Forecasts about global warming and its consequences are shrouded in
uncertainty. Research scientists maintain that the risks associated with
climate change are high, but are unable to estimate accurately how easily
temperature reacts to changes in the levels of carbon dioxide. According to
Tommi Ekholm, Research Scientist at VTT Technical Research Centre of Finland,
who has modelled the costs of climate change mitigation measures in his recent
doctoral dissertation, it is because of this uncertainty that we need to
accelerate measures to mitigate global warming rather than hold back.
According to Ekholm’s calculations, curbing climate change to two degrees
would require worldwide emissions trading and a price of approximately EUR 20
per one tonne of CO2 in 2020. Current emissions trading systems are regional,
and the price in the EU system, for example, has at times been as low as EUR
2–3 per tonne.
“By the end of the century, we should be looking at prices well in excess of
EUR 100”, Ekholm says.
Ekholm portrays the setting as a question of risk management: Mitigation
measures are likely to end up costing less if they are instigated straight
away. If the sensitivity of climate change turns out to be lower than the
consensus forecast, the intensity of measures can be pulled back. If, however,
the sensitivity proves to be higher than anticipated, the cost of the then
inevitable cuts to emissions may rise to intolerable levels in the short term.
“In the worst case scenario, the price of one tonne of CO2 could rise to
levels as high as EUR 1,000. The probability of this scenario is in the region
of a few per cent. The risk is not huge but not marginal either.”
In his dissertation, Tommi Ekholm compared different ways to cut emissions
globally in a cost-effective manner. He believes that the most cost-effective
cuts can be made in electricity production, for example by substituting
wind-powered electricity production for coal-powered electricity production.
The area with the second most potential for cost-effective cuts is the
industrial sector, where emissions can be reduced by introducing new fuels and
by increasing energy efficiency. In other sectors, such as transport and
agriculture, the ways to cut emissions are still being developed. This is why
the costs attributable to these sectors are considerably higher than those of
electricity production or the industrial sector.
Tommi Ekholm’s dissertation in systems and operations research, “Risks, costs
and equity – Modelling efficient strategies for climate and energy policy”,
will be examined at Aalto University in Finland on 6 September 2013. Professor
Erin Baker from the University of Massachusetts serves as the opponent and
Professor Ahti Salo from Aalto University as the chair.