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"The Economics of Climate Change"

12 March 2008, OECD Headquarters, Room CC12

Chairs ׀ Agenda ׀ Motivation for the workshop

Report on Presentation, Discussion and Conclusions of the Workshop on “the economics of climate change” organised by OECD and the Network of National Economic Research Organisations

Report on Presentation, Discussion and Conclusions of the Workshopby Michael Feiner, Rapporteur

 

Chairs

Véronique Deli, Minister for Environmental Affairs, Permanent Delegation of Mexico to the OECD (morning) Joe Grice, Executive Director, Office for National Statistics, UK (afternoon)

Agenda

9:30  Welcome Address
Lorents Lorentsen, OECD Director, Environment Directorate and Jørgen Elmeskov, OECD Acting Head of the Economics Department
 
9:45 – 11:15 Projecting future trends in GHG emissions
Each presentation will last 20 minutes. The presentations will be followed by a 30-minute general discussion

• GHG emission scenarios  (J.-M. Burniaux, OECD)
  Background Paper
• The energy outlook (F. Birol, IEA)
  What role for energy sector in combating climate change?  
• How to incorporate risk and uncertainty into cost/benefit analysis  (C. Gollier, Université Toulouse I)
  The economics of climate change: A cricital analysis of the Stern Review  (English) Background Paper 1 (French)
  The consumption-based determinants of the term structure of discount rates
• General discussion

11:15 – 11:30 Coffee Break

11:30 – 12:40 Designing a global climate policy architecture 1: achieving an efficient climate policy

• An overview of alternative instruments to reduce GHGs instruments (Carlo Carraro, University of Venice)
• An overview of alternative policy instruments to reduce GHGs instruments and interactions across them  (Romain Duval, OECD)
  Background Paper
• Public policies against global warming (H-W. Sinn, IFO)
  Public policies against global warming 
• General discussion

12:40 – 14:45 Lunch

14:45 – 16:00  Designing a global climate policy architecture 2: the role of technology

• The links between the carbon price level and the availability of alternative technologies to address climate change (C. Carraro, University of Venice)
• Policies and the implementation of carbon capture and storage (C. Teulings, Netherlands Bureau for Economic Analysis) & Climate policies and carbon capture and storage in the dutch power sector
• General discussion

16:00 – 16:15 Coffee Break

16:15 – 17:45  Designing a global climate policy architecture 3: providing incentives for countries to curb GHG emissions

• How large are the local benefits of mitigation policies? (M. Greenstone, NBER)
  Background Paper & Consequences of climate change with a focus on human health
• The McKibbin/Wilcoxen proposal  (W. McKibbin, CAMA)
• Policy options for a post-Kyoto agreement  (G. Klepper, Kiel Institute)
• General discussion

 17:45 – 18:00  Summing up: what have we learned? (J. Llewellyn, Lehman Brothers)

Motivation for the workshop

The global climate is changing and the causes appear to be largely man-made. The potentially large human and economic costs associated with climate change justify policy action to reduce it. At the same time, such action can be very costly, especially if policies are not well designed. Therefore, an adequate policy response to climate change needs to be built on reliable information regarding:

• The trends: what are the projected trends in GHG emissions in a business-as-usual (BAU) scenario, what would be the impact on climate change, and what would be the economic costs and benefits of the latter? What is the degree of uncertainty surrounding these cost and benefit estimates?

• The amount of GHG emissions reduction (with respect to a BAU scenario): to what extent should GHG emissions be reduced in order to balance the environmental, economic and equity consequences of action?

• The instrument(s): what are the optimal policy instruments to achieve a given reduction in GHG emissions? To which extent can an efficient abatement strategy be achieved when different instruments (e.g. taxes, permit trading, regulation, R&D subsidies) coexist both within and across countries?

• The incentives: what are the incentives for large emitters to implement mitigation policies?

The purpose of the workshop is to confront views and new results from model-based research regarding future GHG emissions trends, the appropriate policy instruments to achieve given targets and the incentives for countries to adopt them.

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