Atmospheric Stabilization and the Role of Energy Technology

American Council for Capital Formation
December 1996
By Jae Edmonds, James Dooley, and Marshall Wise*

*Summary of a paper by Jae Edmonds, James Dooley, and Marshall Wise of Pacific Northwest National Laboratory. This paper was prepared for a September 11, 1996 policy conference sponsored by the ACCF Center for Policy Research, and will be published in the ACCF's forthcoming book, Climate Change Policy, Risk Prioritization, and U.S. Economic Growth.

Summary

Stabilization of atmospheric greenhouse gas concentrations could require a very significant commitment of world resources largely because carbon emissions from fossil fuel use must eventually be phased out to realize the ultimate objective of the Framework Convention on Climate Change (FCCC).

The costs of stabilizing the atmosphere depend upon the timing with which emissions mitigation occurs, the flexibility available to participating nations in mitigating emissions, and the available technologies. Stabilizing the atmosphere with the present suite of 1990-vintage technologies would cost between one and three percent of present discounted GDP even with the most efficient implementation over space and time. Stabilizing the atmosphere with the suite of technologies anticipated in the Intergovernmental Panel on Climate Change (IPCC) IS92a reference scenario significantly lowers costs if a set of institutions can be created that encourage the use of flexible emissions reduction strategies and if advanced non-carbon energy technologies are developed. While these advanced technologies do offer promise, their development is uncertain and the cost of reaching the emissions reductions assumed in this study could be substantial. If the technologies assumed here are not widely used in future industrial societies, then the costs of stabilizing atmospheric greenhouse gas concentrations will be very high.

Introduction

The Framework Convention on Climate Change (United Nations 1992), signed by 161 nations as of April 1996, seeks to stabilize the concentration of greenhouse gases in the atmosphere. This goal is not further defined, however, leaving open several questions, including the level at which to seek a stable concentration, and the time frame in which to accomplish the goal.

The impact on human activities of achieving this goal is unclear, even though considerable research has been undertaken. The IPCC (1995) identified a set of anthropogenic carbon emissions paths leading to stable carbon dioxide (CO₂) concentrations at levels ranging from 350 parts per million volume (ppmv) to 750 ppmv. In 1994 the concentration of CO₂ in the atmosphere was 358 ppmv. Thus, the IPCC's scenarios spanned a range of concentrations which are lower than the present to more than double the preindustrial concentration of 275 ppmv.

There are in principle an infinite number of anthropogenic CO₂ emissions trajectories which could be followed to stay beneath an arbitrary ceiling. Each emissions path has a variety of implications for policymakers concerned about potential human impacts on climate. Wigley, Richels, and Edmonds (WRE 1996) developed a set of trajectories for concentration ceilings of 350, 450, 550, 650, and 750 ppmv referred to respectively as WRE350, WRE450, WRE550, WRE650, and WRE750. These trajectories were developed to illustrate an alternative to an earlier set of stabilization trajectories presented by the IPCC (1995) which were referred to as S350, S450, S550, S650, and S750.

Three Phases of Stabilization Trajectories

While the optimal level for stabilizing atmospheric CO₂ concentrations remains undetermined, several observations transcend this uncertainty. For concentration levels 450 ppmv and higher, all emissions trajectories exhibit three distinct phases. The first phase is characterized by increasing global emissions. During the second phase, emissions peak and are relatively stable. In the third phase, emissions decline in perpetuity. If a steady-state CO₂ concentration target less than 450 ppmv is chosen, only the third emissions reduction phase is relevant. For example, to effect the S350 case, emissions should have peaked in 1994 and be declining. For the WRE350 case, global emissions do not peak until 2005, but they must decline perpetually thereafter, and for a period become negative.

Important lessons can be drawn about the three phases most emissions scenarios pass through. First, any policy prescription which begins with the proposition that global CO₂ emissions must immediately decline relative to 1990 levels implies a concentration below 500 ppmv until the end of the next century. However, unless further measures are taken to ensure a long-term decline in emissions, the program will not produce a steady-state atmospheric concentration.

Timing of the three phases differs somewhat between the S series and WRE series. Table 1 shows the date at which emissions begin to depart from the IS92a reference scenario, the date at which emissions reach their maximum, and the maximum value they attain.

We arbitrarily define the deflection date to be the year in which emissions in the IS92a trajectory first exceed emissions in the stabilization trajectory by more than 0.1 PgC/year. In the S series of stabilization trajectories, emissions depart immediately from the reference trajectory, while in the WRE cases the deflection date is postponed. Global emissions should have begun to depart from the IS92a scenario no later than 1992 to satisfy even the least stringent S series atmospheric stabilization emissions trajectory. The degree of postponement in the WRE trajectories relative to the S series depends on the eventual steady-state level. In no WRE case is deflection delayed beyond 2023 and for the 450 ppmv steady-state level deflection occurs in 2007.

The date at which emissions reach their maximum is systematically later in the S series of trajectories than in the corresponding WRE series. The greatest difference between the WRE and the S series occurs in the 550 ppmv steady-state. In this case, emissions peak in 2033 for WRE and then gradually recede from the maximum global emission rate of 11.2 PgC/year. This contrasts with the year 2063 peak emission of 8.9 PgC/year in the S series.


Participation in Emissions Mitigation

The discussion above reflects a global perspective. But the FCCC and the Conference of the Parties (COP 1995) differentiate responsibilities associated with Annex I* and non-Annex I nations in emissions mitigation. While the Framework Convention calls on Annex I nations to take the first steps, it is abundantly clear that Annex I nations alone cannot sufficiently reduce emissions to stabilize concentrations at 750 ppmv or lower.

*According to United Nations (1992), Annex I is the group of nations: Australia, Austria, Belarus, Belgium, Bulgaria, Canada, Czechoslovakia, Denmark, European Economic Community, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Russian Federation, Spain, Sweden, Switzerland, Turkey, Ukraine, United Kingdom of Great Britain and Northern Ireland, and the United States.

Figure 1 shows Annex I emissions trajectories consistent with WRE and S series emissions trajectories on the assumption that non-Annex I nations' emissions are unaffected by Annex I reductions. As Edmonds, Wise, and Barns (1995) and Richels et al. (1996) have shown, non-participating nations may have unintended changes in emissions through trade effects. As Figure 1 shows, even if Annex I emissions are totally eliminated, non-Annex I emissions by themselves will exceed the WRE and S trajectories.

Figure 1	Annex I Emissions Trajectories Necessary to Effect WRE and S Atmospheric Stabilization Scenarios on the Assumption that Non-Annex I Emissions Are Unaffected

Cost, Timing, Technology, and Flexibility

This study estimated the cost of stabilizing the atmosphere using the MiniCAM 2.0 model (Edmonds, et al. 1996; Barns, Edmonds, and Reilly 1992; Edmonds, et al. 1986; and Edmonds and Reilly 1985). Costs are estimated for three sets of cases: WRE, S, and Least-Cost steady-state concentration trajectories. Costs (in 1990 dollars) are computed in the year incurred and discounted to the present at 5 percent per year. In most stabilization targets, the S trajectory costs two to three times more than the WRE trajectory (see Figure 2).

Figure 1	MiniCAM 2.0 Costs of Stabilizing the Atmospheric CO2 Concentration at Levels Ranging From 450 ppmv to 750 ppmv for Three Alternative Sets of Emissions Trajectories (S, WRE, and Least-Cost) and One Non-Stabilization Case

We have explored the cost implications of several alternative emissions mitigation trajectories and discovered that there are penalties associated with inflexibly implementing emissions abatement policies. Consider the case where only OECD nations undertake emissions reductions, stabilizing their individual emissions at 1990 levels until 2010, at which time emissions are reduced to 20 percent of 1990 levels and held there indefinitely, and that emissions reductions must be undertaken in the responsible region without shifting emissions to another time period. These emissions reductions decrease atmospheric concentrations in 2100 by 53 ppmv. OECD-only reductions are insufficient to stabilize the atmosphere. Both global emissions and concentrations of CO₂ are rising in 2100. This reduction occurs at a present discounted cost of $1.6 trillion over the period 1990 through 2050. (See Figure 2 for a comparison of concentrations and costs.)

Technology Development Costs

To explore the role of energy technology, we have constructed three cases in which we stabilize the atmosphere with different technologies. The resulting present discounted cost of realizing alternative steady-state concentrations with associated WRE emissions trajectories is shown in Table 2 as a percentage of present discounted GDP. In the first case, energy technology is assumed to be static at 1990 costs and efficiency rates. In the second case, we report results for the IS92a technology assumptions. In the third case, we explore the benefits to be obtained by assuming that cost and performance of technologies identified in IPCC (1996) materialize by 2020 (advanced technology case).

The advanced technology case examines technologies which might be introduced in the future, but which presently are not available. These technologies include: advanced liquefied hydrogen fuel cells; hydrogen transformation from natural gas, biomass, or electrolysis; non-fossil fuel electric power generating technologies including solar photovoltaic, nuclear fusion, and wind; and commercial biomass energy production. Mean potential costs for the non-carbon electric technology set are assumed to decline to a cost of $0.04/kWh by 2020 and decline 0.5 percent per year thereafter. Biomass energy is assumed to be available at costs ranging from $1.40-$2.40/GJ.

The impact of these technologies on the cost of stabilizing atmospheric CO₂ concentrations at various levels is reported in Table 2. For the 450 ppmv steady-state concentration, the present discounted value is approximately three trillion 1990 US dollars, and for the 550 ppmv steady-state the present discounted value is approximately one trillion 1990 U.S. dollars (the difference between costs in IS92a and the advanced technology case). The value of these technologies declines precipitously as the steady-state CO₂ concentration rises above 550 ppmv.

In the foregoing analysis of the cost of stabilizing the atmospheric concentration of CO₂, we not only assume that non-carbon technologies identified in IPCC (1996) become available in 2020, but that the class of non-carbon energy technologies continues to improve over time. This expectation is based on two foundations. First, the assumption is consistent with historical experience. New technologies have continually emerged over time. And second, there exist a variety of scientific developments which, though now in their early stages, could in time revolutionize the production and use of energy.

One such technology group seeks to combine recent advances in nanotechnology-the design and building of structures atom-by-atom-with an emerging class of microtechnologies that control traditional chemical and energy processes within channels a few hundred microns wide. Nano-structure versions of key energy components (such as highly selective membranes) can be combined with the heat and mass transfer benefits of microtechnologies to improve energy transformation and CO₂ emissions. This approach offers many substantial benefits, including, for example, improved heat and mass transfer, improved control of chemical reaction rates, improved mobility, greater safety and reliability, and higher power densities (Wegeng, Call, and Drost 1996).

While it is difficult to see precisely which applications will prove to be important in shaping energy futures, it is clear that energy systems of the future could differ dramatically from those presently available and could be significantly more efficient. Given present trends in energy research and development, there is no assurance that future energy technologies assumed in the IS92a scenario will be available, to say nothing of those potentially available from advanced technology development.

Conclusions

With substantial improvement in energy technologies relative to 1990, and institutional mechanisms for reducing emissions whenever and wherever reduction is cheapest, stabilizing the concentration of atmospheric CO₂ is potentially achievable at present discounted costs of less than one percent of global GDP. Failure to provide either the technology or institutions could lead to ineffective and expensive emissions mitigation.

The development of advanced non-carbon energy technologies holds the promise of reducing the cost of stabilizing atmospheric concentrations of greenhouse gases. However, development of these technologies is uncertain and the costs of reaching the development levels assumed in this study could be high. If these technologies are not brought online as assumed in this study, then the cost of stabilizing greenhouse gas concentrations will be very substantial. The key to effective development and deployment of efficient, low-emissions technologies is increased funding. Indeed, additional research and development funding is a "no-regrets" action since it would correct the underproduction of goods and services that would result if high taxes and ineffective regulation-rather than advanced technologies-are used to stabilize future greenhouse gas concentrations.

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