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« Speak truth to power | Main | Potsdam and the scientific method »
Saturday
Apr132013

DIY integrated assessment model

For anyone who has ever longed to write their own economic assessment of climate change, now you can!

Richard Tol has set up an integrated assessment model in Excel, which can be downloaded here.

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Reader Comments (54)

Andrew forgot to add that I'm around for tech support.

Apr 13, 2013 at 5:08 PM | Unregistered CommenterRichard Tol

'Hello. My tech fell down and he can't get up. We need your support!'

Apr 13, 2013 at 6:01 PM | Unregistered CommenterOtter

The relevance of monetary policy to climate change remains to be discovered.

Apr 13, 2013 at 8:05 PM | Unregistered CommenterRussell

'If you can't be an athlete, be an athletic supporter!" - Grease.

Apr 13, 2013 at 8:12 PM | Unregistered CommenterCharlie

I sense rows of @if logic arguments coming.

Apr 13, 2013 at 8:13 PM | Registered CommenterPharos

Richard, I'm not sure why our esteemed host has chosen to focus on the Excel elements of your contribution - however meaningful they may be to climate-numerologists - when the most influential elements of your post, for the average Jo/an are contained within the pdf book!
Love your idea of tweet-thunks - more concise than elevator speeches but I suspect that they're a little bit too black and white to capture the nuanced spectrum of climate reality.
You've invested, methinks, an enormous amount of work, honesty and ingenuity into this TDF and I look forward to spending time with digesting as much as I can of your efforts.
On a more negative note, I don't believe that a GP climate-blog like this has a hope-in-hell of properly exploring the issues that you raise!

Apr 13, 2013 at 11:27 PM | Unregistered CommenterRoyFOMR

For H**v**s sake (or for f***s sake, if you prefer), Dr Tol, provide us with a simple URL to download it all.at once. Some of us have a fast Internet connection, and balk at the idea of downloading 40+ files (I can't be botherd to count 'em. I respect you greatly, but please avoid tl;dr.

Apr 13, 2013 at 11:49 PM | Unregistered CommenterHamish McDougal

Dr Tol gives us a richitude of his efforts and you moan about how tiresome it is to download it?
Hamish McDougal, why don't you change your name to HamDug so that you can expend less energy on keystrokes than you clearly find tiresome?
If you cannae click it then you cannae think it - and this is your rebuttal?

Apr 14, 2013 at 12:21 AM | Unregistered CommenterRoyFOMR

Would wget work?

Apr 14, 2013 at 1:09 AM | Unregistered CommenterNullius in Verba

Professor Richard Tol,

Thank you for this. It looks excellent. I've just downloaded the book pdf and read the first two chapters. I have three questions:

1. Would you be able to put all the files in one zip file or as few zip files as possible?

2. The book, p 13, says:

Greenhouse gas emissions can be reduced in a number of ways. More efficient energy use and a switch to alternative energy sources are the two main options. This is best stimulated by a carbon tax. Incentive-based policy instruments are better suited for reducing emissions from diffuse and heterogeneous sources than rule-based instruments. Taxes are more appropriate for stock pollutants than tradable permits. A carbon tax is therefore the cheapest way to reduce greenhouse gas emissions.

I have read many times that an interventionist approach where government impose a carbon price (ETS, carbon tax, or other mechanism) is the least cost way to reduce global GHG emissions. But I have never seen a persuasive justification for this. I have never seen what other options have been considered (other than regulatory, which I agree is worse). I have also not seen a persuasive analysis of what the compliance scheme will eventually be that requires measurement of emissions at the standard that will ultimately be required for international trade, commerce, taxation, etc. My question is:

"Why can’t emissions be reduced by innovation, especially by the developed economies removing the impediments we have imposed over decades that are retarding and constraining innovation? Why not, instead of increasing government intervention in markets, remove some of the interventions that have been imposed over the past half century or so. For example, remove the excessive regulatory and licensing blocks that are retarding the development of low-cost nuclear power - so that nuclear can be cheaper then fossil fuels and available for all economies?

With nuclear half the cost of fossil fuels and available for all economies, the issue of global GHG emissions reductions would be largely solved, without any need for a coordinated global carbon pricing mechanism, nor ‘world government’, nor the bureaucracy, nor the potentially high compliance cost of measuring, monitoring, reporting, and disputation (both domestic and international disputation).

[At 10% cost reduction per doubling of capacity, electricity from small modular nuclear power plants (e.g. mPower: http://www.efcog.org/library/council_meeting/12SAECMtg/presentations/GS_Meeting/Day-1/B&W%20mPower%20Overview%20-%20EFCOG%202012-Ferrara.pdf) would be cheaper than from new fossil fuel power stations – even in Australia where we have cheap coal and in USA which has cheap gas - by the time 2.5 GW are operating world wide, and half the cost of new fossil fuel plants by the time 200 GW are operating world wide.]

Has the option of removing the impediments that are blocking innovation been seriously considered as an option to carbon pricing?

3. Can I model this in MLIAM – e.g. by changing varying the cost of low emissions electricity options, the learning rate (cost reduction per doubling) and the rate of roll out?

Apr 14, 2013 at 6:29 AM | Unregistered CommenterPeter Lang

@Hamish McDougal
The model is built in steps 1-8. Steps 8-12 apply the model. If you just want the model, but do not want to learn how to build it, download version 8, 9, 10, 11 or 12, depending on your interests.

This comes with a health warning: Never use a tool you do not understand. The best way to understand a model is to build it.

@Roy
The rest of the book was highlighted in an earlier post.

Apr 14, 2013 at 6:58 AM | Unregistered CommenterRichard Tol

@Peter Lang
Chapter 5 gives the mathematical proof that, of all possible government interventions, a carbon tax is the cheapest.

The book and the model are silent on the impact of liberalization of the energy or research markets on the rate and direction of technological progress. The literature is (largely?) silent on this too.

With the current structure of the model, this cannot be done, even at a phenomenonological level. Will keep it in mind for the next version.

Apr 14, 2013 at 7:07 AM | Unregistered CommenterRichard Tol

Professor Tol,

Many thanks. Much appreciated. I'll get to Chapter 5 soon.

Apr 14, 2013 at 7:46 AM | Unregistered CommenterPeter Lang

@ Roy

Love your idea of tweet-thunks - more concise than elevator speeches but I suspect that they're a little bit too black and white to capture the nuanced spectrum of climate reality.

I think they are a great way to begin each chapter!!

You've invested, methinks, an enormous amount of work, honesty and ingenuity into this TDF and I look forward to spending time with digesting as much as I can of your efforts.

I agree and me too!

On a more negative note, I don't believe that a GP climate-blog like this has a hope-in-hell of properly exploring the issues that you raise!

True, but where is a better place. It is the interested, intelligent, non-specialist (like me) that wants to become informed. How can they (and me) be assisted if not on a 'GP climate-blog'? Is there a better place? This is a genuine question?

Apr 14, 2013 at 7:56 AM | Unregistered CommenterPeter Lang

@Richard Tol

May I also put in a plea for a zip if the files. Because of my somewhat indifferent internet link I find it necessary to use wget for downloads.


I would have thought that by relying on the stick and carrot approach we will only see a continuation of the mess energy provision is in today.

Without considering, and indeed integrating, the reduction of the bureaucratic stupidities in the form of unnecessary regulations in energy production - especially in the nuclear industry - there will be little or no advance in the provision of cheap reliable energy, the key to growth.

Apr 14, 2013 at 11:23 AM | Unregistered Commenterivan

There is now a zip-file with all 36 files. It's big.

Apr 14, 2013 at 1:48 PM | Unregistered CommenterRichard Tol

Professor Tol,

Thank you. That's very quick, but where is it? It doesn't seem to be showing with the list of other files.

That was so quick, can we expect V2 tomorrow - with analysis of options other than carbon pricing, such as government removing impediments to innovation and dispersion of low carbon technologies - such as nuclear power? :)

Apr 14, 2013 at 2:19 PM | Unregistered CommenterPeter Lang

Greenhouse gas emissions can be reduced in a number of ways. More efficient energy use and a switch to alternative energy sources are the two main options.

How does 'more efficient energy use' reduce 'emissions'? Resources freed by improved efficiency are used for other things. This is called 'economic progress'.

Chapter 5 gives the mathematical proof that, of all possible government interventions, a carbon tax is the cheapest.

What? Mathematics can show the implications of your assumptions. Nothing more.

Apr 14, 2013 at 4:24 PM | Unregistered CommenterJake Haye

Presumably the use of Excel is primarily intended to block interference from the CRU?

'Chapter 5 gives the mathematical proof that, of all possible government interventions, a carbon tax is the cheapest.'

Has anyone proved that any intervention is required? (One word answer please).

Apr 14, 2013 at 7:30 PM | Unregistered CommenterZT

@ZT
Yes. See Chapter 7.

Apr 14, 2013 at 8:11 PM | Unregistered CommenterRichard Tol

'Yes. See Chapter 7.' = 4 words

I'm no world class word counting expert, but if chapter 5 proves the optimum intervention is x and chapter 7 contains the poof of the need for intervention - is it possible that you have the cart before the horse? (One word answer please)

Apr 14, 2013 at 8:42 PM | Unregistered CommenterZT

@ZT
In a cost-benefit analysis, you set marginal costs equal to marginal benefits. You can discuss marginal costs first, or marginal benefits. Either way, you ask the reader to patiently wait for the other half of the argument.

Apr 14, 2013 at 9:06 PM | Unregistered CommenterRichard Tol

Hi Richard, that is 37 words. But I commend you for making everything open and analyzable - this is the way that analysis should be.

Given the fact that there is a finite probability that AGW is not a serious problem, and that increasing fuel prices as an attempted cure is a complete certainty, how do the models trade off the inevitable increased winter deaths versus the possibility of a degree or two of extra warmth?

Does the increased fuel poverty death rate translate into a marginal cost or marginal benefit in the model?

Apr 14, 2013 at 9:48 PM | Unregistered CommenterZT

@ZT
The model does not include distributional issues within countries.

There is a substantial literature on these matters. The revenue from a carbon tax is more than sufficient to offset any negative implications on fuel poverty etc.

Unfortunately, our dear leaders have made climate policy unnecessarily expensive while ignoring its negative effects.

Apr 14, 2013 at 10:27 PM | Unregistered CommenterRichard Tol

Peter Lang Apr 14, 2013 at 7:56 AM |

"With nuclear half the cost of fossil fuels and available for all economies, the issue of global GHG emissions reductions would be largely solved, without any need for a coordinated global carbon pricing mechanism, nor ‘world government’, nor the bureaucracy, nor the potentially high compliance cost of measuring, monitoring, reporting, and disputation (both domestic and international disputation)."

==========

But suppose the bureaucracy, carbon trading, world government etc, are what's driving it?

Apr 14, 2013 at 11:19 PM | Unregistered Commentercosmic

Professor Richard Tol (and others)

MLIAM V2 suggestion – Include alternative to carbon pricing;
‘Reduce existing market distortions’

It seems to me we should be considering a third type of alternative policies. My suggested three types of alternative policies are: ‘No GHG Emissions Controls’, ‘International Treaty’ and ‘Reduce Existing Market Distortions’.

1. ‘No Controls’ – adaptation but no policies to mitigate global GHG emissions. This is the baseline policy against which the other policies are compared. .

2. ‘International Treaty - Legally binding international agreement(s) to global GHG emissions reductions (which may include targets and time tables, carbon pricing, regulations, penalties for breeches, transfer of money from rich to poor, taxation);

3. ‘Reduce Existing Market Distortions’ - No legally binding international agreement. Each nation state acts in its own best interest. Global emissions reductions are achieved by removing the impediments that are preventing the world from having low-emissions energy cheaper than fossil fuel energy. Developed countries develop the technologies and sell them to developing countries in commercial transactions. The process would be facilitated by freer trade and removal of the restrictive regulations and licensing processes that are retarding the development of better technologies.

It seems little or no analysis has been applied to the third option: “Reduce existing market distortions’. There may be significant advantages of that option, such as: avoid the need for bureaucracy, world government and the compliance cost of measuring, monitoring and reporting emissions (for all GHGs) and disputation.

Consider one example. Nuclear power, if cheap enough and available to all economies, could potentially replace most fossil fuels for electricity generation world wide by around say 2060. Cheap electricity could also displace some gas for heat and some oil for land transport. Cheap, low-emissions electricity could, potentially, cut emissions from fossil fuels by 50% by around 2060.

There are some forty small nuclear power plant designs in various stages of development from concept through to in-production described here: http://www.world-nuclear.org/info/Nuclear-Fuel-Cycle/Power-Reactors/Small-Nuclear-Power-Reactors/#.UWqx8KIcbSg . But progress in innovation and diffusion is being retarded because of impediments to licensing and to economic production and operation.

The US Nuclear Regulatory Commission (NRC) is, in effect, the de facto world regulator of nuclear designs. NRC takes about 5 to 10 years to get a new design through its processes, it costs about $1 billion per design and they can manage about only three designs through their process at a time. This is a huge impediment to progress. No other technology or industry is constrained to such an extent in its development by government licensing of designs. In stark contrast, the passenger aircraft industry has about 1000 fatalities per year compared with near zero for nuclear, yet the regulation of aircraft designs is nowhere near as constraining as it is for nuclear power designs. These are examples of the sorts of impediments to low-cost, low-emissions electricity that we could remove if we are serious. I’d hope that the options of removing impediments to low-cost, low-emissions electricity is seriously analysed before we advocate pricing carbon.

The US Department of Energy last year selected one small reactor as the first that will go through the licensing process. The scheduled date for this design to be ‘commercialised’ is 2022. The details of the plant and claimed benefits, schedule and costs are here: http://www.efcog.org/library/council_meeting/12SAECMtg/presentations/GS_Meeting/Day-1/B&W%20mPower%20Overview%20-%20EFCOG%202012-Ferrara.pdf

Based on the projected costs in Australia (http://www.bree.gov.au/documents/publications/aeta/Australian_Energy_Technology_Assessment.pdf ) and assuming a 10% cost reduction per doubling of capacity, the cost of electricity from small modular nuclear plants like the ‘mPower’ would be equivalent to that from new coal plants when 2.5 GW are in operation world wide; and half the cost of electricity from new coal plants in Australia when 200 GW are in operation world wide. There are many other alternatives designs wanting to compete, such as this from China nearing ready to be sold to small economies: http://www.uxc.com/smr/uxc_SMRDetail.aspx?key=HTR-PM

With low emissions nuclear power producing electricity at even 10% below, let alone half the cost of, fossil fuels, it seems there would be no need for carbon pricing.

To achieve this we need to remove the impediments to progress we’ve built up over the past half century or so.

As an example of how much the costs of nuclear power have been increased thanks to intervention, regulatory ratcheting had increased the cost of nuclear power by a factor of four up to up to 1990 according to Professor Bernard Cohen (1990) http://www.phyast.pitt.edu/~blc/book/chapter9.html. I expect regulatory ratcheting and the licensing process has probably doubled it again in the 23 years since 1990. So there is great potential to reduce the cost of electricity from nuclear power over the coming decades, and that is be fore we even start to consider the potentially up to 100 times more efficient breeder reactors. All we need to do to gain these benefits is: get rational.

To head of the inevitable comments about safety of nuclear power, nuclear causes the least fatalities per TWh of electricity supplied of any electricity technology: http://nextbigfuture.com/2012/06/deaths-by-energy-source-in-forbes.html. It will only get better as development and competition ramp up.

This is just one example illustrating why we must properly analyse the third alternative, ‘Reduce existing market distortions’ before advocating government’s intervene to impose a carbon price.

Apr 14, 2013 at 11:30 PM | Unregistered CommenterPeter Lang

Professor Richard Tol,

I haven't found the zip files yet. They don't seem to be included in the list here: https://sites.google.com/site/climateconomics/mfiam

Apr 14, 2013 at 11:36 PM | Unregistered CommenterPeter Lang

Try inputting a low climate sensitivity and see what happens.
PS William Nordhaus (Yale) has made his DICE models available on line for years.

Apr 15, 2013 at 2:17 AM | Unregistered CommenterNoblesse Oblige

'Unfortunately, our dear leaders have made climate policy unnecessarily expensive while ignoring its negative effects.'

Agreed - and I guess some of that blame can also be laid at the feet of those people who have suppressed dissenting opinions, hidden declines, fudged uncertainties, and so on...

(for what it is worth, generally people who do not implicitly know how to use Excel).

Apr 15, 2013 at 2:30 AM | Unregistered CommenterZT

"Is there a better place? This is a genuine question?"
Peter, I asked the question that elicited your response above more in despair than in anticipation.
Part of me wants to believe that this is a place to which this question has a meaningful home but pessimism, to me, is more of a powerful driver than hope is for an achievable solution in the imminent future.
Another part of me, that which forces me to come back over and over to this site, gives me a hope that, at times, overcomes my despair that sense will prevail.
Sometimes I think I see a chink of light that gives me a boost. Our host is a strong fellow and part of that strength comes from an ability to divorce himself from pre-won popularity to pragmatic realism.
He'll jaw, jaw rather than war, war and if push comes to shove he'll take the hit and lose previous supporters and , for this reason, the answer to your question is Yes.
This is the venue but not yet!

Apr 15, 2013 at 3:25 AM | Unregistered CommenterRoyFOMR

The carbon cycle and climate part of the model are now also available in Matlab and Octave. Rest to follow.

Apr 15, 2013 at 1:25 PM | Unregistered CommenterRichard Tol

Apr 14, 2013 at 1:48 PM | Richard Tol
Thank you, sir.
I am sorry (and apologize undeservedly) for any earlier infelicity. I did not mean to disparage your work - which (as always) is cogent, &c.
My bad. Sorry.

Apr 15, 2013 at 10:10 PM | Unregistered CommenterHamish McDougal

Professor Richard Tol

The sentence on the MLIAM site says:

"If you're not interested in learning how to model, but just want the model, download one of the last five versions. The whole package can be downloaded here.

However, the link to the whole package doesn't work. The message says "the file does not exist".

Apr 16, 2013 at 5:57 AM | Unregistered CommenterPeter Lang

Dr. Tol--

The zip file looks like this at your website: MLIAM01.zip (0k)

The zero K gives one an uneasy feeling.

I clicked on it anyway, and got the rather wonderful computerspeak "No container content to display."

Your attention to this would be appreciated.

Apr 16, 2013 at 7:43 AM | Unregistered CommenterLance Wallace

Both zip files should now work.

Apr 16, 2013 at 8:37 AM | Unregistered CommenterRichard Tol

"Both zip files should now work."

1. I only see one zip file.
2. The size is only 2k
3. On downloading, it has about 8 or so files all ending in .m, each about 1k in size.

Apr 16, 2013 at 9:09 AM | Unregistered CommenterLance Wallace

@Lance
You found the zip file with the Matlab code.

The other zip file is under "The whole package can be downloaded here."

Apr 16, 2013 at 10:14 AM | Unregistered CommenterRichard Tol

Richard Tol,

Got it. Thank you. Now to learn and explore.

I have enjoyed your book. It is excellent. I really like your succinct, clear writing style and short sentences.

As I read I made some comments, mainly on the parts where I am not persuaded by what you say.

The most significant points are:

1. I am concerned that damages caused by GHG emissions may be being overstated, perhaps greatly overstated, and the real and unexpected costs of carbon pricing understated.

2. I am concerned that there has been no objective policy options analysis before zeroing in on carbon pricing. Therefore, I am concerned that possibly better policy options have not been considered and evaluated (e.g. the alternative of reducing the interventions that are retarding the development and diffusion of low-cost low-emissions energy - see earlier comment on this thread). I think it is important to do an objective policy options analysis as a first step, otherwise people like me will remain unconvinced and be reluctant to support what I see as the potentially high cost and economically damaging carbon pricing policies with, from my perspective, low probability such policies will be successful.

Apr 16, 2013 at 11:44 AM | Unregistered CommenterPeter Lang

@Peter
You can take the model, change the parameters that govern the impacts of climate change and climate policy, and see what happens.

We'd actually need new research to argue that the parameters should be different.

Apr 16, 2013 at 3:34 PM | Unregistered CommenterRichard Tol

@Richard Tol: also @persons looking for the Excel zip file:

A bit hard to find the zip file one wants if looking for Excel. The one that appears is called just MLIAM1.zip and turns out to be the Matlab file. The Excel zip file appears within a two-sentence paragraph that refers to downloading a fraction (five out of 40 or so files) of the data; so following English grammar one assumes the second sentence has something to do with the first, but it is not so:

"If you're not interested in learning how to model, but just want the model, download one of the last five versions. The whole package can be downloaded here."

Moving the last sentence to its own paragraph and identifying the "package" as the Excel zip file would be helpful. And renaming the Matlab zip file as the Matlab zip file would also help.

OK, now that my whining and bitching is out of my system, I greatly appreciate the work you have done.

By the way, I am in complete agreement with Peter Lang about government getting out of the way and making it possible for nuclear power to compete on the proverbial level playing field. Your point about a carbon tax may be correct, but only if applied by a mythical world government and even then only if CO2 is really the culprit for more than a beneficial (using your textbook example of the 14 studies) increase of 2 C.

Apr 16, 2013 at 4:51 PM | Unregistered CommenterLance Wallace

@Lance, Peter
Text rearranged.

Jae Edmonds of PNL has some older papers that show that if more nuclear is allowed, the costs of emission reduction falls rapidly. There is more recent, rather derivative paper by Nico Bauer in PNAS that shows the same.

Apr 16, 2013 at 6:25 PM | Unregistered CommenterRichard Tol

@Richard Tol

Comments on the first two Excel files:

MLIAM01_data—carbon dioxide sheet
1) Column A runs backward from 2006 to 13.3 AD (quite precise, that!) then repeats only going backward from 1996 to 1942. Perhaps the reason for this will come clear in time, but meanwhile, as Alexander Woolcott remarked about the famous Time Magazine style, “Backward ran sentences until reeled the mind”.
2) What you call “temperature” is actually temperature anomaly. Might be helpful to state that it was 1961-1990 as I determined by doing a running 30-year average until it was close to zero.

MLIAM01_data—carbon dioxide sheet
1) Column C appears to be another anomaly, only this time a 29-year base period (1850-1878). Presumably you want 1851-1880.

MLIAM01_model
1) Plotting your modeled CO2 against observed, the model is a very consistent 10-12 ppm high. For a model with 5 compartments and about 10 parameters, this appears downright careless. Need I mention von Neumann’s dictum about the elephant’s trunk?

CO2 best fit…..xlsx
2) I was able to fit the CO2 curve with a 3-parameter model, hitting every month (646 consecutive months) within 2 ppm (error <1%). Actually two models, one quadratic, one exponential. The exponential model was rather neat, since the Excel Solver function chose all 3 parameters with no prompting, one of interest being the baseline value, which it found to be 256 ppm, not far off the canonical 275.
3) One can also fit the emissions with an exponential model, although not as nicely, errors of about 1.5 ppm, still hugely better than your 10 ppm error). I like exponential models, running into them all during my 30 years looking at environmental data. They seem to occur whenever there are a lot of sources contributing to the total. Intuitively, I think of this as meaning individual sources can vary considerably but will be compensated for by others. My colleague Wayne Ott even produced a paper with a physical interpretation (repeated stochastic dilutions of a puff of polluted air). (>200 citations!)

There are three Excel files on Dropbox, the first two with graphs and corrections noted from your first two files.

https://dl.dropboxusercontent.com/u/75831381/MLIAM01_data--law.xlsx
https://dl.dropboxusercontent.com/u/75831381/MLIAM01_model--law.xlsx

The third Excel file on Dropbox provides my quadratic and exponential fits to the CO2 atmospheric data--also a comparison of the emissions data to the CO2 values. A very simple linear fit (one MMT = 0.000228 ppm) does rather well, with a 45% R^2. This is not to say I believe that the fossil fuel emissions are completely or even just 50% responsible for Mauna Loa CO2. I think the other natural fluxes are huge and likely the system feedback is compensating for the puny anthropogenic contribution.

https://dl.dropboxusercontent.com/u/75831381/co2-best%20fit%20with%20formulas%20revised%20April%202013.xlsx

The Ott citation:
Wayne R. Ott (1990): A Physical Explanation of the Lognormality of Pollutant Concentrations,
Journal of the Air & Waste Management Association, 40:10, 1378-1383

Apr 16, 2013 at 10:17 PM | Unregistered CommenterLance Wallace

Richard Tol,

Thank you. I will do exactly as you suggest over an extended period. I am hoping it will be easier to change the parameters in MLIAM and see the results than it is in RICE and DICE. The first inputs I want to do sensitivity analyses on are:
- climate sensitivity
- damage function (Nordhau's term)
- rate of decarbonisation of the global economy

But I haven't begun yet.

We'd actually need new research to argue that the parameters should be different.

I totally agree. But I argue it is rational for people to be very concerned about embarking on a hugely costly and likely economically damaging global carbon pricing system when the key inputs to the cost benefit analyses are so poorly understood (e.g. we have only 17 usable impact studies, and our estimates of climate sensitivity range from 0K to >20K whereas the range of the real climate sensitivity is perhaps +/- 0.1K at current planetary conditions). And we've spent >$100 billion and 25 years getting to this point.

It is rational for people to be questioning every aspect of the analyses and the inputs if they are being asked to vote for implementation of a high cost scheme with what many believe has a very low probability of achieving the claimed results.

Uncertainty about the problem is a given; uncertainty about the chosen solution is inexcusable. This is to say, we should be confident that our solutions are going to be effective, and the more expensive the solution the more confident we should be.

Apr 16, 2013 at 11:27 PM | Unregistered CommenterPeter Lang

Richard Tol,

Jae Edmonds of PNL has some older papers that show that if more nuclear is allowed, the costs of emission reduction falls rapidly. There is more recent, rather derivative paper by Nico Bauer in PNAS that shows the same.

Thank you. Yes, And the Australian CSIRO has recently produced reports and an online calculator with graphics where you can easily select input parameters and see the results http://efuture.csiro.au/. It shows that if nuclear is allowed it would supply 60% of Australia's electricity by 2050 (using the 'medium' input parameters, the inputs are from the government's AETA (2012 report http://www.bree.gov.au/documents/publications/aeta/Australian_Energy_Technology_Assessment.pdf). However, there is no learning curve allowed for nuclear whereas aggressive learning curves are applied for renewables. So this calculator does not allow the user to change the important parameters like the potential cost reduction curve for nuclear power (if the developed countries reduced the impediments).

The point I was trying to make is that development of nuclear is severely retarded. I am advocating that analyses like yours and Nordhaus's look at the option of removing the impediments that are preventing the world from having lower-cost, low-emissions electricity generation before we strongly advocate imposing carbon pricing on the world.

Apr 16, 2013 at 11:44 PM | Unregistered CommenterPeter Lang

Professor Richard Tol,

Has anyone analysed what the compliance cost of global carbon pricing will be when the system is fully implemented, covering nearly all GHG emitters in nearly all countries? The compliance cost is not addressed explicitly in Nordhaus 'A Questions of Balance' or in the RICE and DICE models. I also didn't notice that it had been addressed in 'Climate Economics'.

I posed questions about 'The ultimate compliance cost for the ETS' in a short post here: http://www.onlineopinion.com.au/view.asp?article=13578

Today's 'The Australian' newspaper has an article based on a release from the Australian Taxation office under Freedom of Information which explains some of their concerns about compliance cost for the new mining tax. The complexity is horrific, and that is in just one country and dealing with a small number of mining companies who have the best accounting systems in the world. If it is this hard for this small select group of companies, imagine trying to measure, report, monitor, and resolve disputes between, companies, between companies and governments and between countries when we get to the point of monitoring emissions from every cow, sheep and goat. Because that is where any venture to tax or trade GHG emissions will eventually end up.

Before we embark on carbon pricing these questions need to be answered and convincingly so. We also need to know that alternatives policies options have been properly considered, such as "Reduce existing market distortions’.

Apr 17, 2013 at 12:13 AM | Unregistered CommenterPeter Lang

Economists and Excel ...

There is a summation error: sum(z:aa) should be sum(z:ab). Changes basically everything.

Apr 18, 2013 at 1:34 PM | Unregistered CommenterRichard Tol

Richard Tol,

Thank you for letting us know. What is the consequence? Does it mean we have to replace one file or many files we've downloaded (I downloaded the 35 MB zip file)? Can you tell us what we need to do?

Apr 18, 2013 at 2:16 PM | Unregistered CommenterPeter Lang

@Peter
All files will need to be redone.

Apr 18, 2013 at 10:27 PM | Unregistered CommenterRichard Tol

Professor Richard Tol,

OK. Thanks. I'll wait for revised version and download the replacement zip file when ready. Any idea when when you expect it to be be ready?

Apr 19, 2013 at 12:21 AM | Unregistered CommenterPeter Lang

Professor Richard Tol,

In the meantime, while waiting for the updates to the files, I have suggestions for two 'simple' modifications you might like to consider for Version 2. :)

1. Decarbonisation rate module

2. Slider inputs and graphic outputs

Decarbonisation rate module

Add a module to allow the user to change the parameters that control the rate of decarbonisation of the global economy that could be achieved (my purpose is to allow users to better understand what could be achieved with alternative policies to carbon pricing)

From the inputs you provided for the Kaya Identity (Climate Economics, p35), I calculate the rate of decarbonisation of energy (‘CO2 per energy’) needs to increase from -0.01% pa to -4% pa to cut global GHG emissions to 55% by 2050 and 84% by 2100. So, without changing the other inputs to the Kaya Identity, this is the rate of reduction of ‘CO2 per energy’ the world needs to achieve if we want to achieve the global emissions reduction targets being advocated.

Roger Pielke Jr (Figure 2 here: http://rogerpielkejr.blogspot.com.au/2010/07/decelerating-decarbonization-of-global.html) showed that the rate of decarbonisation of the global economy has been decreasing during the two decades we’ve been trying to increase the rate through government interventions and UN climate conferences. The rate decreased from -2% pa to -0.7% pa from 1991 to 2009.

The ‘simple’ modification I am suggesting for your MLIAM v2 is to add a module that allows the decarbonisation rate to be calculated using whatever are the relevant inputs.

Inputs that come to mind (for example for electricity) are:

• Cost of electricity from new coal and gas plants (2020) (e.g. $84 and $98 /MWh)
• Emissions rate from coal and gas (2020) (e.g. 0.8 and 0.4 t/MWh)
• Cost of electricity from low emissions plants (2020) (e.g. small nuclear 113/MWh)
• Rate of cost reduction per doubling of capacity (e.g.10% per doubling)
• Rate of doubling of capacity that could be achieved as cost of electricity falls (calculate)
• CO2 abatement cost (calculate)

From the above inputs I calculate the cost of near zero emissions electricity generation would be half the cost of fossil fuel generated electricity when there are 200 GW of small nuclear power plants (like the ‘mPower’ http://www.efcog.org/library/council_meeting/12SAECMtg/presentations/GS_Meeting/Day-1/B&W%20mPower%20Overview%20-%20EFCOG%202012-Ferrara.pdf) in operation world wide.

How fast could the world decarbonise its economy if technology like this was available for all countries and continued to improve and lower the costs as competition and diffusion increases?

Electricity is one important source of emissions that needs to be reduced. The next most important is transport fuels. There are many possible options (biomass is probably not one of them). US Navy Research calculated the cost of jet fuel from seawater on board nuclear powered aircraft carriers. John Morgan extended that to calculate the cost if the processing plant was on land: “Zero emissions synfuel from seawater” http://bravenewclimate.com/2013/01/16/zero-emission-synfuel-from-seawater/. This would be even cheaper with cheap electricity and hydrogen provided by high temperature reactors (e.g. China’s new HTR http://www.world-nuclear.org/info/Nuclear-Fuel-Cycle/Power-Reactors/Small-Nuclear-Power-Reactors/#.UXB3naIcbSg) instead of by electrolysis. [There are many options. Progress will happen faster if we remove the impediments retarding it.]

How fast could the world decarbonise its economy if technology like this was available for all countries?

Slider inputs and outputs

My second ‘simple’ suggestion is to provide an online graphic calculator so dummies like me can fiddle with the inputs and determine how best to fix the world :)

Here is an example of CSIRO’s recently developed online calculator for the least cost way for Australia to reduce its emissions from electricity http://efuture.csiro.au/#scenarios (it is pro-renewables biased but that is beside the point).

However, I’d suggest the inputs be adjusted by slider bars instead of from a pull down selection. The NREL Levelised Cost of Electricity calculator is an excellent example of what I am suggesting: http://www.nrel.gov/analysis/tech_lcoe.html

Examples of the inputs you might want to allow people to adjust might be your equivalent of the ones listed in Nordhaus “A Question of Balance” Table 7-1, (see p127 here: http://nordhaus.econ.yale.edu/Balance_2nd_proofs.pdf ). Other essential inputs would be those to calculate the discount rate.

Easy! So, when could MLIAM be released? :)

Apr 19, 2013 at 12:37 AM | Unregistered CommenterPeter Lang

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