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The proliferation and growing variety of climate-economy models and what are known as integrated assessment models (IAMs) can make it difficult for someone interested in following the debate to place any specific model, or the discussion about the merits of one or another, into a broader context. The literature related to climate-economy modelling is already vast: apart from a very large number of models and an even larger number of applications, there already exist many good surveys comparing—inter alia—modelling frameworks, model assumptions and model results. The objective of this chapter is to provide a simple overview and organising scheme of this modelling world by delving into the characteristics of more than 60 individual IAMs towards describing the main ways in which certain classes or groups of climate-economy models differ from one another. In contrast to other more detailed or narrowly focused “overviews” and literature reviews, this analysis takes less for granted and aims at providing an initial understanding of generic model structures. After briefly discussing some principles of classification that can help organise this often daunting modelling world, the chapter offers descriptions and comparisons of the main classes of models.

Canada is one of the top ten greenhouse gas (GHG) emitters in the world, and of the nation’s total, the province of Alberta was the biggest emitter primarily due to the fossil fuel industry and power generation. Alberta is currently facing a challenge to reduce GHG emissions in line with Canada’s obligations to meet Paris Agreement goals. Additionally, the oil sand deposits in Alberta are located on the traditional land of Indigenous communities; therefore, the development, regulation and consultation of this sector have a direct impact not only on emissions but also on the socioeconomic welfare of Indigenous communities. Thus, the transition towards a low-carbon pathway in the oil sand industry is closely connected to upholding the rights of Indigenous peoples. Meaningfully consulting with Indigenous peoples is essential when developing low-carbon pathways that impact the environment and wellbeing of the community. Failure to consult proposed changes with Indigenous communities can lead to risks for the government, the industry and the communities themselves. These risks have been prevalent in the current consultation process in Alberta which has led to litigation, creating mistrust between the government, industry and Indigenous community. Given this background, we present a Consensus Building in Engagement Processes framework that includes Indigenous consensus, knowledge, interests and rights as a focal point of a consultation process required for decision-making. The consultation process is presented within the context of land use decisions impacting a low-carbon future for oil sand development. The framework is based on seeking consensus from all parties involved and aims to help to reduce risks resulting from decisions that do not consider the interests and rights of communities most impacted by resource development or climate mitigation pathways.

In this chapter, a step-by-step application of calibrating an agent-based model is presented. In particular, an agent-based model for small-scale PV adoption was calibrated on the historical data for the small-scale solar PV capacity additions that took place in Greece from January 2010 to February 2013. The process of the model calibration allowed to (a) quantify and take into consideration uncertainties that are related to the characteristics and the decision-making criteria of the agents (i.e. independent PV power producers), in contrast to the more obvious uncertainties, such as technology costs, and (b) use the calibration results to explore the plausible—given the historical data—behaviour of the potential PV adopters in Greece under the new net-metering scheme (in effect as of mid-2015).

Ambitious emission reduction targets are challenging the status quo on designing effective strategies for electricity generation portfolios. In this chapter, we consider the role of low-carbon technologies and determine the cost-benefits of policy strategies to mitigate greenhouse gas emissions in the EU. In particular, we look into how long-term scenarios for transmission expansion and decarbonisation policies influence the evolution of the EU power system infrastructure. We use an EU electricity investment model to determine the optimal portfolio of electricity generation technologies and compute their respective costs and emissions achieved towards 2050. Based on the investment model’s results (strategies and suggested portfolios), we investigate how these portfolios perform under divergent policy or geopolitical developments. For this purpose, we apply a robust optimisation tool based on the min-max and the min-max regret criteria, which selects ideal portfolios by stress testing a particular scenario or policy choice under uncertainty of input parameters.

Results show that pursuing a strong transmission expansion strategy under the EU PRIMES reference case leads to the maximum regret, while relying on EU scenarios with strong prospects for decarbonisation, either with possibilities or with limitation on transmission expansion, leads to portfolios that exhibit the least variance. However, applying regret analysis on investment costs and total emissions indicates a limited transmission investment case as the more robust one, also noting that a high carbon price will accelerate the energy transition.

Over the last 20 years, numerous studies have shown significant changes in the global climate which negatively affect life in many aspects. The perpetual problems due to climate change impacts have created the urgent need to find efficient ways to tackle them. In this frame, European countries are moving towards the creation of energy and climate policies in order to achieve specific targets and mitigate the consequences of greenhouse gas emissions. They have defined a number of scenarios comprised of different targets’ combinations and ambition levels. The targets to be achieved are defined as to the CO emission reduction, the improvement in energy efficiency and the increase of the share of renewable energy sources until 2030. Thus, the aim is to lead EU to counteract the increasing energy demand and its negative effects on the environment as well as to abate the fossil fuel dependency. In this context, the scope of the particular paper is to examine which of the defined scenarios could respond adequately to the European region’s profile and which could affect positively living conditions. Subsequently, the research focuses on the assessment of each alternative climate and energy policy scenario and its socioeconomic, environmental and energy impacts with the application of multi-criteria decision analysis. The method used in the herein analysis is the PROMETHEE II, which ranks the proposed scenarios based on the decision-makers’ preferences. In order to ensure the robustness of the results, a sensitivity analysis is also performed.

Energy, water, and food systems have so far mostly been studied independently. In this chapter, we argue that it is important to take an “energy-water-food nexus approach” to analyzing these three resource systems. After briefly introducing the emerging literature on the energy-water-food nexus, we inspect the interrelationship between energy and water use in the Middle East. We present results for projected power production, water withdrawal, and water consumption levels until 2050 in the Middle East under both baseline and stringent climate policy scenarios. We also analyze how the use of different cooling techniques for the main power production options in the Middle East can yield water withdrawal and consumption savings in the electricity sector in the region. We end by informing authorities responsible for the implementation of energy-water policies on the risks and uncertainties associated with the water usage of future energy systems.

The evaluation of environmental practices of each country is a very interesting area which has recently gained significant attention. An analysis, which can provide results for comparisons among countries with different economies, is data envelopment analysis. In this chapter, countries’ environmental efficiency is estimated using data envelopment analysis. Applying a slack-based model under the consideration of constant returns to scale and variable returns to scale technologies, a composite index is calculated from the efficiency scores of each model. These models consider both desirable and undesirable outputs. However, especially for undesirable outputs, the data collected are not accurate and could potentially be subject to uncertainty. To handle the uncertainty in the undesirable data, a chance-constraint DEA model is applied. Results of the deterministic model show that Australia gathers high values of environmental efficiency. However, in the presence of noise in the undesirable data, the rankings of the countries change.

Standard market-based policies for addressing climate change mostly aim to internalize the Social Cost of Carbon (SCC) into the economy with either carbon taxes or cap-and-trade schemes. Standard policies are failing to manage the systemic risk of dangerous-to-catastrophic climate change for a variety of reasons. In this chapter we clarify and expand on a market hypothesis that argues for a second externalized cost of carbon, called the Risk Cost of Carbon (RCC), as the appropriate solution to this risk problem.

The combination of the SCC and RCC creates a new paradigm of complementary market pricing for the dual objectives of improving market efficiency and managing systemic risk, respectively. Introducing the RCC addresses the problem of how to decouple gross world product (GWP) from carbon emissions and how to solve the paradox of time discounting under systemic risk. Subsequently the RCC could have major implications for climate change economics, public policy, and sustainability theory. The hypothesis is novel by taking into consideration both the entropy and the mass of the carbon budget.

The RCC is technically defined as the cost of imposing risk tolerances (%) on climate mitigation objectives, and it has units of USD per tonne of carbon dioxide equivalent (COe) mitigated. The RCC is internalized with a “global carbon reward” that manages a trade-off between market efficiency and climate certainty. The carbon reward is issued as a parallel currency and with an exchange rate that is managed by central banks over a rolling 100-year planning horizon. A key recommendation is to test the hypothesis with experiments.

The renewable energy projects involve multiple stakeholders; the social acceptance of these projects may convert into a thoughtful risk for the exploitation of renewable energy. Comprehending the process under which a social license to operate may be granted to a renewable energy project is significant. The “GO” or “NO-GO” decision for a renewable energy project is a vital task. In order to illustrate how renewable energy projects can be assessed from the sustainability point of view, two hypothetical scenarios were constructed. These scenarios describe a conceptual renewable energy project evaluated by five imaginary stakeholders under specific criteria and sustainability pillars. The first scenario is a “NO-GO” scenario: the project is not sustainable due to significant environmental, social, economic, technological and geopolitical negative impacts. In this case, the social license to operate will not be endorsed by the stakeholders; important changes are needed before reassessment. The second scenario is a “GO” scenario: the preferences of the stakeholders are such that the project may be considered sustainable and the social license to operate may be endorsed by the stakeholders. The methodology utilized to assess the two hypothetical scenarios for the same renewable energy project is the multi-criteria decision analysis combined with the multi-attribute utility theory. The quantification of assessment results was conducted with the assistance of a state-of-the-art decision support system (“Acropolis DSS”), which allows decision-makers to evaluate multiple options that offer alternate solutions in “GO-NO-GO” situations.

In the midst of its respective energy transitions, the European power sector faces several challenges. Low levels of both European Union Emissions Trading Scheme (EU ETS) allowance prices and wholesale power prices fuelled concerns over drivers for decarbonisation and long-term generation adequacy. Whilst some countries have introduced capacity remuneration mechanisms to ensure generation adequacy, reforming the EU ETS has proven to be difficult. This paper proposes a unilateral approach by a state introducing a CO levy that internalises and prices CO at a national level. The suggested climate and supply market model thereby incentivises and rewards production from CO-neutral sources during times when it does not cover the targeted share of production. Prior to describing the model in detail, this paper discusses the theoretical policy steering background and the problems associated with current energy policies. For a broader picture, other CO taxation models are briefly presented. This is followed by a discussion on the legal aspects of the model, its compatibility with international as well as EU law. The model is explored further by using Switzerland as an example, showing that a cross-sector carbon price can be implemented at acceptable costs for consumers. Last but not least, the paper examines varieties of the model and the adaption potential for European countries.