Time is Running Out: The 2°C Target and Optimal Climate Policies

Yu-Fu Chen, Michael Funke and Nicole Glanemann

No 262, Dundee Discussion Papers in Economics from Economic Studies, University of Dundee

Abstract: The quintessence of recent natural science studies is that the 2°C target can only be achieved with massive emission reductions in the next few years. The central twist of this paper is the addition of this limited time to act into a non-perpetual real options framework analysing optimal climate policy under uncertainty. The window-of-opportunity modelling setup shows that the limited time to act may spark a trend reversal in the direction of low-carbon alternatives. However, the implementation of a climate policy is evaded by high uncertainty about possible climate pathways.

Keywords: Climate policy; carbon dioxide scenarios; non-perpetual real options (search for similar items in EconPapers)
JEL-codes: D81 Q51 Q54 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2011-12
New Economics Papers: this item is included in nep-ene and nep-env
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Related works:
Working Paper: Time is Running Out: The 2°C Target and Optimal Climate Policies (2012)
Working Paper: Time is Running Out: The 2°C Target and Optimal Climate Policies (2011)
Working Paper: Time is Running Out: The 2°C Target and Optimal Climate Policies (2011)
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