Climate policy

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Key policy issues

  • What global greenhouse gas emissions pathways would meet the well below 2 °C climate target?
  • What is the effect of effort-sharing approaches on regional and national emission reduction targets and on the cost of climate policies?
  • What is the effect of the NDCs on achieving the long term 2 ºC target?
  • What are the trade-offs between mitigation costs, adaptation costs, and climate change damage?


With the 2015 Paris Agreement, all Parties to the United Nations Framework Convention on Climate Change (UNFCCC) have agreed to limit global warming to 2 °C compared to pre-industrial levels and to pursue efforts to further limit this increase to a maximum of 1.5 °C UNFCCC (2015b).

To achieve this goal, countries have proposed short- and long-term reduction targets in the UNFCCC climate negotiating process and in domestic policies. To support climate policymakers, the IMAGE model is used in conjunction with the climate policy model FAIR. FAIR is a decision support tool to analyse the costs, benefits, and climate effects of mitigation regimes, emission reduction commitments, and climate policies.

FAIR can work in stand-alone mode using exogenous data, but in recent applications it interacts with several IMAGE components. For instance, mitigation cost curves for the energy sector are derived from the Energy Supply and Demand model TIMER and land-use mitigation options from Agriculture and Land Use, while non-CO2 MAC curves are based on Lucas et al. (2007) and Harmsen et al. (2019c). Data from FAIR on marginal abatement costs and reduction efforts per sector and greenhouse gases are used as input for IMAGE to evaluate the impacts under different assumptions for climate mitigation.

FAIR in combination with IMAGE can analyse the interaction between long-term climate targets and short-term regional emission targets. Regional targets are based on effort-sharing approaches and/or national emission reduction proposals, taking into account decisions on accounting rules as agreed under the Paris Agreement. The central purposes of the model are the calculation of mitigation costs and trade in emission allowances, and the net mitigation costs of a region to achieve its mitigation target. FAIR enables evaluation of proposed effort-sharing regimes, including differentiated timing and participation of a limited number of parties to the climate convention. Furthermore, FAIR analyses the trade-offs between costs and benefits of mitigation and adaptation policy.

Input/Output Table

Input Climate policy component

IMAGE model drivers and variablesDescriptionSource
Population Number of people per region. Drivers
Adaptation level Level of adaptation to climate change , defined as the share of climate change damage avoided by adaptation. This level is be calculated by the model to minimise adaptation costs and residual damage, or set by the user. Drivers
Climate target Climate target, defined in terms of concentration levels, radiative forcing, temperature targets, or cumulative emissions. Drivers
Domestic climate policy Planned and/or implemented national climate and energy policies, such as taxes, feed-in tariffs, renewable targets, efficiency standards, that affect projected emission reduction. Drivers
GDP per capita Gross Domestic Product per capita, measured as the market value of all goods and services produced in a region in a year, and is used in the IMAGE framework as a generic indicator of economic activity. Drivers
Equity principles General concepts of distributive justice or fairness used in effort sharing approaches. Three key equity principles are: Responsibility (historical contribution to warming); capability (ability to pay for mitigation); and equality (equal emissions allowances per capita). Drivers
Non-CO2 GHG emissions (CH4, N2O and Halocarbons) Non-CO2 GHG emissions (CH4, N2O, Halocarbons). Emissions
CO2 emission from energy and industry CO2 emission from energy and industry. Emissions
Marginal abatement cost Cost of an additional unit of pollution abated (CO2eq). A marginal abatement cost curve (MAC curve) is a set of options available to an economy to reduce pollution, ranked from the lowest to highest additional costs. Energy supply
Land-use CO2 emissions - grid Land-use CO2 emissions from deforestation, wood harvest, agricultural harvest, bioenergy plantations and timber decay. Carbon cycle and natural vegetation
BC, OC and NOx emissions Emissions of BC, OC and NOx per year. Emissions
SO2 emissions SO2 emissions, per source (e.g. fossil fuel burning, deforestation). Emissions
CO and NMVOC emissions Emissions from CO and NMVOC. Emissions
External datasetsDescriptionSource
Investment and Capital Stock Database on investment and capital stock on country level. Used to determine initial capital stocks and savings rates. IMF
Other energy and land-use models Emission projections and marginal abatement costs curves based on external models, such as the IIASA land-use models or the POLES database. Enerdata Global Energy & CO2 Data, IIASA database

Output Climate policy component

IMAGE model variablesDescriptionUse
Carbon price Carbon price on the international trading market (in USD in 2005 per tonne C-eq) calculated from aggregated regional permit demand and supply curves derived from marginal abatement costs.
Emission abatement Reduction in emission factors as a function of Climate policy.
Emission trading Emission credits traded between regions Final output
Consumption loss Loss of private consumption due to mitigation and adaptation costs and residual damage. Final output
Adaptation costs Costs for adaptation measures to reduce the vulnerability of natural and human systems to actual or expected climate change effects. Final output
Residual damage Climate change damage remaining after adaptation. Final output
Global emission pathways Global emission pathway consistent with a specific long-term climate target. Final output
Mitigation costs Net costs of measures to reduce greenhouse gas emissions. Final output