1. Is there a mitigation trap? Lessons learnt so far and next steps
Jan Steckel and Michael Jakob
Potsdam Institute for Climate Impact Research
April 20, 2012

2. Leapfrogging can currently not be observed
Energy
Emissions
Developing countries
Developing countries
Stronger coupling of growth and energy
Stronger coupling of growth and emissions
OECD countries
OECD countries
Weaker coupling of growth and energy
Weaker coupling of growth and emissions
‚Decoupling‘ should not be expected for developing countries in the near to midterm
(Jakob et al. 2012)

3. Newly Industrializing Countries‘ growth drive emissions
Global emissions by countries/regions
Contributions to net annual emissions growth coming from different characteristic factors [all in %]
Slower energy efficiency improvements and a growth surge, not necessarily carbonisation, explain China’s explosion of emissions
China’s large contribution to recent global emissions growth
(Steckel et al. 2011)

4. Energy thresholds Cement Steel Threshold at around 40 GJ per capita
Steckel et al. (submitted to EcolEcon)
Threshold at around 40 GJ per capita
Steel
10 GJ per capita can be explained by subsidiary needs
10 – 20 GJ per capita can be explained by infrastructure needs

5. Climate Finance Curse Climate Finance Range [% of GDP] Data
Resource Exports, FDI: Year 2009
Aid: Year 2008
ETS: ReMIND scenario Year 2020

6. Implications Do developing countries face a tri-lemma?
Impacts of climate change most severe in developing countries even though they are not responsible
Mitigation policy has the potential to delay their development
Compensation based on equity principles is difficult

7. Further ideas Threshold effects known to cause trap-like behaviour
Understanding of nature of threshold essential
Threshold externalities of energy at low development levels and interrelation to emissions needs to be further understood
Reasons for traps: special role of energy in development processes (increasing returns to scale at low levels)
Definition of trap not necessarily consistent, in any case, a delay in development seems to be possible which is equally inacceptable for developing countries

8. “Mitigation trap“ in a Solow model
Production function:
[$] KC
Capital formation: K0
In the case of climate policy:
β decreases
The trap gets more likely in the presence of climate policy in the form of βK(s) [Independent from the form of the function s(k)]

9. The resource curse in a coaltion model
Example region: India
MICA: Model of International Climate Agreements (Lessmann et al., 2009)
The creation and stability of a coalition depends on the regions‘ resulting welfare welfare = discounted consumption
Including a resource curse in MICA changes welfare values
 Effect on coalition stability
Consumption
Production
Nahmmacher, Kornek, Lessmann, Steckel (in preperation)

10. Questions and discussion
Thank you very much!
Questions and discussion

11. Additional Slides

12. Model results India Non Annex I Annex I Europe 55 30 50 45 25
FE per capita [GJ] 40
FE per capita [GJ] 35 20 30 15 25
Cat 3+4
2030
Cat 3+4
2050
Cat 1+2
2030
Cat 1+2
2050
Baseline
2030
Baseline
2050
Cat 3+4
2030
Cat 3+4
2050
Cat 1+2
2030
Cat 1+2
2050
Baseline
2030
Baseline
2050
Annex I
140
Europe
160
140
120
FE per capita [GJ]
FE per capita [GJ]
120
100
100 80 80
Baseline
2030
Baseline
2050
Cat 3+4
2030
Cat 3+4
2050
Cat 1+2
2030
Cat 1+2
2050
Baseline
2030
Baseline
2050
Cat 3+4
2030
Cat 3+4
2050
Cat 1+2
2030
Cat 1+2
2050 12

13. Energy and Infrastructure
Investments and GDP are highly significant for steel and cement in developing countries
In OECD countries both are less or not significant
Population is also important factor for both inputs in developing countries
In OECD countries population is only a significant driver for cement
R² are better for cement, might be due to trade patterns

14. Projections of Energy for Infrastructure

15. Decomposing Scenarios
BAU
450ppm CO2

16. China‘s role in global mitigation efforts

17. Energy and Infrastructure
Investments and GDP are highly significant for steel and cement in developing countries
In OECD countries both are less or not significant
Population is also important factor for both inputs in developing countries
In OECD countries population is only a significant driver for cement
R² are better for cement, might be due to trade patterns

18. Mitigation costs might be underestimated.
Why is this important ?
$50
$30
$10
BAU
GDP per capita [$]
Final Energy per capita [GJ]
Aspects of development are usually not included into state of the art energy-economy models (such as ReMIND by PIK)!
Mitigation costs might be underestimated.

19. India’s production and consumption without resource curse
domestic
production
consumption
Emission trading and the resource curse 19

20. India’s production and consumption with resource curse
domestic
production
consumption
Emission trading and the resource curse 20