Parts of Climate policy/Description
|Component is implemented in:|
|Related IMAGE components|
Model description of Climate policy
FAIR consists of six linked modules as presented in the flowchart and described briefly below.
Global pathfinder and climate module
The pathfinder module FAIR-SiMCaP calculates global emission pathways that are consistent with a long-term climate target (Den Elzen et al., 2007; Van Vliet et al., 2012; Van den Berg et al., 2015). Inputs are climate targets defined in terms of concentration levels, radiative forcing, temperature, and cumulative emissions. In addition, intermediate restrictions on overshoot levels or intermediate emission targets representing climate policy progress can be included. The model combines the FAIR mitigation costs model and a module that minimises cumulative discounted mitigation costs by varying the timing of emission reductions. For climate calculations, FAIR-SiMCaP uses the MAGICC 6 model, with parameter settings calibrated to reproduce the medium response in terms of time scale and amplitude of 19 IPCC AR4 General Circulation Models (Meinshausen et al., 2011b).
Policy evaluation module
The Policy evaluation module calculates emission levels resulting from the reduction proposals (pledges and NDCs) and mitigation actions submitted by developed and developing countries as part of the 2015 UNFCCC Paris agreement (Den Elzen et al., 2016; Rogelj et al., 2016). This module also collects the emission projections of current and planned policy scenarios as calculated by the IMAGE-TIMER model (Roelfsema et al., 2018). These scenarios take into account the impact of individual policies in different subsectors that are implemented in 25 major emitting countries (Kuramochi et al., 2018). The module is used in conjunction with a wide range of evaluation tools developed in cooperation with IIASA and JRC, such as tools for analysing policy options for land-use credits and surplus emissions. The PBL Climate Pledge NDC tool gives a summary of the greenhouse gas emission reduction proposals, domestic policies of major countries and the impact on the emissions by 2030.
Effort sharing module
The Effort sharing module calculates emission targets for regions and countries, resulting from different emission allocation or effort-sharing schemes (Den Elzen et al., 2012a; Hof et al., 2012; Van den Berg et al., 2019). Such schemes start either at the global allowed emission level, after which the effort-sharing approach allocates emission allowances across regions, or at the required global reduction level, after which various effort-sharing approaches allocate regional emission reduction targets. Both approaches use information from the Global Pathfinder and Climate module on the required global emission level or emission reductions. As an alternative, emission allowances can be allocated to regions without a predefined global reduction target, based on different effort-sharing approaches. The model includes effort-sharing approaches such as Contraction & Convergence, common-but-differentiated convergence, ability to pay, and a multi-stage approach.
Mitigation costs module
The Mitigation costs module is used for calculating the regional mitigation costs of achieving the targets calculated in the Policy Evaluation and/or the Effort Sharing modules, and to determine the buyers and sellers on the international emissions trading market (Den Elzen et al., 2011a; Hof et al., 2017). Inputs to the model are regional gas- and source-specific Marginal Abatement Cost (MAC) curves that reflect the additional costs of abating one extra tonne of CO2 equivalent emissions. CO2 MAC curves are derived from the energy and land-use modules of IMAGE. Non-CO2 MAC curves are based on Lucas et al. (2007) and Harmsen et al. (2019c). The MAC curves describe the potential and costs of the abatement options considered. The model uses aggregated regional permit demand and supply curves derived from the MAC curves to calculate the equilibrium permit price on the international trading market, its buyers and sellers, and the resulting domestic and external abatement per region. The design of the emissions trading market can include: constraints on imports and exports of emission permits; non-competitive behaviour; transaction costs associated with the use of emission trading; a less than fully efficient supply of viable CDM projects with respect to their operational availability; and the banking of surplus emission allowances.
Damage and Cost-Benefit Analysis modules
The Damage and Cost-Benefit Analysis modules calculate the consumption loss resulting from climate change damage, and compare these with the consumption losses of adaptation and mitigation costs (Hof et al., 2008; 2009; 2010; Admiraal et al., 2016). Estimates of adaptation costs and residual damage (defined as the damage that remains after adaptation) are based either on the AD RICE model (De Bruin et al., 2009), which are based on total damage projections made by the RICE model, or on output from sectoral impact models. Calibration of the regional adaptation cost functions of AD RICE is based on an assessment of each impact category described in the RICE model, using relevant studies and with expert judgement where necessary. The optimal level of adaptation can be calculated by the model, but may also be set to a non-optimal level by the user.
Estimation of consumption losses
Consumption losses due to mitigation, adaptation and climate change damage are estimated based on a simple Cobb–Douglas production function. The production factors are labour and capital. Regional changes in labour over time are based on the projected changes in total regional population. Initial regional capital stocks are based on the Investment and Capital Stock Dataset of the IMF. Future capital stocks depend on depreciation (set at 5% per year) and investments. Investments depend on the savings rate and initial savings rates are taken from the same IMF source. Total factor productivity of each region is calibrated to the exogenous GDP path without damage or mitigation costs. In a second step, damages, adaptation and abatement costs are subtracted from investment or consumption to determine both the direct replacement effect on consumption and the indirect effect from replacing productive investments.
- The Cobb–Douglas production function is a particular functional form of the production function widely used to represent the technological relationship between the amounts of two or more inputs and the amount of output that can be produced by those inputs.