The difficulty in implementing comprehensive policies aimed at reducing greenhouse gas emissions has led analysts and researchers to wonder about alternative strategies for dealing with climate change. Geoengineering –that is the deliberate reduction of the incoming solar radiation- has received increased interest in recent years as an alternative or complementary climate strategy to abatement of greenhouse gas emissions. In particular, the uncertainties about the magnitude and impact of climate change contributed to the vision of geoengineering as a last resort type of climate policy, which could render abatement in the short term dispensable. In recent research, we analyse the interaction between both types of climate policies and find that under uncertainty, substantial abatement in the medium and short term remains optimal under fairly general conditions due to the time lag until geoengineering options might be available.
Keywords: Geoengineering, Mitigation, Climate Policy, Uncertainty
JEL classification: Q54, C63, D81
Suggested citation: Emmerling, Johannes, Tavoni, Massimo, Is Geoengineering a Viable Option for Dealing with Climate Change? (April 17, 2013). Review of Environment, Energy and Economics (Re3), http://dx.doi.org/10.7711/feemre3.2013.04.004
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The slow progress in climate change mitigation policies aimed at reducing greenhouse gas emissions has fuelled the discussion about alternative policy options in order to cope with the impacts from climate change. The better known one is adaptation, but most recently ‘climate geo-engineering’ has begun to attract increasing attention. In particular, geoengineering options which either remove carbon dioxide from the atmosphere (carbon dioxide removal or CDR) or counteract the temperature increase by deliberately managing incoming solar radiation (Solar Radiation Management or SRM) have been proposed and increasingly debated over recent years. These two geoengineering options differ fundamentally in terms of costs and effectiveness. While CDR strategies tend to be costly and slow in terms of temperature response, SRM has been argued to be a much more cost-effective solution since it can reduce the effects of global warming relatively fast (Matthews and Caldeira 2007).
The most widely discussed strategy for reducing solar radiation is through stratospheric aerosols. The reduction in solar radiation after volcanic eruptions have provided natural “experiments” as a basis for this strategy. In 1991, the eruption of Mount Pinatubo led to the injection of around 20 megatons of sulphur dioxide into the stratosphere leading to a decrease of global temperature of about 0.5°C in the years after the eruption (Soden et al. 2002). Based on these experiences, a large scale Solar Radiation Management scheme could offset global warming at a fraction of costs of abatement of greenhouse gas emissions (McClellan et al. 2012). It provides thus a potential game-changer for climate policy which has led to a polarizing debate, focussing on the cost-efficient potential to offset climate change and the political difficulties in climate policy negotiations on the one hand, or on the potentially severe consequences such as increased ozone depletion and continued damages from a higher CO2 concentration on the other. Economists have contributed to the debate about risks and virtues of geoengineering, unsurprisingly finding mixed results and mostly relying on numerical simulations, see (Klepper and Rickels 2012) for an overview. The fundamental driver of the divergence of opinion in this debate reside in the assumptions about relative costs, damages, and the uncertainty about the parameters characterising geoengineering (Sterck 2011).
Uncertainy of geoengineering
Very few papers though have provided an explicit modelling of the uncertainty of geoengineering, with the exception of (Moreno-Cruz and Keith 2012). In recent research (Emmerling and Tavoni 2013), we use standard economic models of dynamic decision theory under uncertainty in order to assess the optimal climate policy under uncertainty with geoengineering. We deliberately take an optimistic view about the costs of geoengineering vis à vis abatement to study how much abatement should still be implemented even with a geoengineering option available in the future.
We analyse the optimal climate policy by means of abatement and geoengineering, where the latter is only available in the future and with uncertainty characterizing both the uncertainty of geoengineering as well as the climate. Our results suggest that under fairly general conditions, today’s mitigation effort is decreasing but concave in the probability of success of geoengineering under a fairly general condition. Geoengineering does provide an alternative to abatement, but the uncertainty around its effectiveness makes abatement today respond slowly to the probability of success of geoengineering. The following graph illustrates the results for a reasonable calibration. If geoengineering were a certain option in the future, optimal abatement in the short run would be very low as soon as the effectiveness of geoengineering is slightly above zero as shown by the green curve. Under uncertainty (brown curve), however, the curve is concave in the probability of geoengineering showing a rather "flat" relation as long as the probability of geoengineering being implemented and effective is not close to one. This shows that significant abatement reductions are optimal only if SRM is very likely to be effective.
Figure 1 - Optimal abatement 2005-2050 in per cent of BaU emissions
We also investigate the potential insurance effect of geoengineering using a copula approach to model the relationship between the uncertainty about climate response and geoengineering, and are able to confirm the results for reasonable correlation structures between the climate and the effect of geoengineering. An “insurance” effect arises only if the relatedness between geoengineering becoming effective and severe impacts from climate change is very high and moreover if the probability of SRM becoming a viable option is large enough.
Figure 1 shows the results for different degrees of correlation (ρ) between the effectiveness of geoengineering and climate sensitivity. It reveals that even for a considerable “optimistic” correlation structure that still a significant amount of abatement is optimal to implement.
Numerical results with an integrated assessment model
We confirm the results using a fully-fledged Integrated Assessment Model (WITCH) and find that the results carry over to a much more detailed set up. To assess the quantitative magnitude of the effect of uncertain geoengineering on the optimal abatement path, we integrate geoengineering as an option to reduce solar radiation through stratospheric aerosols. Specifically, we model million tons of sulphur (MtS) injected into the stratosphere to lead –if successful– to a negative radiative forcing of -1.75W/m2 (Gramstad and Tjøtta 2010) per MtS. Moreover, we assume a stratospheric residence time of two years and consider a linear cost function at a cost of 10 billion USD per MtS, which lies within the broad range of estimated costs (Robock et al. 2009). Maintaining the optimistic viewpoint on geoengineering, we abstract from side-effects and damages associated with the deployment of geoengineering and do not consider damages linked to the CO2 concentration such as ocean acidification.
Figure 2 - IAM results with and without geoengineering, CEA policy
Considering a climate policy with limit of global warming to 2°C by the year 2100 and where geoengineering becomes available in 2050 with 50% chance, abatement goes to zero after that date in the case where geoengineering “works”. However, before 2050, the differences are rather small. The optimal abatement path in the WITCH optimization under uncertainty is only slightly below the one without the geoengineering option. In both cases, significant abatement is carried out, both via energy efficiency measures as well as by deploying mitigation technologies such as CCS, renewables, nuclear power and low carbon fuels. The social cost of carbon in 2010 decreases only from 28.9 $/tCO2 to 19.4 $/tCO2 if geoengineering is possible. Thus, as in the case of the analytical model, hedging against the risk of geoengineering not being effective provides a strong rationale for carrying out abatement prior to uncertainty being resolved.
Running the model with different probabilities of geoengineering, we also confirm the theoretical findings of our analytical model that the relation between optimal abatement prior to resolution of uncertainty and the probability of success of geoengineering is concave. With respect to the magnitude, the level of abatement declines to almost zero only if the probability becomes very high: at a 80% probability of success of geoengineering, optimal abatement is approximately 60% of what would be carried in the absence of geoengineering.
Summing up, our research provides a strong argument for maintaining mitigation policies even when considering a very optimistic viewpoint on the potential of Geoengineering. This is due to the dynamic nature of the decision problem. We also show that our results hold even when we explore the relation between the uncertainty about geoengineering and the climate, as a way to assess the insurance value of geoengineering. While further research is a prerequisite to assess whether there will be a viable geoengineering option at some point in the future, the results suggest that for the time being, geoengineering does not warrant to be taken as a reason to significantly delay abatement effort from an economic point of view, even under optimistic scenarios about its feasibility and acceptability.
Emmerling, J. and Tavoni, M., 2013. Geoengineering and abatement: a “flat” relationship under uncertainty, FEEM Nota di Lavoro No. 31.2013, Milan, Fondazione Eni Enrico Mattei.
Gramstad, K. and Tjøtta, S., 2010. Climate engineering: cost benefit and beyond, MPRA Working Paper No.27302, Munich.
Klepper, G. and Rickels, W., 2012. The Real Economics of Climate Engineering. Economics Research International, 2012, pp.1–20.
Matthews, H.D. and Caldeira, K., 2007. Transient climate-carbon simulations of planetary geoengineering. Proceedings of the National Academy of Sciences, 104(24), pp.9949–9954.
McClellan, J., Keith, D.W. and Apt, J., 2012. Cost analysis of stratospheric albedo modification delivery systems. Environmental Research Letters, 7(3), p.034019.
Moreno-Cruz, J.B. and Keith, D.W., 2012. Climate policy under uncertainty: a case for solar geoengineering. Climatic Change, forthcoming.
Robock, A. et al., 2009. Benefits, risks, and costs of stratospheric geoengineering. Geophysical Research Letters, 36(19), p.L19703.
Soden, B.J. et al., 2002. Global Cooling After the Eruption of Mount Pinatubo: A Test of Climate Feedback by Water Vapor. Science, 296(5568), pp.727–730.
Sterck, O., 2011. Geoengineering as an alternative to mitigation: specification and dynamic implications, IRES Discussion papers – 2011035, Louvain.
FEEM Nota di Lavoro 31.2013