Coping With the Climate Crisis: Mitigation Policies and Global Coordination by unknow

Author:unknow
Language: eng
Format: epub
ISBN: 9780231547352
Goodreads: 45998944
Publisher: Columbia University Press
Published: 2018-07-03T00:00:00+00:00

2. Conclusion

The unprecedented nature of climate change creates the need to consider model uncertainty in economic models that incorporate a feedback between the world economy and the environment. This, in turn, motivates the use of robust control optimization. This novel approach has several implications for optimal growth, emissions, the energy transition, and for economic policy. A more sizable Pigouvian tax on emissions is needed to support the socially efficient allocation. This is in sharp contrast with existing policies, which subsidize fossil fuel. The concern about model uncertainty adversely affects the use of the dirtier fossil fuel, such as coal. In the presence of the fundamental uncertainties associated with climate change, active policies that promote renewables and natural gas relative to coal are a form of insurance.

This review abstracted from learning from experience with climate change and from technological progress in the energy sector. The latter is an important limitation, as significant technological developments are taking place in both renewable and fossil fuel energy production. This is an important topic for future research.11

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