The Impact of Economic Models on Climate Change Policy: Contrasts Between the U'S' and the E'U'

1
The Impact of Economic Models on Climate Change
Policy Contrasts Between the U.S. and the E.U.
Prepared by Dr. Margo Thorning Managing
Director International Council for Capital
Formation Park Leopold Rue Wiertz 50/28 B-1050
Brussels, Belgium Email mthorning_at_iccfglobal.org
Web www.iccfglobal.org Tel [phone] Fax
32.2.401.68.68
2
CO2 Reductions Required by 2050 to Stabilize
Concentrations at 550 PPM
United States
Canada
Russia
Japan
European Union
Germany
United Kingdom
Italy
France
Reduction Required of CO2 ( 1998 level)
-38
-48
-52
-56
-59
58
-62
-75
-80
Source U.K. Interdepartmental Analysts Group
3
Impact of Kyoto Protocol on GDP levels in the
U.S. Over the 2008-2012 Period
Manne/Richels (NT)
Admin/CEA(T)
DOE/EIA (NT)
WEFA(NT)
ABARE(NT)
CRA(NT)
DRI(T)
Percent change from baseline
TEmissions Trading NTDomestic abatement only
4
If You Saw This Chart What Would You Think?
Partial Equilibrium Models
of GDP in 2010
General Equilibrium Models
Macroeconomic Models
5
Impact of Kyoto Protocol on GDP Levels in the EU
in 2010 (Alternative Model Forecasts)
Oxford
DRI-WEFA Germany
DRI-WEFA UK
DRI-WEFA Spain
G-Cubed
ABARE-GTEM
MERGE3
MS-MRT
PRIMES
MARKAL
DRI-WEFA Netherlands
Partial Equilibrium Models
of GDP in 2010
General Equilibrium Models
Macroeconomic Models
6
Impact of the Kyoto Protocol and Additional GHG
Reductions on Italian GDP, 2010-2025
2020
2025
2010
Percent change from baseline
73 euros per tonne of carbon 183
euros per tonne of carbon 366 euros per
tonne of carbon
7
Alternative Strategies to Address Climate Change

• Technology development to reduce energy intensity
• Increase Research Development
• Reform tax code to lower the cost of new
  investment
• Sequestration
• Enhance natural systems
• Develop man-made technologies
• Expand the role of nuclear energy
• Expand bilateral cooperation with developing
  countries
• Promote a truly global solution