Climate change and the transition to a low carbon economy – Carbon targets and the carbon budget

Unurjargal Nyambuu and Willi Semmler

Economic Modelling, 2020, vol. 84, issue C, 367-376

Abstract: Carbon intensive fuels generate a significant negative externality which is quite relevant for climate change mitigation policy. We propose a dynamic growth model where output is produced using two types of energy sources: fossil fuel and renewable energy. Fossil fuel discovery, extraction, and associated costs are incorporated in our model together with the dynamics of greenhouse gas emissions and consequent damages. Consistent with the empirical facts, our numerical solutions suggest that fossil fuels, especially coal, should not be exploited to depletion. Furthermore, renewable energy should be gradually phased in to meet targets consistent with the Paris 2015 agreement. We show that adopting those policies should slow down the growth rate of cumulative emissions; but the outcome is contingent upon the carbon emission targets set for advanced countries, as distinct from those assigned to developing countries.

Keywords: Climate change; Carbon budget; Fossil fuel; Renewable energy (search for similar items in EconPapers)
JEL-codes: O13 Q32 Q43 Q54 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:84:y:2020:i:c:p:367-376

DOI: 10.1016/j.econmod.2019.04.026

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