Optimal Multi-Phase Transition Paths toward A Stabilized Global Climate: Integrated Dynamic Requirements Analysis for the 'Tech Fix'

Paul David and Adriaan van Zon

No 12-006, Discussion Papers from Stanford Institute for Economic Policy Research

Abstract: This paper analyzes the requirements for a social welfare-optimized transition path toward a carbon-free economy, focusing particularly on the role of R&D and other technological measures to achieve timely supply-side transformations in the global production regime that will avert catastrophic climate instability. We construct a heuristic integrated model of macroeconomic growth constrained by geophysical system with climate feedbacks, including extreme weather damages from global warming driven by greenhouse gas emissions, and 'tipping point' for catastrophic runaway warming. A variety of options for technology development and implementation, each having a distinctive primary functionality CO2 emissions control, and the dynamic relationships and interactions among them are examined. The specifications recognize (i) the endogeneity and embodiment of technical innovations, and (ii) the irreversibility and long gestation periods of required intangible (R&D) and tangible capital formation. Efficient exercise of these options is shown to involve sequencing different investment and production activities in separate temporal "phases" that together form a transition path to a carbon free economy. To study the requirements of a timely (catastrophe-averting) transition, we formulate a sequence of optimal control sub-problems linked together by transversality conditions, the solution of which determines the optimum allocation of resources and sequencing of the several phases implied by the options under consideration. Ours is "planning-model" approach, which departs from conventional IAM exercises by eschewing assumptions about the behaviors of economic and political actors in response to market incentives and specific public policy measures. Solutions for each of several multi-phase models yields the optimal phase durations and rates of investment and production that characterize the transition path. Sensitivity experiments with parameters of economic and geophysical sub-systems provide insights into the robustness of the requirements analysis under variations in the technical and geophysical system parameters.

Keywords: global warming; tipping points; catastrophic climate instability; technology fix options; R&D investments; capital-embodied innovations; optimal sequencing; IAM and DIRAM policy design approaches; multi-phase optimal control; sustainable endogenous growth (search for similar items in EconPapers)
JEL-codes: O31 O32 O33 Q54 Q55 (search for similar items in EconPapers)
Date: 2012-12
New Economics Papers: this item is included in nep-ene, nep-env and nep-ino
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www-siepr.stanford.edu/repec/sip/12-006.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to www-siepr.stanford.edu:80 (No such host is known. )

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sip:dpaper:12-006

Access Statistics for this paper

More papers in Discussion Papers from Stanford Institute for Economic Policy Research Contact information at EDIRC.
Bibliographic data for series maintained by Anne Shor ( this e-mail address is bad, please contact ).