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Many European politicians argue that the EU should set tougher emission targets than what is required by the Kyoto protocol, and moreover, that emission trading with other countries outside EU should be limited so as to keep emission quota prices high. One of the arguments, frequently cited for such a policy, is the need for technological development. However, the literature on climate change and technological innovation does not unambiguously support the need for setting high emission taxes today. In this paper we investigate the relationship between emission taxes and technological change further by modeling innovation activity explicitly. In our model both the amount of R&D and the amount of carbon abatement are decided in a decentralized way by the market as a response to an emission tax. Moreover, we introduce several distinct failures in the market for new innovations, among others, insufficient patent protection and intertemporal knowledge spill-overs. Our findings suggest that governments should under some circumstances set a higher carbon tax today if we have technological change driven by R&D than if we have pure exogenous technological change. Based on numerical simulations these circumstances are (a) positive intertemporal knowledge spillovers and/or (b) weak patent protection. [ABSTRACT FROM AUTHOR]

Enterprises are the market players for carbon reductions and carbon trading, and they are also the significant driving force in a low-carbon economy and society. Using the data of A-share listed companies from 2010 to 2016, this study uses a difference-in-differences (DID) model to examine the effects of the low-carbon city construction on corporate carbon reduction performance. Consistent with our hypotheses, we find that the low-carbon city construction promotes corporate carbon reduction performance. Further analysis indicates that the policy effect is stronger for state-owned enterprises (SOEs) than non-state-owned enterprises (non-SOEs). Moreover, environmental quality can affect the promotion of local government officials, which is more prominent in pilot low-carbon cities, and political promotion incentives significantly improve corporate carbon reduction performance. Furthermore, the highest emission reduction effects come in the fourth year after adopting a carbon reduction policy and are concentrated among the firms in the eastern region. Overall, our findings offer a new point view for a deeper understanding of the improvement of corporate carbon reduction performance, and provide microscopic evidence for the objective evaluation of the environmental effects of China's low-carbon city pilot policies. [ABSTRACT FROM AUTHOR]

Accurate assessment of the cost of carbon sequestration is important for the development of mitigation policies globally. Given that sequestration in soils or vegetation is a lengthy process, such assessment requires financial discounting and making realistic assumptions about changes over time in the rate of sequestration, the price of carbon, and the opportunity cost incurred by adopting sequestration practices. Our objective is to demonstrate how these assumptions affect estimates of the cost of sequestration-based mitigation strategies. Using an Australian case study of soil carbon sequestration, our estimates of the carbon price required for financial viability are highly sensitive to dynamic assumptions, varying by a factor of four with different assumptions. Yet the influence of these time-related assumptions is poorly acknowledged in the literature, with many studies either failing to disclose their assumptions, or employing questionable assumptions and methods. Recommended global strategies are for researchers to report their assumptions related to dynamics much more transparently and to improve their research methods and the realism of their assumptions when analysing the economics of carbon sequestration. We recommend that policymakers become better aware of the issues created by dynamics, so that they are able to validly interpret assessments of the cost of sequestration and to ensure that they design policies in a way that facilitates fair comparison of the costs of mitigation strategies that operate over different timescales. [ABSTRACT FROM AUTHOR]

Deep emission cuts rely on the use of low carbon technologies like renewable energy or carbon capture and storage. There is considerable uncertainty about their future costs. We carry out a sensitivity analysis based on Gauss Quadrature for cost parameters describing these technologies in order to evaluate the effect of the uncertainty on total and marginal mitigation costs as well as composition changes in the energy system. Globally, effects in total cost often average out, but different regions are affected quite differently from the underlying uncertainty in costs for key abatement technologies. Regions can be either affected because they are well suited to deploy a technology for geophysical reasons or because of repercussions through international energy markets. The absolute impact of uncertainty on consumption increases over the time horizon and with the ambition of emission reductions. Uncertainty in abatement costs relative to expected abatement costs are however larger under a moderate ambition climate policy scenario because in this case the marginal abatement occurs in the electricity sector where the cost uncertainty is implemented. Under more ambitious climate policy in line with the two degree target, the electricity sector is always decarbonized by 2050, hence uncertainty has less effect on the electricity mix. The findings illustrate the need for regional results as global averages can hide distributional consequences on technological uncertainty. [ABSTRACT FROM AUTHOR]

For CO2 capture and storage (CCS) to succeed as a mitigation strategy, political commitment is one of several prerequisites. This article offers an appraisal of political commitment to a CCS strategy among high-income countries in Europe and North America: Which governments are committed, and what particular interests and concerns do they seek to accommodate by supporting CCS? In order to answer these questions, new data are reported on government CCS research, development and demonstration (RD&D) budgets. RD&D budgets divided by GDP is used as an indicator of political commitment, and explanations are sought for cross-national differences. The analysis shows that fossil fuels reserves and extraction within a country has a very strong bearing on funding levels. Likely explanations include the potential for combining CCS with enhanced resource recovery. All large economies (population >50 million) have a funding program. The smaller states that provide funding (Norway, Canada, the Netherlands) have the highest funding levels relative to GDP. These findings suggest that high-income petroleum producing countries are likely to be leaders in promoting CCS and a favorable regulatory environment. The fact that all large, high-income countries in the two regions now display some interest in CCS further improves its political outlook. [ABSTRACT FROM AUTHOR]