Economic damages from on-going climate change imply deeper near-term emission cuts

Anselm Schultes, Franziska Piontek, Bjoern Soergel, Joeri Rogelj, Lavinia Baumstark, Elmar Kriegler, Ottmar Edenhofer and Gunnar Luderer

MPRA Paper from University Library of Munich, Germany

Abstract: Current analyses of pathways limiting global warming to well below 2°C, as called for in the Paris Agreement, do not consider the climate impacts already occurring below 2°C. Here we show that accounting for these damages significantly increases the near-term ambition of transformation pathways. We use econometric estimates of climate damages on GDP growth and explicitly model the uncertainty in the time that damages persist and in the climate sensitivity. We find that carbon prices in 2030 are higher compared to the case where only the 2°C is considered; the median value is $115 per tonne of CO2. The long-term persistence of damages, while highly uncertain, is a main driver of optimal near-term climate policy. Accounting for damages on economic growth increases the gap between the currently pledged nationally determined contributions and the welfare-optimal 2030 emissions for 2°C by two thirds, compared to pathways considering the 2°C limit only.

Keywords: Climate change; Climate change mitigation; Climate change impacts; Climate policy; International climate policy; Paris Agreement; Transformation pathways (search for similar items in EconPapers)
JEL-codes: F53 O13 Q5 Q54 Q56 (search for similar items in EconPapers)
Date: 2020-08-15
New Economics Papers: this item is included in nep-ene, nep-env and nep-res
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