Gaps between costs and potentials estimated by bottom-up assessments versus integrated assessment models

Abstract

There are large gaps between the costs and potentials of emissions reductions estimated by technology bottom-up assessments and those estimated by integrated assessment models (IAMs). This study estimates the costs and potentials by sector and technologies in 2030 and 2050 using a technology-rich IAM. The estimated costs and potentials are largely consistent with the medium range of the IAM assessments of the sixth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC). However, larger emission reduction potentials are estimated through the technology bottom-up assessments in the IPCC report. The gaps, approximately 6–17 GtCO2/yr in 2030 under carbon prices of 100 USD/tCO2, arise mainly from differences in the treatment of several hidden costs, and costs for variable renewable energy, such as solar photovoltaic and wind power, arise from considerations of grid integration costs. To recognize the gaps and implement better policies to achieve deep emissions reductions, it is necessary to understand the hidden costs and systems costs, including the grid integration costs, and to consider opportunities for limiting the costs.

Keywords

• Costs and potentials
• Integrated assessment model
• Implicit discount rate
• Hidden costs