skip to primary navigationskip to content

MPhil in Engineering for Sustainable Development

global challenges, engineering solutions

Studying at Cambridge

Hugh Amos

Australia's clean energy future: Achieving effective carbon pricing Supervised by Dr Douglas Crawford-Brown

Hugh Amos

Australia's clean energy future: Achieving effective carbon pricing Supervised by Dr Douglas Crawford-Brown

This research utilises the PAGE09 integrated assessment model under 450 and 550ppm CO2 stabilisation scenarios to examine their effects on the predicted social cost of carbon (SCCO2), with specific reference to an Australian context. Use of a modelling system other than that currently being applied in Australia allows examination of the potential impact of uncertainty in predictive modelling, and posits this as a key consideration in determining an evidence-based carbon pricing system.

The amount by which the Net Present Value (NPV) of climate impacts changes if a tonne of carbon as CO2 increases, or decreases if one less tonne is emitted results from comparing the NPV of a particular emissions scenario with the same scenario adjusted to incorporate an extra spike in emissions. Calculations have been made for the incorporated 8 world regions up to the year 2200 with sea level, economic, non-economic and discontinuity impact sectors considered at each time point. All calculations have been performed probabilistically, incorporating latin hypercube sampling to build up probability distributions of the results.

This analysis shows that predicted temperatures within the two scenarios follow a similar trajectory until 2020 before diverging at this point, resulting in the higher concentration scenario reaching a 2 degC increase approximately 10 to 15 years earlier than the alternative. The SCCO2 levels resulting from each model are around $115 and $153 per tonne of CO2 in the respective scenarios with both modelling distributions encompassing large positive skews, with the top 1% of SCCO2 values contributing $31 and $40 to their respective prices. Prices increase over time suggesting the SCCO2 price will rise to over $600 per tonne of CO2 in 2100, as the unit of emissions does more damage at the margin the later it is emitted since it is in the atmosphere while concentrations are higher.

The major influences on the SCCO2 were found to be the transient climate response, the pure time preference rate, the internal random number variable distinguishing the probability for a discontinuity to occur, the feedback response time of the earth, the elasticity of marginal utility and the effect of indirect sulphate forcing. For the PAGE09-450 model, extending the timeframe from 2200 to 2300 increased the NPV to over 40% and the SCCO2 over 30%. Alternatively, limiting the timeframe to 2100 reduced the PAGE09-450 SCCO2 by greater than 50% and also altered the distribution of influential parameters, particularly the effect of indirect aerosol forcing.

Australia has already appointed a starting carbon price of AU$23 from July 2012 based on the evidence of specific modeling. As countries of the world begin to put a price on carbon, the impacts of uncertainly and various modelling protocols on the predicted trajectory of SCCO2 must be highlighted.