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An ethically-based method for allocating climate change mitigation effort among subsidiaries, applicable worldwide, is proposed. Applied to the EU Green Deal, this results in a wider range of targets than the Commission’s proposal of 2021.

The objective of the United Nations Paris Agreement to limit global warming to well below 2°C, with efforts to reach 1.5°C, requires a strict limitation of future global greenhouse gas (GHG) emissions based on a global carbon budget. Applying equity considerations allows for the derivation of national carbon budgets. A key question then arises: How can these national budgets be allocated at the sectoral level? A new method is proposed to allocate carbon budgets at the sectoral level. First, a cost-based approach is used to indicate a necessary carbon budget for each sector. However, the aggregation of these initial sectoral carbon budgets usually exceeds the available national carbon budget. This indicates the relevance of working with sectoral carbon budgets and the required reductions to remain within the overall national carbon budget. This conceptual approach aims at, first, a cost-effective sectoral effort-sharing; second, the design of corresponding strict carbon emission reduction pathways (at both the sector and aggregate levels); and, third, the redesign of investment policies for capital stock improvements to remain within the aggregate carbon budget (involving trade-offs in investment induced emissions for operational emission reduction). 'Policy relevance' Limiting global warming according to the United Nations Paris Agreement requires a strict limitation of future global GHG emissions. A new method is presented to allocate national carbon budgets to the national sectoral level. The carbon budget concept has the potential to provide a transparent and informative tool for the analysis, policy design and monitoring of GHG emission pathways, particularly for the long time horizons involved. The area of activity involving the construction and use of buildings, termed embodied and operational GHGs, requires a particularly large fraction of the national carbon budget. Compared with other sectors, these activities have the highest potential for keeping countries within their national carbon budgets as far as enabling capital stock improvements are concerned that over-proportionally reduce use emissions. The approach can link carbon budgets at the municipal, city and regional levels. It could lend itself to an initially voluntary initiative, later compulsory policy framework for substantial and cost-effective emission reductions.

To mitigate climate change, societies strive to transform the energy sector towards greenhouse gas emission neutrality, a move which assessment studies often indicate incurs large macroeconomic costs. In this context the weighted average costs of capital (WACC) are especially important, as renewables are highly capital intensive. In particular, investors' perceptions and expectations of risks are fundamental determinants of WACC and thus strongly influence the macroeconomic outcome of transition analyses. For the case of Europe's electricity sector transition, we analyze this sensitivity by choosing different WACC settings, driven also by different policy settings redirecting expectations. First, we find that when differentiating WACC across regions and technologies more accurately than usually done in the literature, immediate and substantial macroeconomic benefits from the transition emerge. We thereby reveal a systematic overestimation of low-carbon transition costs in the literature. Second, we find that when pricing-in increasing trust in renewables, these benefits get significantly larger, outweighing possible negative macroeconomic effects from the risk of stranding of fossil-based assets. We also demonstrate that in developed regions such as Europe, de-risking renewables is an effective lever for reaching climate targets, which indicates the relevance of green macroprudential regulation. Keywords: Climate change mitigation, Electricity, Europe, Risk, Capital costs

Climate change triggers manifold impacts at the national to local level, which in turn have various economy-wide implications (e.g. on welfare, employment, or tax revenues). In its response, society needs to prioritize which of these impacts to address and what share of resources to spend on each respective adaptation. A prerequisite to achieving that end is an economic impact analysis that is consistent across sectors and acknowledges intersectoral and economy-wide feedback effects. Traditional Integrated Assessment Models (IAMs) are usually operating at a level too aggregated for this end, while bottom-up impact models most often are not fully comprehensive, focusing on only a subset of climate sensitive sectors and/or a subset of climate change impact chains. Thus, we develop here an approach which applies climate and socioeconomic scenario analysis, harmonized economic costing, and sector explicit bandwidth analysis in a coupled framework of eleven (bio)physical impact assessment models and a uniform multi-sectoral computable general equilibrium model. In applying this approach to the alpine country of Austria, we find that macroeconomic feedbacks can magnify sectoral climate damages up to fourfold, or that by mid-century costs of climate change clearly outweigh benefits, with net costs rising two- to fourfold above current damage cost levels. The resulting specific impact information – differentiated by climate and economic drivers – can support sector-specific adaptation as well as adaptive capacity building. Keywords: climate impact, local impact, economic evaluation, adaptation

Spring frosts, as experienced in Europe in April 2016 and 2017, pose a considerable risk to agricultural production, with the potential to cause significant damages to agricultural yields. Meteorological blocking events (stable high-pressure systems) have been shown to be one of the factors that trigger cold spells in spring. While current knowledge does not allow for drawing conclusions as to any change in future frequency and duration of blocking episodes due to climate change, the combination of their stable occurrence with the biological system under a warming trend can lead to economic damage increases. To evaluate future frost risk for apple producers in south-eastern Styria, we combine a phenological sequential model with highly resolved climate projections for Austria. Our model projects a mean advance of blooming of -1.6 ± 0.9 days per decade, shifting the bloom onset towards early April by the end of the 21st century. Our findings indicate that overall frost risk for apple cultures will remain in a warmer climate and potentially even increase due to a stronger connection between blocking and cold spells in early spring that can be identified from observational data. To prospectively deal with frost risk, measures are needed that either stabilize crop yields or ensure farmers' income by other means. We identify appropriate adaptation measures and relate their costs to the potential frost risk increase. Even if applied successfully, the costs of these measures in combination with future residual damages represent additional climate change related costs.

Tipping points have become a key concept in research on climate change, indicating points of abrupt transition in biophysical systems as well as transformative changes in adaptation and mitigation strategies. However, the potential existence of tipping points in socio-economic systems has remained underexplored, whereas they might be highly policy relevant. This paper describes characteristics of climate change induced socio-economic tipping points (SETPs) to guide future research on SETPS to inform climate policy. We review existing literature to create a tipping point typology and to derive the following SETP definition: a climate change induced, abrupt change of a socio-economic system, into a new, fundamentally different state. Through stakeholder consultation, we identify 22 candidate SETP examples with policy relevance for Europe. Three of these are described in higher detail to identify their tipping point characteristics (stable states, mechanisms and abrupt change): the collapse of winter sports tourism, farmland abandonment and sea-level rise-induced migration. We find that stakeholder perceptions play an important role in describing SETPs. The role of climate drivers is difficult to isolate from other drivers because of complex interplays with socio-economic factors. In some cases, the rate of change rather than the magnitude of change causes a tipping point. The clearest SETPs are found on small system scales. On a national to continental scale, SETPs are less obvious because they are difficult to separate from their associated economic substitution effects and policy response. Some proposed adaptation measures are so transformative that their implementations can be considered an SETP in terms of ‘response to climate change’. Future research can focus on identification and impact analysis of tipping points using stylized models, on the exceedance of stakeholder-defined critical thresholds in the RCP/SSP space and on the macro-economic impacts of new system states.

Urban sprawl is caused by the interlinkage of spatial planning and transport characteristics. However, there are only a few approaches that quantify the cross-impacts of policy options in these two spheres. The purpose of this paper is thus a combined regional analysis of spatial planning instruments and transport policy, with a special emphasis on urban–rural diversities. We link a multi-region computable general equilibrium model that incorporates elements of the new economic geography with a transport forecast model. The general equilibrium model illustrates residential choice between urban and peripheral regions, while the transport model depicts the transport implications thereof. Our results suggest that transport policy is obviously effective in addressing transport externalities, while it would have to be set at a politically infeasible stringency to have an effect on residential patterns. As for spatial planning instruments (i.e., expanding housing supply in central regions or limiting it in peripheral regions), we find a strong potential to influence residential choice and hence urban sprawl. Along this line, spatial planning instruments do have a small but still significant impact on reducing transport volume and number of trips. This impact can be enhanced by a policy promoting public transport