As you read in the last post, in the past days I finally completed Work Package 2 and I could start the main activity of Work Package 3. I talk about “main activity” because, as you might remember, in 2017 I worked a bit on a side activity focused on the Sustainable Development Goals (SDGs), whose paper I presented at the EAERE conference in Athens.

In this last research task of my MERCURY project I would like to focus on a policy aspect in the context of climate mitigation. The starting point is the consideration that the European Union is and will be leader in implementing clean policies addressing climate change: the main aim of this task is thus to explore scenarios where there is no common and uniform effort at global level, i.e. where one or more regions do not participate in the mitigation policies led by the EU. Specifically, the objective is to assess by how much policy cost would rise for the participating regions (with a particular focus on the EU, obviously) and how the optimal electricity mix would change.

It must be specified that I wrote this proposal before December 2015, i.e. before the signature of the Paris Agreement, which indeed proved to generate a common consensus: only two countries did not sign the agreement, i.e. Syria and Nicaragua (the latter by the way joined later). Interestingly, I initially conceived this activity thinking about a possible boycott by the oil-exporting Middle-Eastern countries which would hypothetically jeopardize the Paris agreement selling cheap oil in order to maintain their market shares. Reality has indeed been more “fascinating”, because now the scenario more adherent to reality would be a global effort towards climate change mitigation not involving the United States. On June 1, 2017, in fact, the US President Donald Trump announced the intention to withdraw his country from the agreement: the procedure requires some years and would be effective from November 2020. We will see how things will evolve, however in the meantime a mitigation scenario not involving the US surely deserves to be explored.

For this exercise I conceived a very simple scenario set, similar to the nuclear task, also considering that the available time is not much.

Scenarios are six in total, i.e. the benchmark no-policy Business-as-Usual (BAU) scenario plus five policy scenarios compatible with the Paris long-term targets.

The policy scenarios, in general, are run imposing a carbon tax on greenhouse gas emissions, exponentially growing over time and leading to a temperature increase in 2100 with respect to the pre-industrial levels below 2°C with a likely chance. The policy exercise consists in applying the carbon tax in different areas of the world: comprehensibly, the value must increase as the number of participant regions decreases (the exact value will be calibrated accordingly).

Indeed, I chose to impose a reduced carbon tax also in the regions not participating in the mitigation policies (with the initial value and the yearly growth rate halved with respect to the full tax). This is done for two reasons: 1) without fixing a minimal carbon tax in even just one important region (e.g. USA) the climate target is not feasible, and 2) this tax would somehow mimic the decarbonization signal that in any case the non-participating regions would receive from the surrounding participating regions, which could not be otherwise modeled.

The reference mitigation scenario (CTAX) is run imposing a uniform tax to all world regions. Additional scenarios consider the non-participation of:

1. USA
2. the fossils exporting regions, i.e. MENA and TE, where MENA is the Middle East and North Africa region, while TE stands for Transition Economies (namely Russia and Former Soviet Union states) and the non-EU Eastern European countries
3. both of the former
4. the fossils exporting regions plus the low-income regions. These additional regions are SSA (Sub-Saharan Africa except South Africa), SASIA (South Asian countries except India), INDIA, and EASIA (South-East Asian countries).