Report

Learning from Nationally Determined Contributions

Apr 19, 2018 | Joseph E. Aldy, William A. Pizer, Keigo Akimoto, Lara Aleluia, Carlo Carraro, Massimo Tavoni

Summary

Countries are pursuing a variety of climate change policies; we examine how much they cost relative to cheaper alternatives.

Key Findings

  • It is important to model realistic climate change policies in order to understand both their domestic costs and how they affect other countries.
  • Modeling realistic policies requires detailed economic models and more information about policy design.
  • Knowing the cost difference between actual policies and cheaper alternatives can inform choices in the future.
  • Organizations and independent experts can gather data while stakeholders provide feedback to further refine policies and establish better estimates to work with for future policy development.

Abstract

National governments have submitted emissions mitigation pledges under the Paris Agreement that vary considerably in form, level of required emissions mitigation, elaboration of nonemissions goals, and implementation strategies. As a result, domestic emissions mitigation programs necessary to deliver on the Paris pledges will diverge in the degree to which that mitigation will be achieved at least cost. This paper explores both what we learn from how nationally determined contributions (NDCs) diverge from least-cost policies and the implications for comparing mitigation efforts. The NDCs can reveal a country’s preferences regarding climate policy, economic development, and other priorities. Modeling analysis of the NDCs can highlight opportunities for (i) measuring the revealed cost of institutional and political constraints that limit least-cost implementation; (ii) mitigating climate change alongside other policy objectives; and (iii) policy learning over time. We undertake two case studies based on global energy-economic models to illustrate how implementation of NDCs may deviate from least-cost implementation. In the first case study, we employ the World Induced Technical Change Hybrid (WITCH) model to assess how the nonemissions goals in NDCs may constrain implementation in a way that increases costs related to cost-effective emissions abatement. In the second case study, we employ the Dynamic New Earth 21 Plus (DNE21+) model to assess how countries’ stated domestic implementation policies may diverge from a cost-effective domestic mitigation policy. These modeling analyses serve to illustrate how comparing mitigation implementation can then be represented by a bounding exercise that develops both conservative and generous estimates of mitigation effort.