INTRODUCTION TO THE SPECIAL ISSUE ON REACHING NET ZERO BY 2050

Abstract

Climate Change EconomicsOnline Ready Free AccessINTRODUCTION TO THE SPECIAL ISSUE ON REACHING NET ZERO BY 2050Robert Mendelsohn, David Maddison, and Daigee ShawRobert MendelsohnYale School of the Environment, New Haven, CT, USA, David MaddisonDepartment of Economics, University of Birmingham, Birmingham, UK, and Daigee ShawInstitute of Economics, Academia Sinica, Taiwanhttps://doi.org/10.1142/S201000782303001XCited by:0 Next AboutSectionsPDF/EPUB ToolsAdd to favoritesDownload CitationsTrack CitationsRecommend to Librarian ShareShare onFacebookTwitterLinked InRedditEmail The Paris Agreement on Climate Change is a binding International Treaty signed by 196 parties (countries) in 2015. The Paris Agreement stated a desire to hold warming to well below 2.0∘C with a preferred warming target of 1.5∘C. These targets were chosen to prevent harmful global warming. In order to reach these temperature targets, global greenhouse gas (GHG) emissions need to fall toward zero this century.Several economic studies have explored the cost of holding global warming to 2∘C by 2100. Although economic studies of the damage caused by GHGs have explored a wide range of economic scenarios (SSP1 through SSP5), economic studies of the mitigation cost of holding temperatures to 2∘C or less have relied solely on a single scenario (SSP1). The economic growth rate in SSP1 is 2.3%. In contrast, the economic growth rate needed for the high emission RCP8.5 scenario is 3.1%/yr. By 2100, a 3.1% growth rate leads to a global economy of 1100 trillion USD, whereas global GDP is just 620 trillion USD with a 2.3% growth rate. The mitigation cost of holding the world to low temperatures would be considerably higher if economic growth rates were higher. Luckily, economists are not anticipating economic growth rates of 3%.In order to hold temperatures to 2∘C, modelers have assumed SSP1 and RCP2.6 (SSP1-RCP2.6) (IPCC 2022) (Riahi et al., 2022). These economic studies have found the least cost emission path that would hold temperatures at 2∘C. This emission path tends to decline over time, reaching net zero around 2080. Cumulative emissions would rise above the final desired level so that the final two decades are assumed to have negative emissions. Negative emissions imply carbon dioxide is drawn out of the atmosphere using afforestation, crop biomass with CCS, and direct air capture and storage. The conclusion of Working Group III in the 2022 Sixth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC 2022) was that such emission paths were likely to cost 1.3–2.7% of global GDP each year (Riahi et al., 2022). This cost estimate implies global spending on mitigation would be 1.3–2.7 trillion USD per year this decade, rising to 8.1–22.8 trillion USD per year by the final decade of the century. That amounts to an annual cost of 164–467 USD per person this decade and 1151–2391 USD per person by 2100. This per person payment applies not only to wealthy citizens but to everyone on the planet.In order to hold temperatures to 1.5∘C, the world must engage in more dramatic and immediate emission reductions. The studies that examine the 1.5∘C target are also based on SSP1 but use the RCP1.9 emission scenario. These studies hold temperatures at 1.5∘C by reducing emissions by 50% by 2030 (seven years from now) and by 90% by 2050. This is far more expensive than the 2∘C scenario because the mitigation must be done immediately forcing a great deal of our current global capital to be prematurely retired. The conclusion of the IPCC (2022) report is that these 1.5∘C scenarios would cost 2.6–4.2% of GDP each year (Riahi et al., 2022). This translates into a cost of 2.6–4.2 trillion USD each year now and a cost of 16.1–26.0 trillion USD per year in 2100. On a global per person basis, the current annual cost is 328–530 USD rising to 2303–3720 USD by 2100.“Net Zero by 2050” is a more stringent emission path than just meeting the 1.5∘C target by 2100. After 2050, all remaining GHG emissions in a year must be offset by negative emissions that same year. The mitigation cost of “Net Zero by 2050” is likely to be higher than the 1.5∘C scenario because there is no flexibility about net emissions after 2050. Surprisingly, the cost of “Net Zero by 2050” has not been published. This Special Issue asked a number of modeling teams to estimate what “Net Zero by 2050” would cost individual countries, regions, and the world. Many economic models could not estimate these costs because the models could not organize the required investment in time for these goals to be met. However, a few bold authors attempted to determine the mitigation cost of “Net Zero by 2050” in this Special Issue.The paper by Richard Tol entitled “Costs and Benefits of the Paris Climate Targets” argues that the least cost estimate of reaching Net Zero by 2050 is optimistically going to cost 3.8–5.6% of GDP (Tol, 2023). The Tol estimates translate into a 3.8–5.6 trillion USD cost today or about 475–700 USD per person. In 2100, this would grow to 24–35 trillion USD or 3366–4960 USD per person. He estimates that the costs of these low temperature goals are unlikely to outweigh the benefits.Tol also makes a cogent argument that these least cost numbers are a floor, not a best guess. Tol argues that there is no indication that any country is going to follow a least-cost path. A great deal of the mitigation that has been undertaken to date has been very inefficient, leading to high costs per mitigated ton.Tol further notes that very few countries are even planning on reaching net zero by 2050. There is a big gap between the goals of the Paris Agreement and the mitigation plans of most countries. Finally, he notes that there is a rapidly rising cost to negative emissions, removing carbon from the atmosphere. Attempts to create ever more forestland and convert ever more cropland into biomass production are quickly going to run out of land. Direct air capture and storage could cost as much as $1000/ton implying that a gigaton would cost $trillion.The paper by Daigee Shaw, Yu-Hsuan Fu, and Ya-Qi Chen entitled “East Asia Climate Club: Pathway Towards 2050 Net-Zero” examines the emission plans for Japan, South Korea, China, and Taiwan (Shaw et al., 2023). They apply the E3ME-FTT model to assess three net-zero policy scenarios. The authors begin by noting that Japan, South Korea, and Taiwan have recently agreed to reach net zero by 2050, with China following suit by 2060. However, the detailed mitigation plans of each country would only lead to an aggregate reduction of emissions from 17.5Gt/year by 2050 to 9.9Gt/yr. In order to further reduce emissions, the authors propose the four parties create a climate club with three common programs: a uniform carbon price with revenue-neutral recycling, a carbon border adjustment mechanism (CBAM) on imports from non-club members, and a requirement to entirely phase out fossil fuel power generation without CCS by 2050. This would reduce aggregate emissions by 2050 to 6.6Gt/yr. They then propose the climate club creates a Green Fund from some of the carbon price revenues to invest in negative emission technologies to pay off the carbon debt. They find this Green Fund could cumulatively reduce emissions to 2.3Gt/yr by 2050. This is still short of Net Zero by 2050, but it gets the national plans of these four parties a lot closer to the desired goal. To fully reach the target, the governments must formulate additional net-zero strategies across sectors.The paper by Jennifer Morris, Y. H. Henry Chen, Angelo Gurgel, John Reilly, and Andrei Sokolov entitled “Net Zero Emissions of Greenhouse Gases by 2050: Achievable and at What Cost?” is the most optimistic paper in the Special Issue about reaching Net Zero by 2050 and lays out a detailed plan on how to get there (Morris et al., 2023). The analysis uses the MIT Integrated Global Systems Model (IGSM), a complete earth system-economic model to examine three scenarios: Net Zero by 2050 for the whole world, Net Zero for Europe and the United States but global emissions limited to holding temperatures at 1.5∘C by 2100, and the latter scheme with emission trading between Europe, the United States, and the rest of the world.The authors argue that a great deal of fossil fuels must be replaced in the electricity sector with renewables, biomass, and a little nuclear energy. This clean electricity replaces fossil fuels in homes, cars, and light industry. However, there will remain some hard to abate sectors, such as heavy industry (steel, cement, and chemicals), heavy transport (trucks, ships, rail, and airlines), and certain agricultural activities (livestock and rice). Substantial non-CO2 GHGs will also remain. These GHG emissions will have to be offset by negative emissions. The paper assumes these negative emissions can be achieved by switching 400Mha of managed forests into natural forests and by using 750Mha of grasslands and pasture for BECCS.Moving from Net Zero by 2050 to a 1.5∘C temperature target slightly relaxes the immediate constraints on emissions, though both policies are almost identical by the end of the century. Emission trading leads to the same aggregate target but at a slightly lower cost as the United States and Europe help China and India lower their emissions and buy credits from Latin America and Africa which both have considerable negative emissions to sell.With the Net Zero scenario, the price of carbon rises exponentially to 1200USD/ton by 2050 and then falls to about 400–700 USD/ton for the rest of the century. The 1.5∘C policy avoids this peak of carbon prices approaching 2050. The percent of global consumption lost in the Net Zero policy rises quickly after 2030 to 15% by 2050 and then falls back to 13% for the rest of the century. The 1.5∘C policy rises from 2030 to about 10% of global consumption by 2065. Net Zero by 2050 is feasible according to the model but the cost is staggering. Even holding temperatures at 1.5∘C, the cost will be almost three times higher than the IPCC (2022) report imagines (Riahi et al., 2022).In summary, the Net Zero by 2050 goal can be reached. But the sacrifice that the world must make to achieve this plan is steep. The people living between 2030 and 2060 could lose as much as 15% of their consumption. The world after 2060 could be 10% poorer. The short timeline to achieve a very large transformation will be far more disruptive to the economy than planners hope. Economics is not the only barrier. The most important barrier is likely to be political. Countries invariably will be reluctant to give up control of their land and spend so lavishly on a global benefit. Europe and the United States, who will allegedly lead this effort, could easily find themselves making deep sacrifices for very little national gain. The sacrifice will be made, but if not by all, the climate will warm anyway. The key point, though, is that 2∘C is a lot cheaper and the additional climate damage associated with 2∘C is not dramatic. References Morris, J, Y-H Henry Chen, A Gurgel, J Reilly and A Sokolov [2023] Net zero emissions of greenhouse gases by 2050: Achievable and at what cost? Climate Change Economics, 14(4), 2340002. Google Scholar Riahi, K et al. [2022] Mitigation pathways compatible with long-term goals. In IPCC, 2022: Climate Change 2022: Mitigation of Climate Change. Contribution of Working Group III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change, PR Shuklaet al. (eds.), Cambridge, UK: Cambridge University Press. Google Scholar Shaw, D, Y-H Fu and Y-Q Chen [2023] East Asia climate club: Pathway toward 2050 net-zero. Climate Change Economics, 14(4), 2340005. Google Scholar Tol, RSJ [2023] Costs and benefits of the Paris climate targets. Climate Change Economics, 14(4), 2340003. Google Scholar Remember to check out the Most Cited Articles! Be inspired by these New titles in Energy, Resource & Environmental Economics today. Featuring authors from Princeton, Columbia University, Imperial College Business School and many more! FiguresReferencesRelatedDetails Recommended Online Ready Metrics History Received 4 September 2023 Accepted 5 September 2023 Published: 30 September 2023 PDF download