Governmental Climate Change Mitigation Efforts Are Less Costly When They Target Temperatures Rather Than CO2 Emissions Reductions

December 29, 2008

The researchers, in the Netherlands and Germany, have found scientific grounds for the commonly held opinion that high initial costs of eco-friendly solutions are rewarded in the long term by savings from lower energy usage.

Rather than focus on a CO2 emissions cap which is the common approach to climate solutions, the researchers modeled changes based on a cap for future temperature rises.

Working with a temperature cap makes sense in many ways, especially financially, saysMichiel Schaeffer of Wageningen University in the Netherlands and lead author of the study. This is because the cost estimates associated with limiting a pre-determined level of carbon emissions often rise rapidly, even exponentially, as the scale of emission reductions to be reached increases.

Taking the maximum temperature approach circumvents this and is more relevant to real-life impacts which are strongly related to temperature rise. “Concentrations don’t tell you that much about what happens in terms of rainfall … or to society,” Schaeffer was quoted as saying by Reuters.

Nice words, but does this really make sense? At the decision maker level it certainly does, the scientists say. Changing your normative target to a limit of a global temperature and playing the game accordingly results in a lower chance that governments are faced with exponential costs, they add. The researchers established a functional relationship between the costs involved and actual success booked (i.e. reductions in temperatures). Their research shows that the mitigation costs rise proportionally to the likelihood of meeting a temperature target across a range of concentration levels.

In economic terms, investing in climate mitigation to increase the probability of achieving climate targets yields “constant returns to scale,” because of a counterbalancing rapid rise in the probabilities of meeting a temperature target as concentration is lowered.

And they have the numbers to support the hypothesis. Governments around the world will need to fork out hefty initial investments in order to achieve an impact and slow temperature rises. But after a certain level of success has been acheived, the extra costs will have positive returns on warming, say the researchers.

So how much money are we talking about? Early investments must be seizable. We have a 90 percent chance of limiting global warming to 2 Celsius (3.6 Fahrenheit) above pre-industrial temperatures by investing 2 percent of the global gross domestic product (GDP) in climate mitigation packages from 2005 until the year 2100.

By contrast, if globally only 0.5 percent of GDP is spent on the environment (approximately what the EU currently spends) there would only be a 10 percent chance that we actually bring temperatures down by 2 Celsius. This figure is one that many participants in the global climate negotiations agree on. Raising the initial investment in climate mitigation packages to one percent of GDP results in a 40 percent chance.

The ‘shock therapy’ the researchers suggest has an upside in that it really will work out for the best. The most common reason why most governments fail to invest in climate mitigation on a large scale is the fear that the expenditure might be low initially and will soar later on. But the opposite cost analysis trend is likely to be more accurate. “It gets easier once the world gets going,” according to Schaeffer. Read the article Schaeffer and his colleagues from Germany published about their findings in The Journal Proceedings of the National Academy of Science (PNAS) here.

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