DEVELOPMENT OF LOW-CARBON POWER TECHNOLOGIES AND THE STABILITY OF INTERNATIONAL CLIMATE COOPERATION

Vicki Duscha, Jan Kersting, Sonja Peterson, Joachim Schleich and Matthias Weitzel
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Vicki Duscha: Fraunhofer Institute for Systems and Innovation Research, Breslauer Strasse 48, 76139 Karlsruhe, Germany
Jan Kersting: ��TWS Partners AG, Widenmayerstr. 38, 80538 München, Germany
Sonja Peterson: ��Kiel Institute for the World Economy, Kiellinie 66, 24105 Kiel, Germany

Climate Change Economics (CCE), 2021, vol. 12, issue 04, 1-30

Abstract: This paper explores the effects of the technological development of key low-carbon power technologies (photovoltaic (PV), wind, and carbon capture and storage (CCS)) on the stability of global climate cooperation under several assumptions about climate-related damage. The methodology combines cooperative game theory with a global computable general equilibrium (CGE) model allowing us to endogenize testing of stability of the global coalition and to include macroeconomic effects. Global cooperation is found to be stable only under mean or pessimistic assumptions about the development of key low-carbon power technologies and when damage is severe. If the technological development is favorable or climate damage is not severe, the gains from global cooperation are not sufficient to compensate for mitigation costs, because a nonglobal coalition of willing countries can then achieve emission reductions close to the global optimum. Finally, our findings support establishing nonglobal ‘climate clubs’ to overcome the lack of global cooperation in international climate policy.

Keywords: International climate regime; technological uncertainty; cooperative game theory; computable general equilibrium model (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:wsi:ccexxx:v:12:y:2021:i:04:n:s2010007821500135

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DOI: 10.1142/S2010007821500135

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