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

Michael Funke, Yu-Fu Chen and Nicole Glanemann

Quantitative Macroeconomics Working Papers from Hamburg University, Department of Economics

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; CO2 scenarios; non-perpetual real options (search for similar items in EconPapers)
JEL-codes: D81 Q51 Q54 (search for similar items in EconPapers)
Date: 2011-11
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http://www.uni-hamburg.de/fachbereiche-einrichtungen/fb03/iwwt/makro/WP3664.pdf (application/pdf)

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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Persistent link: https://EconPapers.repec.org/RePEc:ham:qmwops:21111

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