Solar Geoengineering versus Mitigation: The Role of Time Preference Mariia Belaia, David Keith, Gernot Wagner Work in progress 0 / 23 Anthropogenic Climate Change: Market Failure Figure 1: Direct measurements 1 / 23 Anthropogenic Climate Change: Market Failure Figure 2: Proxy measurements: reconstruction from ice cores 2 / 23 Climatic Risk 3 / 23 Climatic Risk 4 / 23 Climatic Risk 5 / 23 Yet ... 1. Climate inertia 2. Socio-economic inertia 3. Technological inertia 4. Population growth, increasing energy demand 5. Limits to adaptation 6. Tragedy of global commons 6 / 23 Geoengineering Ultimate goal: reduce negative impacts of climate change. 7 / 23 Geoengineering • Carbon dioxide removal (CDR) • Solar radiation management (SRM) 8 / 23 SRM: Stratospheric aerosols injection Figure 3 9 / 23 The DICE-SRM model: The DICE-2016 model extended to include SG and uncertainty in climate change: • 5- to 1-year timestep. • SRM enters via radiative forcing changes and damage costs from the SRM side-effects. • Uncertainty in climate sensitivity. 10 / 23 The DICE-SRM model Economy: T X 1 W = U(c(t))L(t) (1) (1 + ρ)t t=1 c1−η − 1 U(c) = (2) 1 − η gross γ 1−γ Yt = At Kt Lt (3) net 1 gross Yt = · Yt (4) 1 + Ωt net Yt = (1 − Λt )Yt (5) θ2 Λt = θt;1µ (6) Ct = Yt − It (7) Ct ct = (8) Lt It = st · Yt (9) Kt+1 = It + (1 − δK )Kt (10) 0 ≤ µ ≤ 1 is emissions control rate. 11 / 23 The DICE-SRM model: Emissions: ind gross Et = σt [1 − µt ]Yt (11) ind land Et = Et + Et (12) Carbon cycle (three-reservoir model): at at up Mt = b11Mt−1 + b12Mt−1 + Et (13) up at up lo Mt = b21Mt−1 + b22Mt−1 + b23Mt−1 (14) lo lo up Mt = b31Mt−1 + b32Mt−1 (15) Radiative Forcing: at Mt ex G Ft = η(log2( at )) + Ft − Ft (16) M1750 Climate Model: at at at at lo Tt = Tt−1 + 1[Ft − 2Tt−1 − 3(Tt−1 − Tt−1)] (17) lo lo at lo Tt = Tt−1 + 4(Tt−1 − Tt−1) (18) 12 / 23 The DICE-SRM model Damages costs (fraction of gross world product): at at 2 G Dt = α1Tt + α2(Tt ) + Dt (19) G G Ft Dt = βj 2xCO2 j (20) Ft Figure 4: Function DG Calibration: 13 / 23 Integrated Assessment Model of Climate and Economy 14 / 23 I. No Climate Policy (a) (b) (c) (d) 15 / 23 II. Optimal control. DICE-SRM ({) vs DICE ({) (a) (b) DICE-SRM (c) (d) 16 / 23 Higher ρ: 1:5% ({) vs 3% ({) (a) (b) 17 / 23 Lower ρ: 1:5% ({) vs 0:1% ({) (a) (b) 18 / 23 Higher η: 1.45 ({) vs 2 ({) (a) (b) 19 / 23 Social Cost of Carbon Calibration Model ρ,% η SCC (2020) 2010 USD Default DICE 1.5 1.45 37.64 DICE-SRM 1.5 1.45 32.18 Higher ρ DICE, 3 1.45 15.31 DICE-SRM 3 1.45 14.94 Lower ρ DICE 1 1.45 57.57 DICE-SRM 1 1.45 45.52 Very low ρ DICE 0.1 1.45 178.84 DICE-SRM 0.1 1.45 133.95 Higher η DICE 1.5 2 20.45 DICE-SRM 1.5 2 19.04 20 / 23 III. Climate Change Uncertainty Figure 5: DICE-SRM Figure 6: equilibrium climate sensitivity probability density function 21 / 23 Expected Utility Framework. DICE-SRM ({) vs DICE ({) (a) (b) 22 / 23 Lower ρ: 1:5% ({) vs 0:1% ({) (a) (b) 23 / 23 Figure 7 Solar Radiation Management versus Mitigation Summary from DICE-SRM: • SRM reduces SCC. • SRM reduces radiative forcing during the period around the peak of industrial emissions. • SRM reduces the rate of optimal emissions control rate, thus potentially addressing the question of limited speed of success in emissions reduction. • Higher the discount rate, further both mitigation and SRM are delayed. • Under climate change uncertainty: lower PRTP =) stronger abatement and early and moderate SRM. Otherwise, strong and late SRM. Next steps: • Introduce CDR. • Optimal CDR-SRM-mitigation portfolio analyzes for alternative preference specifications. • Sensitivity with respect to damage costs, CDR costs, and SRM side-effects. • Explore Epstein-Zin utility (further). 24 / 23.