the costs of climate change
DESCRIPTION
The Costs of Climate Change. International Conference on Climate Change 29 – 31 May 2007 Hong Kong Convention and Exhibition Centre. Dr. Ottmar Edenhofer. Cost-Benefit Approach to Climate Change Management:. Climate Protection Benefits. =. -. -. Avoided Damages. Adaptation Costs. - PowerPoint PPT PresentationTRANSCRIPT
The Costs of Climate Change
Dr. Ottmar Edenhofer
International Conference on Climate Change
29 – 31 May 2007
Hong Kong Convention and Exhibition Centre
Cost-Benefit Approach to Climate Change Management:
AvoidedDamages
Climate Protection Benefits
Adaptation Costs
Mitigation Costs
=
- -
Tipping Points in the Earth System
Source: OECD (2003) and Kemfert (2004)
Economic Damages in % of GDP
-5
0
5
10
15
20
25
30
35
40
1 2 3 4 5 6
Temperature
in %
GD
P
Temperature Increase
In %
of
GD
P
Nordhaus
Natural Scientists
Kemfert-high
Stern Review
Environmental Scientists
Tol
Kemfert-low
Social Scientists
Source: OECD (2003) and Kemfert (2004)
Economic Damages in % of GDP
-5
0
5
10
15
20
25
30
35
40
1 2 3 4 5 6
Temperature
in %
GD
P
Temperature Increase
In %
of
GD
P
Nordhaus
Natural Scientists
Kemfert-high
Stern Review
Environmental Scientists
Tol
Kemfert-low
Social Scientists
Are there limits to adaptation?
Dutch cow ready for sea level rise?
Sou
rce:
Ede
nhof
er, L
essm
ann
et a
l. 20
06
Mitigation Costs with ITC
Cost-Benefit Analysis
Losses BAU: GWP - 0.84% / 8.5% (2175-2195)
Losses CBA: GWP - 0.8% / 1.8% (2050) ; Cons. - 1.2% / 3.3%(2050)
How to avoid dangerous climate change?
Business As Usual
2°CDangerous Climate Change
Year 2000 ConstantConcentrations
Mitigation and Adaptation
Mitigation
• Reduces GHG emissions.
• Potential benefits are global and expected after 30-50 yrs.
Adaptation• Reduces impacts per
warming scenario.
• Direct benefits are regional.
Mitigation and Adaptation are Complementary!
Glo
bal S
urfa
ce W
arm
ing
(°C
)
The Mitigation Gap‘Business as Usual’
EmissionsEmissionsReductionReduction
What is an Energy System?
Hard Coal: Global Distribution of Reserves & Resources
2,078 Gt = scaling factor 1
Global Reserves: 728 Gt
Source: BGR (2005), Reserves, Resources and Availability of Energy Resources 2005
Brown Coal: Global Distribution of Reserves & Resources
434 Gt = scaling factor 1
Global Reserves: 207 Gt
Source: BGR (2005), Reserves, Resources and Availability of Energy Resources 2005
Biomass Combined Heat-power
Natural Gas NGCC
Solar energy
Wind energy
Hydropower
Nuclear LWR Geothermal energy
Natural Gas NGCC with CCS
Coal PC
EJ/aElectricity production
(450 ppm Scenario)
EJ/aElectricity production
(450 ppm scenario with nuclear power phase-out)
Energy costs due to nuclear power phase-out will
increase by 4.6 %
Biomass Combined Heat-power
Natural Gas NGCC
Solar energy
Wind energy
Hydropower
Nuclear LWR Geothermal energy
Natural Gas NGCC with CCS
Coal PC
Default values for solar energy: learning rate 0,2 – floor costs 1000 $/kW
floor costs of solar energy ($/kW)
learning rate of solar energy
rela
tive
cost
incr
ease
(%
)
Additional costs due to nuclear phase-out
(mitigation costs with nuclear phase-out minus mitigation costs without nuclear phase-out )
New Territory ???
RCLC1 Cushing, Ok Crude Oil Future Contract 1 (Dollars per Barrel)
0
10
20
30
40
50
60
70
Fe
b 1
8, 1
98
2
Ju
l 0
3, 1
98
3
No
v 1
4, 1
98
4
Ma
r 2
9, 1
98
6
Au
g 1
1, 1
98
7
De
c 2
3, 1
98
8
Ma
y 0
7, 1
99
0
Se
p 1
9, 1
99
1
Ja
n 3
1, 1
99
3
Ju
n 1
5, 1
99
4
Oct 2
8, 1
99
5
Ma
r 1
1, 1
99
7
Ju
l 2
4, 1
99
8
De
c 0
6, 1
99
9
Ap
r 1
9, 2
00
1
Se
p 0
1, 2
00
2
Ja
n 1
4, 2
00
4
Ma
y 2
8, 2
00
5
Oct 1
0, 2
00
6
Pri
ce
(c
urr
en
t d
oll
ars
/bb
l)
In the history of oil use, we have never before experienced a prolonged period of ever-increasing oil prices
Futures Market
Oil prices at which energy sources are economically available
Fuel Price
$ per Barrel
Energy Sources in Transportation
$ 80 Biodiesel
$ 60 US corn-based ethanol
$ 50 Shale oil, Biomass-to-liquids
$ 40 Tar sands, Gas-to-liquids, Coal-to-liquids, Brazilian ethanol
$ 20 Conventional Oil
Source: The Economist, Apr 22nd 2006, 67
Primary Energy Secondary Energy
TransportFuels
Electricity
Hydrogen
FossilFuels
Biomass
NGCC, NGT, CHP + CCS
Fischer-Tropsch + CCS
IGCC, PC + CCS
Biodiesel & Bioethanol Production
CHP
Hydrogen Production + CCS
Carbon Sequestration
Coal
Natural Gas
Edenhofer/Lueken 2007
Biomass: Potential and its utilisation
Bioenergy Potential of Europe(15% of Primary Energy Consumption in 2030)
EEA, 2006
Comparative Advantage of Renewables
EUA Closing Prices, historical
32€
12€
8€
4€
0€
16€
20€
24€
28€
Dec 05
Apr 0
5
Jun 0
5
Aug 05
Oct 05
Dec 05
Feb 06
Feb 05
Apr 0
6
Jun 0
6
Aug 06
Oct 06
Dec 06
Feb 07
The graph shows daily bid-offer close EUA Dec 2007 prices from December 2004 (blue line) in the OTC market, and EUA Dec 2008 from Sept 2005 (red line). The data was updated 15 March 2007
Source: Point Carbon
A Bretton Woods Carbon Market
GlobalCO2
Market
CO2
Price
EU ETS
RGGI
California
(Global) Technology Initiative
Carbon Central Bank
EfficiencyRenewable Energy
CCS
CO2-Emissions