The Costs of Climate Change

1. The Costs of Climate Change International Conference on Climate Change 29 – 31 May 2007 Hong Kong Convention and Exhibition Centre Dr. Ottmar Edenhofer

2. Cost-Benefit Approach to Climate Change Management: Climate Protection Benefits = - - AvoidedDamages Adaptation Costs Mitigation Costs

4. Tipping Points in the Earth System

6. Natural Scientists Kemfert-high Stern Review Environmental Scientists Nordhaus In % of GDP Kemfert-low Social Scientists Tol Temperature Increase Economic Damages in % of GDP Source: OECD (2003) and Kemfert (2004)

7. Natural Scientists Kemfert-high Stern Review Environmental Scientists Nordhaus In % of GDP Kemfert-low Social Scientists Tol Temperature Increase Economic Damages in % of GDP Source: OECD (2003) and Kemfert (2004)

8. Are there limits to adaptation? Dutch cow ready for sea level rise?

9. Source: Edenhofer, Lessmann et al. 2006 Mitigation Costs with ITC

11. Cost-Benefit Analysis Losses BAU: GWP - 0.84% / 8.5% (2175-2195) Losses CBA: GWP - 0.8% / 1.8% (2050) ; Cons. - 1.2% / 3.3%(2050)

12. Mitigation Reduces GHG emissions. Potential benefits are global and expected after 30-50 yrs. Adaptation Reduces impacts per warming scenario. Direct benefits are regional. Business As Usual 2°C Dangerous Climate Change Mitigation and Adaptation Year 2000 Constant Concentrations How to avoid dangerous climate change? Global Surface Warming (°C) Mitigation and Adaptation are Complementary!

13. The Mitigation Gap ‘Business as Usual’ Emissions Reduction

15. What is an Energy System?

16. Hard Coal: Global Distribution of Reserves & Resources 2,078 Gt = scaling factor 1 Global Reserves: 728 Gt Source: BGR (2005), Reserves, Resources and Availability of Energy Resources 2005

17. Brown Coal: Global Distribution of Reserves & Resources 434 Gt = scaling factor 1 Global Reserves: 207 Gt Source: BGR (2005), Reserves, Resources and Availability of Energy Resources 2005

20. EJ/a Electricity production (450 ppm Scenario) Coal PC Biomass Combined Heat-power Natural Gas NGCC with CCS Solar energy Natural Gas NGCC Wind energy Hydropower Nuclear LWR Geothermal energy

21. EJ/a Electricity production (450 ppm scenario with nuclear power phase-out) Energy costs due to nuclear power phase-out will increase by 4.6 % Coal PC Biomass Combined Heat-power Natural Gas NGCC with CCS Solar energy Natural Gas NGCC Wind energy Hydropower Nuclear LWR Geothermal energy

22. Additional costs due to nuclear phase-out (mitigation costs with nuclear phase-out minusmitigation costs without nuclear phase-out ) relative cost increase (%) learning rate of solar energy floor costs of solar energy ($/kW) Default values for solar energy: learning rate 0,2 – floor costs 1000 $/kW

23. In the history of oil use, we have never before experienced a prolonged period of ever-increasing oil prices New Territory ???

24. Futures Market

25. Oil prices at which energy sources are economically available Source: The Economist, Apr 22nd 2006, 67

26. Primary Energy Secondary Energy Transport Fuels Fossil Fuels Fischer-Tropsch + CCS Biodiesel & Bioethanol Production Coal Electricity IGCC, PC + CCS Natural Gas NGCC, NGT, CHP + CCS CHP Hydrogen Biomass Hydrogen Production + CCS Carbon Sequestration Edenhofer/Lueken 2007

27. Biomass: Potential and its utilisation

28. Bioenergy Potential of Europe(15% of Primary Energy Consumption in 2030) EEA, 2006

29. Comparative Advantage of Renewables

30. EUA Closing Prices, historical The graph shows daily bid-offer close EUA Dec 2007 prices from December 2004 (blue line) in the OTC market, and EUA Dec 2008 from Sept 2005 (red line). The data was updated 15 March 2007 32€ 28€ 24€ 20€ 16€ 12€ 8€ 4€ 0€ Apr 05 Aug 06 Aug 05 Oct 06 Dec 05 Feb 05 Jun 05 Oct 05 Dec 05 Feb 06 Apr 06 Jun 06 Dec 06 Feb 07 Source: Point Carbon

31. Global CO2 Market CO2 Price Carbon Central Bank Efficiency Renewable Energy CCS (Global) Technology Initiative A Bretton Woods Carbon Market CO2-Emissions EU ETS RGGI California