Sustainable Macroeconomics, Climate Risks and Energy Transitions: Dynamic Modeling, Empirics, and Policies

Description

Given the industrialized world’s historical dependence on fossil fuel-based energy resources and the now-realized perils of moving beyond the earth’s carbon budget, this book explores the myriad challenges of climate change and in reaching a low-carbon economy. Reconciling the medium-term competing, yet frequently complementary, needs for transition policies, the book provides guidelines for complex and often conflicting climate policy tasks. The book presents empirical trends in the use of carbon-emitting resources and evaluates market-driven short-termism and its adverse impact on resource use and the environment; it emphasizes a medium-term macroeconomic perspective for the transition. The authors attempt a paradigm shift towards a framework of sustainable macroeconomics. They survey relevant historical models, conduct empirical and numerical analyses of the climate change-relevant dynamic models, provide empirical illustrations, and evaluate diverse policy options and implementations together with their historical evolution. New analytical issues are also  considered, e.g., strategic behavior in the energy and resource sectors, energy competition and the dynamics of market shares in new energy  technology, and supporting policies for dealing with the tipping points encountered in climate change. The authors suggest a multitude of market-based strategies and public fiscal, monetary, and financial policies, and longer-run planning for resource extraction -all suitable for driving sustainable growth and a transformation of the energy sector. The book also examines the multiple delaying forces slowing the transition to a low-carbon economy; these typically arise from short-termism, lock-ins, irreversibility, leakages, non-cooperative games, and other political strategies. Thus, they explain the snail’s pace evolution of current national and global climate policies.    The book will appeal to scholars and students of economics and environmental science. It is also relevant for policymakers and practitioners in multilateral institutions, research institutions as well as governments and ministries of countries interested in alternative energy sources, climate economists, and those who study the implementation of sustainable and low carbon-based policies.  Preface Acknowledgment and Statement of Gratitude Praise for Sustainable Macroeconomics, Climate Risks and Energy Transitions Contents 1 Introduction and Overview References 2 Sustainable Growth, Welfare, and Short-Termism 2.1 Sustainability, Natural Wealth, and Welfare 2.2 Intergenerational Welfare Improvements 2.3 Market Dynamics and Short-Termism 2.4 Fossil Fuel Resources: Their Use and the Environment 2.5 Conclusion References 3 Non-sustainable Growth, Resource Extraction, and Boom-Bust Cycles 3.1 Resource Extraction and Boom-Bust Cycles 3.2 Foreign Debt Burdens, Borrowing Costs, and Risk Premia 3.3 Growth Models with Exhaustible Resources 3.3.1 Basic Growth Model with Resources 3.3.2 Modeling Resource Exports and Foreign Debt 3.4 Numerical Solutions—Economic Growth and External Debt Ratios 3.5 Conclusion References 4 Fossil Fuel Resources, Environment, and Climate Change 4.1 Global Trend in Temperature—The Climate Impact of Fossil Fuels 4.2 Reserves and Production of Fossil Fuels 4.3 Gains and Losses from Changes in Resource Prices 4.4 Conclusion References 5 Limits on the Extraction of Fossil Fuels 5.1 Resource Extraction, Its Management, and Prices 5.2 Modeling Extraction and Price Dynamics of Non-renewable Resources 5.3 Numerical Solutions and Results of Resource Extraction Strategies 5.4 Conclusion References 6 Fossil Fuel Resource Depletion, Backstop Technology, and Renewable Energy 6.1 Introduction to Backstop Technology 6.2 Trends in Energy Prices and Costs 6.3 Modeling Extraction Costs and Backstop Technology 6.4 Numerical Solutions of Growth Models with Backstop Technology 6.5 Conclusion References 7 Transition to a Low-Carbon Energy System 7.1 Is the Limit of the Carbon Budget Reached? 7.2 Emission Rise and the Carbon Budget 7.3 The Electricity Capacity from Renewable Power Generation 7.4 Environment, Mixed Energy System, and Sustainable Growth 7.5 Numerical Solutions–Fossil Fuel Extraction, Emission, and Damages 7.6 Conclusion References 8 The Private Sector—Energy Transitions and Financial Market 8.1 Private Real and Financial Sectors 8.2 Some Stylized Facts 8.3 Incumbents and New Entrants in the Energy Sector—Dominant Fossil Fuel-Based Firms 8.4 Renewable Energy-Based Firms as Entrants 8.5 Financing Renewable Energy Firms and Capital Cost 8.6 Green Assets and Portfolio Performance 8.7 Conclusion References 9 The Public Sector—Energy Transition and Fiscal and Monetary Policies 9.1 Public Sector and Policies 9.2 Climate-Macro Models with Mitigation and Adaptation 9.3 Public Sector, Fiscal Policy, and Climate Change 9.4 Numerical Solutions on Fiscal Policy Actions 9.5 Disaster Scenarios and Climate Policies 9.6 Central Banks, Monetary Policy, and Climate Change 9.7 Conclusion References 10 Delaying Forces and Climate Negotiation—Games, Lock-ins, Leakages, and Tipping Points 10.1 Literature Review 10.2 Games and Inefficient Outcomes of International Negotiations 10.3 A Dynamic Climate-Macro Model with Leakages 10.4 Drivers of Nonlinearities and Tipping Points 10.5 Conclusion References 11 Climate Risks, Sustainable Finance, and Climate Policy 11.1 Diverse Crises and Delay of Climate Protection Policies 11.2 Green Innovation and Sustainable Finance 11.3 Costs of Renewables and Climate Investments 11.4 Fiscal Policy and Climate Investments 11.5 Climate Risk and Monetary Policy 11.6 Global Efforts for Climate Protection 11.7 Conclusion References 12 Concluding Remarks References