon technologies under market rules. This thesis investigates the combined questions of how investments are made in liberalized electricity markets, and to which extent climate policy instruments are effective in inducing cleaner technology choice. It uses Germany as a case study, where during the last years a considerable number of new coal power plants have been brought on the way. This "dash for coal", apparently contradicting political efforts to transform the energy system, serves as the guiding issue around which several aspects of the aforementioned questions are investigated.

          The first analysis explores the drivers and decision factors that likely triggered the "dash for coal". Because no integrated theory of investments in liberalized electricity markets yet exists, it compiles a list of potentially influential economic, technological and sociopolitical factors in a first step. Examining these factors in more detail in a second step, it turns out that the extensive coal investments can be attributed to six main reasons. They are: (1) replacement requirements due to the nuclear phase out, (2) the onset of a new investment cycle in the power market, (3) favourable economic and technological prospects for coal compared to natural gas in the long run, (4) a status-quo bias of investors in regard to future renewable deployment, (5) explicit political support for coal, and (6) the ineffectiveness of public protest in hampering new projects. Two of these are looked at in more detail in the succeeding parts of this thesis.

          The second analysis deals with how emission certificate allocations had distorted fossil investments in favour of coal technologies. The EU Emission Trading Scheme (EU ETS), implemented in 2005, was set up to incentivize cleaner investments by putting a price on CO2 emission through tradable certificates. However, in its first phase initial certificate allocations for new plants in Germany were technology specific, leading to a considerably higher number of total certificates for coal compared to natural gas. Because suppliers incurred windfall profits by passing-through the opportunity costs of these certificates, coal plants were expected to receive higher additional cash flows than natural gas plants, which effectively subsidized coal. In fact, results suggest that disproportionate windfall profits compensate more than half the total capital costs of a hard coal plant. Only auctioning of certificates or a single best available technology benchmark would have made natural gas the predominant technology of choice. This underlines that implementation details had a great impact on investment incentives, unintentionally increasing the edge of coal over natural gas rather than decreasing it.
          The third analysis leaves the level of the single investor and looks at how the market as a whole responds to a price on CO2 under the situation of a nuclear phase out that induces consideral replacement investments. More specifically, it investigates technology choice and the optimal CO2 price level from a welfare perspective. Motivated by the structure of the German market where four big suppliers own the major share of capacities, imperfect  competition with strategic behaviours by these suppliers is assumed. Moreover, based on the finding of the first analysis, investments in coal plants are limited to the strategic suppliers, which adds a so called technological market power. Model results indicate that in such a setting investments in natural gas occur at lower CO2 price levels and more gradually than in a perfect competitive market. This happens due to the strategic reduction of output that increases electricity prices, which in turn makes natural gas profitable even when the comparative advantage in emission costs is still low. In a perfect competitive market though, investments switch from exclusively coal to exclusively natural gas when the CO2 price is 37 EUR/t or higher. Furthermore, the impact of market power on overall welfare is relatively moderate and losses never exceed 1% if the price of CO2 is set at the optimal level. This shows that a price on CO2 can indeed be a suited instrument to induce investments into cleaner technologies, especially natural gas. Nevertheless, relatively high prices are needed for a fundamental transition, and it remains to be seen if this will become reality in the future.

          Investment Strategies for Climate Change Mitigation
          Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. pdf

          Submission:
          Juni
          2011

          Abstract:
          The substantial threat of anthropogenic climate change implies the reducing of greenhouse gas emissions. This thesis deals with the costs and strategies of climate change mitigation. In particular, investment strategies for climate change mitigation are investigated. The thesis is separated into five parts each focusing on subquestions of the overall research question. After an introduction into the problem of climate change and the important macro-economic mechanisms for mitigation, these subquestions are answered in separate chapters. For the analysis Integrated Assessment models are used.

          First, the impacts of technological spillovers under climate policies are analyzed by means of a multi-regional model with technological change in form of interregional spillovers. Model results indicate that the higher the ratio between the spillover intensities for energy and labour efficiency, the lower are mitigation costs. As well, first-mover advantages and commitment incentives for climate policy scenarios are investigated. A multi-regional hybrid model with a more complex energy system is used for studying investments into energy technologies in detail. In climate policy scenarios the entire energy consumption is reduced, while renewable energy and CCS technologies are expanded immediately. Different regions follow quite different mitigation strategies. While ambitious climate targets can be reached with moderate global costs, the regional costs show a high variance. In addition, Integrated Assessment models are used to investigate what happens if the
          world will not agree on a climate friendly policy within the next years. The impacts of early investments into renewable energy technologies in first-best and second-best worlds are analyzed. Mitigation costs increase significantly, if the climate policy implementation is delayed. In contrast, early deployment of renewable energy technologies reduces the global costs. Within a five-region hybrid model the impacts of dynamics and direction of technological change under climate change mitigation are studied. It turns out that mitigation costs and strategies are quite sensitive to these variables. Further experiments indicate that the impacts depend on the set of available technologies. For studying the role of endogenous technological change for climate change mitigation, this model is
          extended by a new formulation of efficiency improvements. It turns out that investments into the efficiency of some energy sectors play a crucial role for low mitigation costs. In climate policy scenarios, the increased mitigation costs of technological restrictions can be overcome by R&D investments into energy efficiencies.

          However, the results of this thesis demonstrate the important role of investment strategies for climate change mitigation costs. The world gains from early investments into both a broad portfolio of technologies and energy efficiencies. Thereby the immediate support and high diversity of investments mainly provide low mitigation costs.

          Towards a Global Carbon Market? Linking Systems, Adding Sectors
          Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. pdf

          Submission:
          Dezember 2010

          Abstract:
          International emission trading is prominently discussed as a policy instrument for mitigating global greenhouse gas emissions. The articles assembled in this cumulative thesis aim at enhancing the understanding of the economic and political implications of this climate policy approach.
          Five potential future international carbon market configurations are identified and analyzed with regard to their environmental effectiveness, cost effectiveness, and political feasibility. It turns out that the choice between top-down and bottom-up architectures entails a trade-off between environmental effectiveness on the one hand, and political feasibility on the other. The basic reason is that at least initially a full global trading regime and the Kyoto approach promise to cover a larger fraction of global emissions, thus enabling more significant global emission cuts and providing better protection against carbon leakage. But while a high participation rate is beneficial from the global environmental point of view, it complicates political coordination due to the larger number of political parties, especially regarding the inevitable distributional challenges as well as the need for regulatory coordination. Regarding cost effectiveness, bottom-up linking of regional trading systems is the superior approach.
          The analysis of linking regional cap-and-trade systems from a policymaker’s perspective identifies a number of merits and demerits of this approach. Potential benefits include standard gains from trade; the possibility of ’anti-leakage’ from linking a sectorally fragmented cap-and-trade system to asymmetric sectors in developing countries; enhanced policy stability by creating an additional vertical layer in the multi-level governance of domestic emission sources; elimination of competitiveness concerns across linked systems; and the political signal of a multilateral climate policy initiative. Potential disadvantages include welfare losses from deteriorating terms-of-trade and intensification of disbenefits from suboptimal policies; a range of distributional concerns; and the need for close regulatory coordination across linked systems and the related loss of souvereignty due to the inevitable spillovers of regulatory decisions.
          Finally, this thesis examines the option of including the road transport sector into capand-trade systems. An empirical analysis of EU ETS road transport inclusion shows that this option does not raise competitiveness concerns from rising EU allowance prices. The point of regulation should be chosen upstream.

          Climate Change Policy in a Second-Best World - An Analysis of Policy Options under Conditions of Partial Cooperation and Uncertainty
          Technical University Berlin, Fakultät VII - Wirtschaft und Management  pdf

          Submission:
          Dezember 2010

          Abstract:
          Starting from the premise that climate change policy-making takes place under considerable uncertainty and suffers from a lack of international cooperation, and that this prevents the implementation of a global first-best policy, the present thesis poses the second-best question of what can be done despite these constraints and compares different policy options.
          Under conditions of partial cooperation, two questions of the second-best type arise: (i) What can already cooperating countries do to ensure their climate policies are effective and cost-efficient? (ii) How can the highest possible level of international cooperation be achieved? In this thesis, these issues are treated by assessing different institutional forms of emissions trading, in particular the ‘linking’ of permit markets, and, also, by adopting a game-theoretic view to analyze in how far trade sanctions can help to broaden international cooperation. The results show (a) how institutional incompatibilities and general equilibrium effects could reduce the benefits of a linking agreement, and (b) that tariffs have a significant potential to increase participation in a climate agreement.
          Uncertainty, and how it affects different policy instruments, is the other second-best aspect investigated. So-called intensity targets, which index emission targets on GDP, are analyzed with regard to their effect on cost-uncertainty, and their compatibility with international emissions trading. The results suggest that due to the increased complexity and the potentially only modest benefits of an intensity target, conventional absolute targets remain a robust choice for a cautious policy-makers.

          • Michael Lüken

          Distributive Impacts of Global Climate Change Mitigation - Effects of Technology, Emission Permit Allocation and Energy Trade
          Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. Link

          Submission: November 2010

          Abstract:
          The thesis provides an improved understanding of major drivers influencing regional mitigation costs. It analyzes the effects of the availability of low-carbon technologies, emission permit allocation schemes and energy trade on the welfare redistributions due to climate change mitigation. The methodologic novelty of the thesis is the consideration of the three dimensions of technology, permit allocation and energy trade in a comprehensive model framework (REMIND), together with the development of a formal economic decomposition method that renders a quantification of the impacts possible.
          The analysis confirms (and sharpens) results from previous studies, on the relevance of a broad portfolio of low-carbon technologies and of endowments with tradable factors such as energy carriers or tradable emission permits for global and regional mitigation costs.  But the thesis concludes that interrelations among the dimensions of technology and trade play a crucial role for the distributive impacts of mitigation. In particular, a broad portfolio of low-carbon technologies reduces the monetary equivalents of traded emission permits, so that a variation of the initial permit allocation scheme has a lower redistributive impact. Also, the size of energy trade effects is subject to the availability of technologies. Finally, technologies can take the role to render a new trade flow possible, for example an electricity transmission technology, which turns an untradable endowment (e.g., a huge solar potential) into an indirectly tradable (by electricity generation).

          Endogenous Technological Change in Strategies for Mitigating Climate Change
          Technical University Berlin, Fakultät VI - Planen Bauen Umwelt. pdf

          Submission:
          2009

          Abstract:
          This thesis suggests that induced technological change has potential to reduce the burden that climate change mitigation puts on the economy. Furthermore, international cooperation on climate policy, which may trigger this induced technological change, may be achieved by linking climate negotiations to other issues.  The starting point are two assumptions: first, action to mitigate climate change is necessary, and second, technologies will play a key role in this effort.  There is empirical evidence that technological change is induced by policies.  However, previous assessments of such induced technological change (ITC) have been ambiguous.  Moreover,  a clear climate policy is required in order to induce the technological progress.  However, the literature on international environmental agreements suggest that the prospect for global climate policy is not bright.  This raises two broad research questions:  First, what is the role of ITC for climate change mitigation?  And second, how can we achieve a global policy that triggers this technological change?

          • Sebastian Wienges

          Governance in Global Policy Networks. Individual Strategies and Collective Action in Five Sustainable Energy-Related Type II Partnerships.
          University of Potsdam, Faculty of Economics and Social Sciences. pdf of summary

          Submission:
          April 2008

          Abstract:
          Energy spurs social and economic development and has multiple effects on the ecological and social environment of societies. Energy access for socially equitable development, energy security for sustainable economic growth, and the mitigation of climate change all represent issues of long-term developments, whose effects are not fully reflected in incentive structures in energy markets. Consequently, this study will distinguish six forms of market failures in energy markets impeding the sustainability of social, environmental and economic development. International governance mechanisms are supposed to overcome those long-term problems. At the same time governance mechanisms must allow to consider short-term interests of various actors in order to incentivize and enable these actors to comply. Strategies for long-term policies, therefore, have to build in flexibility in governance mechanisms and include state as well as non-state actors. The Johannesburg World Summit 2002 produced a number of such partnerships committed to sustainable development. Based on research on the five sustainable energy-related global policy networks of GVEP, REEEP, GNESD, EUEI, and REN21 and conducted expert interviews, this study will analyze the effectiveness of global policy networks, compare the effectiveness of the five explored networks and their governance practices, and aim to identify instruments of effective global environmental governance. Hence, the thesis will draft a strategy for network governance how to reconcile long-term and short-term interests. Additionally, the study will develop how to design institutionalized instruments to map and harness common good resources like knowledge and good contacts contained in networks in order to support systematized reaping benefits of potentials for cooperation among network partners.

          Imprecise probability analysis for integrated assessment of climate change.
          University of Potsdam, Faculty of Mathematics and Natural Sciences, Institute of Physics. pdf

          Submission:
          2005

          Abstract:
          We present an application of imprecise probability theory to the quantification of uncertainty in the integrated assessment of climate change. Our work is motivated by the fact that uncertainty about climate change is pervasive, and therefore requires a thorough treatment in the integrated assessment process. Classical probability theory faces some severe difficulties in this respect, since it cannot capture very poor states of information in a satisfactory manner. A more general framework is provided by imprecise probability theory, which offers a similarly firm evidential and behavioural foundation, while at the same time allowing to capture more diverse states of information. An imprecise probability describes the information in terms of lower and upper bounds on probability.

          Carbon Capturing and Sequestration - An Option to Buy Time?
          University Potsdam Faculty of Economics and Social Sciences. pdf

          Submission: January 2005

          Abstract:
          The thesis uses the MIND model framework as a hybrid model integrating an economic growth model of the Ramsey-type with an energy system model and a climate system model. The use of a hybrid model that integrates these various systems is suggested by the complex problem at hand and justified by the dynamics and feedbacks between the systems. The CO2 emission mitigation options are related to investments and their social optimal timing and extent is computed by maximising an intertemporal social welfare function. Although this function is subject to various points of critique it takes into account issues of intergenerational equity. The use of CCS and the other options depends on assumptions of various exogenous model parameters. The extensive sensitivity analysis undertaken in this thesis reveals that the property of CCS being an option to buy time is robust for a broad range of parameter values. It turns out that the potential to introduce renewable energy technologies is highly important for the use of CCS. Imposing such a constraint reduces the ability to switch to alternative energy sources giving features of CCS like the leakage rate a higher significance. The more constrained renewable energy sources are the more sensitive are the results regarding the extent and the welfare impact of CCS with respect to parameter variations of the CCS technology. Tight constraints on renewables and low leakage rates can even make CCS an option that will be used throughout the 21st century.

          • Katrin Gerlinger

          Muster globaler anthropogener CO2-Emissionen. Sozio-ökonomische Determinanten und ihre Wirkung.
          PhD Thesis University Potsdam, Faculty of Economics and Social Sciences.

          Submission:
          June 2004

          Abstract:
          The thesis analyses the main driving forces for CO2 in different world regions. It uses the famous Kaya identity as a starting point for a cluster analysis. Based on Cluster analysis, it provides ideal types of cluster sharing the same causes of non-sustainability. These ideal types are used as a socio-economic 'macroscope' which may enable researchers to identify patterns of sustainability.

          Link to finished Master and Diploma Theses

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