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FAIR, the climate policy model in IMAGE 3.0
Flowchart Climate policy. See also the Input/Output Table on the introduction page.

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., 2009; Van Vuuren et al., 2011b,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 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). Next, this module analyses the impact of planned and/or implemented domestic mitigation policies, such as carbon taxes, feed-in tariffs and renewable targets, on national emissions by 2030 to determine whether countries are on track with their reduction pledges (Roelfsema et al., 2014; Den Elzen et al., 2015a; Den Elzen et al., 2016; Kuramochi et al., 2016). 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. Finally, the PBL Climate Pledge INDC 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). 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, 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., 2008; Den Elzen et al., 2011a). 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. 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 on the AD RICE model (De Bruin et al., 2009), which are based on total damage projections made by the RICE model. Calibration of the regional adaptation cost functions 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.[1]Each region is calibrated separately to the exogenous GDP path. Damages, adaptation and abatement costs are subtracted from investment or consumption to determine either the direct replacement effect on consumption, or the indirect effect from replacing investments.

  1. 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, particularly physical capital and labor, and the amount of output that can be produced by those inputs.