Coupled Climate–Economy–Biosphere (CoCEB) model – Part 1: Abatement efficacy of low-carbon technologies

The Chair Energy and Prosperity has contributed to Dr Keroboto Ogutu’s work in 2016-2017

Abstract. In the present Part 1 of a two-part paper, we formulate and study a simple Coupled Climate–Economy–Biosphere (CoCEB) model. This highly idealized model constitutes the basis of our integrated assessment approach to understanding the various feedbacks involved in the system. CoCEB relies on recent versions of the Dynamic Integrated model of Climate and the Economy (DICE) model but innovates by taking into account the mutual feedback effects between climate and economic growth. CoCEB is composed of a physical climate module, based on Earth’s energy balance, and an economy module that uses endogenous economic growth with physical and human capital accumulation. We concentrate on the interactions between the two subsystems: the effect of climate on the economy, via damage functions, and the effect of the economy on climate, via control of greenhouse gas emissions. Simple functional forms of the relation between the two subsystems permit simple interpretations of the coupled effects. The CoCEB model is used to evaluate hypotheses on the long-term effect of investment in emission abatement, and on the comparative efficacy of different approaches to abatement. In this paper, we consider investments in low-carbon technologies. Carbon capture and storage (CCS), along with deforestation reduction, will be dealt with in Part 2. The CoCEB model is highly flexible and transparent; as such, it allows one to easily formulate and compare different functional representations of climate change mitigation policies. Using different mitigation measures and their cost estimates, as found in the literature, one is able to compare these measures in a coherent way. While many studies in the climate–economic literature treat abatement costs merely as an unproductive loss of income, this paper shows that mitigation costs do slow down economic growth over the next few decades, but only up to the mid-21st century or even earlier; growth reduction is compensated later on by having avoided negative impacts of climate change on the economy. More broadly, the simplicity, transparency and flexibility of the model provides the corner stone for a whole new area in integrated assessment modeling, an area that engages in the evaluation of non-equilibrium climate– economy and climate–economy–biosphere models. Such non-equilibrium coupled models, along with the analysis methodology introduced in this paper, will provide novel tools for studying intrinsic and endogenous variability in one or more of their constituent modules.