Modeling Climate Policy Instruments in a Stackelberg Game with ...

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86 4 EVALUATION OF POLICY INSTRUMENTS Labor R&D Energy R&D Renewable energy R&D LbD subsidies −10.5 54.1 2163.5 −15.2 Table 12: Relative change in % of transfer volumes from BAU to RED Figure 33: Comparison of transfer volumes of BAU and RED Impact of Technologies on Mitigation Policy To study the impacts of renewable energy and ETC for mitigation policies, the following model runs are analyzed and compared: Basemodel (standard parameters) Basemodel (high elasticity of resource substitution, i.e. s = 2.0) Basemodel (high elasticity of energy substitution, i.e. s 1 = 2.0) ETC model without renewable energy ETC model with renewable energy Fig. 35 shows the impact of such technological options on the optimal resource tax. As already the parameter study of elasticities (Fig. 13) showed, resource tax rates fall with a better substitutablilty of fossil resources and energy. In contrast, if ETC augments overall as well as energy productivity, tax rates increase considerably if no renewable energies are available. Thus, although energy and carbon efficiency increase, demand for resources also grows due to rebound effects (as already examined in Sec. 4.4.1 and 4.4.2) and has to be dropped by high resource taxes. This changes substantially if renewable energy is available. The latter becomes already competitive at small scales with sectoral ETC and increasing resource prices (due to the Hotelling rule) in the BAU case. With additional moderate resource taxes and higher R&D expenditures, renewable energy replaces fossil energy completely in the RED scenario. Furthermore technological options have an important impact on the timepath of resource extraction and hence on mitigation. Fig. 35 shows that higher
4.4 Technology Policy 87 300 250 Basemodel Basemodel - High Resource Elasticity Basemodel - High Energy Elasticity ETC Model without Renewable Energy ETC Model with Renewable Energy 200 Resource Tax 150 100 50 0 0 20 40 60 80 100 120 Time [Years] Figure 34: Resource tax under several technology and policy options energy substitutability leads to a flatter extraction path while high resource substitutability and renewable energy shift extraction foreward. In contrast, the ETC model without renewable energy does not influence the timing considerably. Increased energy and resource efficiency are mainly used for output augmenting under the mitigation constraint but not for a shifting of mitigation across time. Abatement is usually shifted to the future because a positive pure time preference rate discounts future costs. The dynamic of the finite resource stock even amplifies this effect because – according to Hotelling’s rule – the price of not extracted resources has to increase over time. This augments opportunity costs of early abatement and thus impides a more uniform extraction path with considerable resource depletion in long-term future. As renewable energy provides a backstop price for fossil resources, all the resources which can be depleted without exceeding the mitigation goal, have to be extracted before the backstop price is reached. Thus, renewable energy drives on resource dynamics and leads to early extraction. Above results confirm the qualitative similar behavior of an additional renewable energy option and a higher elasticity of resource extraction. This can justify the technical approximation of an renewable energy sector by a higher substitutability of resources by capital. Furthermore Fig. 34 and 35 highlight the high sensitivity of an optimal resource tax respect to elasticities and availability of renewable energy. As estimation of the “real” parameters, learning curves and technological development in the renewable energy sector is afflicted with high uncertainties, the efficacy of the price instrument in reality is very dubious.
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Matthias Kalkuhl Modeling Climate P
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CONTENTS III Contents 1 Introductio
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LIST OF FIGURES V List of Figures 1
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LIST OF ABBREVIATIONS VII List of A
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EXECUTIVE SUMMARY IX Executive Summ
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1 “Climate change is a result of
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1.3 Scope of this Thesis 3 a wide p
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5 2 Methods and Economic Theory 2.1
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2.3 Economic Theory and Policy Inst
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2.4 Review of Climate Economic Mode
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2.6 Implications and Challenges 19
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21 3 Model Development and Analysis
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23 Although population growth is an
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3.1 Description of the Basemodel 25
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3.2 Model Extensions 33 3.2 Model E
Page 47 and 48: 3.2 Model Extensions 35 first-stage
Page 49 and 50: 3.2 Model Extensions 37 augments fa
Page 51 and 52: 3.3 Model Calibration 39 Resource S
Page 53 and 54: 3.3 Model Calibration 41 3.3.4 Elas
Page 55 and 56: 3.3 Model Calibration 43 3.5 3 T =
Page 57 and 58: 3.4 Analysis 45 ˜F(K Y , K E , K R
Page 59 and 60: 3.4 Analysis 47 imply lim µ(S −
Page 61 and 62: 3.4 Analysis 49 Ċ = Ẏ − I ˙ (
Page 63 and 64: 3.4 Analysis 51 of Barro and i Mart
Page 65 and 66: 3.4 Analysis 53 Figure 10: Shares o
Page 67 and 68: 55 4 Evaluation of Policy Instrumen
Page 69 and 70: 4.1 Price vs. Quantity Policy 57 Fi
Page 71 and 72: 4.1 Price vs. Quantity Policy 59 To
Page 73 and 74: 4.2 Input vs. Output Taxation 61 Fi
Page 77 and 78: 4.2 Input vs. Output Taxation 65 th
Page 81 and 82: 4.3 Competition Policy 69 should me
Page 83 and 84: 4.3 Competition Policy 71 100 95 Pe
Page 85 and 86: 4.3 Competition Policy 73 equations
Page 87 and 88: 4.3 Competition Policy 75 2.5 2 Mon
Page 89 and 90: 4.4 Technology Policy 77 no tax m e
Page 91 and 92: 4.4 Technology Policy 79 Figure 29:
Page 93 and 94: 4.4 Technology Policy 81 without R&
Page 97: 4.4 Technology Policy 85 LbD R&D Lb
Page 103 and 104: 91 5 Concluding Remarks and Reflect
Page 105 and 106: 93 market power, ad-valorem tax pro
Page 107 and 108: climate policy not only may help to
Page 109 and 110: 97 A Reformulating the Discrete Opt
Page 111 and 112: 99 B Derivatives of Several Functio
Page 113 and 114: 101 C The Stackelberg Leader Optimi
Page 115 and 116: 103 Government C gov =Γ + τ K rK
Page 117 and 118: 105 E List of Variables and Paramet
Page 119 and 120: E.2 Parameters 107 s elasticity of
Page 121 and 122: REFERENCES 109 References Abadie, J
Page 123 and 124: REFERENCES 111 Hanley, N., J. F. Sh
Page 125 and 126: REFERENCES 113 Pigou, A. C. (1932).
Page 127 and 128: REFERENCES 115 van der Zwaan, B. C.
Page 129: Ehrenwörtliche Erklärung Hiermit
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