Interprétation simultanée en direct en français.
The presentation addresses the optimal carbon policy to fight global climate change. The main focus of the presentation is a fully analytic climate change assessment model. This model has the same numeric accuracy as the most widespread numeric model used in policy advising (DICE), but it shows analytically how the optimal carbon price depends on production, damages, carbon dynamics, radiative forcing, and ocean-atmosphere temperature interactions. The model disentangles risk attitude from intertemporal (and intergenerational) equity concerns improving the calibration of risk premia and discount rates. A consequence of these improvements is that the optimal policy is approximately independent of the atmospheric carbon concentrations. First, the finding implies that slacking on today’s climate policy does not imply greater mitigation effort in the future, but living with the (perpetually persisting) consequences. Second, the finding implies that the present cap and trade systems result in major welfare losses under technological uncertainty because they keep the emission quantity rather than the mitigation price fix. This result weighs heavily in view of the anticipated COP negotiations in Paris, where once more, the discussion focuses on quantity targets as opposed to the social cost of carbon emissions. I conclude the presentation by briefly suggesting a smart cap, a novel cap and trade-system that can eliminate these unnecessary welfare costs when abating carbon dioxide.
