Kapitel 3

1. does economic overheating drive carbon-dioxide emission?

2. network for greening the financial system (NGFS)

3. climate related scenarios for financial stability assessment (France)

4. Forcasting and scenarios

• GDP growth

• level of urbanizatiom

• energy mix

  
  

Evidence that during economic booms the use of coal increases. Overall, the interaction between economic growth and coal use is significant and positive for carbon emissions: i.e. booms disproportionally increase the use of carbon heavy coal and thereby contribute to additional CO2 emissions.

The findings are policy relevant:

• they highlight the negative role of coal, and to a much lesser extent that of oil

• and positive impact of renewable energy sources

• Policy support for structural policies to green the energy structure

• Policy support for policy efforts to steer away from coal.

• New finding that the carbon intensity of economic growth is increasing also underscores the urgency of the ongoing climate change reforms.

In der Stichprobe nach 2000 geht ein höheres Wirtschaftswachstum mit einem höheren Anteil von Kohle am Energiemix einher.6 Insbesondere in Ost- und Südasien gingen Wirtschaftswachstum und Kohleanteil tendenziell Hand in Hand.

Network of Central Banks and Supervisors for Greening the Fiscal System

1. strengthening the global response required to meet the goals of the Paris agreement

2. use financial system to manage risks and to mobilize capital for green investments (sustainable development)

3. create hypothetical scenarios

4. create a common starting point analysis of climate risks to the economy and financial system

Orderly scenarios assume climate policies are introduced early and become gradually more stringent. Both physical and transition risks are relatively subdued.

Disorderly scenarios explore higher transition risk due to policies being delayed or divergent across countries and sectors. For example, carbon prices are typically higher for a given temperature outcome.

Hot house world scenarios assume that some climate policies are implemented in some jurisdictions, but globally efforts are insufficient to halt significant global warming. The scenarios result in severe physical risk including irreversible impacts like sea-level rise.

Too little, too late scenarios would assume that a late transition fails to limit physical risks. While no scenarios have been specifically designed for this purpose, this space can be explored by assuming higher physical risk outcomes for the disorderly scenarios.

the French scenario is a add on to the NGFS scenarios

• different assumptions about the likelihood of government actions

• technological developments and their spillover effects on productivity

  
  

Each scenario combines assumptions related to:

i) the introduction of a public policy measure (a higher carbon tax);

ii) productivity shocks resulting from the insufficient maturity of technological innovations (higher

energy prices, including for low-carbon sources of energy that may not step up to the challenge) and the crowding-out effects on investments in non-energy sectors (lower productivity gains than expected in the baseline).

baseline scenario (business as usual) is risky because of physical risks

France wants to reach zero net emissions bz 2050

The orderly transition scenario assumes that climate policies are introduced early and become gradually more stringent. Net zero CO2 emissions are achieved by 2050, giving a 67% chance of limiting global warming to below 2°C. It is assumed that carbon neutrality will be reached by a combination of a gradual increase in carbon prices ($54 per CO2 ton in 2025 and $181 in 2050) and ambitious objectives in terms of energy efficiency, GHG reductions and development of renewable energies. This leads to an increase in the oil price (incl. the tax) of 2.5% per year.

3/5 durch increase in carbon tax

1/5 durch Verschlechternde Bedingungen in public finance

1/5 durch productivity shock

RoW = rest of the world

RoEU = rest of EU

Forecasting: identify the most likely outcome - its performance to be assessed against what effectively happens (leading to the notion of a forecasting error that one would like to minimize).

Scenarios: rather than focusing on the identification of the likely outcome, they highlight the diversity of possible futures

Scenarios consist of a set of beneficial or adverse yet plausible economic events.

They usually include assumptions as to the evolution of a set of key macroeconomic and financial variables (e.g. GDP, asset prices...) and represent the tail events.

These scenario analyses focus often at extreme events (deep recessions). They explore lower probability but high impact developments.

In order to provide a relative assessment we contrast the outcome of these scenarios against the central case scenario and focus on the difference between the adverse scenario and the baseline as well as on the consequences of the alternative scenario.

• there is no historical experience with climate scenarios

• horizon (typically 3-5 years in models) way longer in climate change

• not only long-term but also short/medium-term effects should be analyzed

• Vehralten der Menschen sehr entscheidend

• die Stärke der physical risks entscheided sehr stark über Verhaltne der Menschen

Zwischen 1971 und 1993 trieben die rasche Verstädterung und das Wachstum des verarbeitenden Gewerbes die Kohlendioxidemissionen recht stark an (Modell II). In der zweiten Hälfte der Stichprobe (1994-2016) schwächen sich diese Effekte dagegen erheblich ab, während der Effekt des BIP-Wachstums an Umfang zunimmt. Die Punktschätzung des Koeffizienten steigt sogar um etwa 50 %.Die negativsten Auswirkungen auf die Umwelt hat die Nutzung von Kohle. Bemerkenswert ist, dass sich die kurzfristigen Auswirkungen des Einsatzes von Kohle im jüngsten Teil der Stichprobe fast verdreifachen.Gleichzeitig hat sich die positive Auswirkung der Nutzung erneuerbarer Energieträger ebenfalls deutlich erhöht und ist statistisch signifikant geworden.

for all scenarios, GDP losses from physical risks outweight transition risk

-> need to add investment on adaptation

Ex ante, although the carbon tax should bring in additional receipts for the government, they are entirely redistributed to households. The net effect is a worsening of the general government balance over the long term, which deteriorates in the case of France by 0.7 percentage points on average between 2040 and 2050 in the delayed transition (Scenario 1) and by 1.5 percentage points in the sudden transition (Scenario 2).