Lecture 10 Climate Policy Instruments

Gang He

November 17, 2025

A five points “climate haiku”

1. It’s warming
2. It’s us
3. We’re sure
4. It’s bad
5. We can fix it

IPAT

\(I(mpact) = P(opulation) \times A(ffluence) \times T(echnology)\)

\(I(mpact) = \frac{P(opulation) \times A(ffluence)}{T(echnology)}\)

• Technology: renewable energy, energy efficiency, innovations

Kaya identify

\(F=P \times \frac{G}{P} \times \frac{E}{G} \times \frac{F}{E}\)

Where:

• F: global CO2 emissions from human sources
• P: global population
• G: world GDP
• E: global energy consumption

And:

• G/P: GDP per capita
• E/G: energy intensity of the GDP
• F/E: emission intensity of energy

Emissions gap

Not on the right trajectory

Climate wedges

Abatement cost curve

Social cost of carbon

Best practices

• Energy efficiency
  
• Low carbon eco-city
  
• Renewable integration
  
• Sectoral experiences
  
• Policy/technology tools

Policy instruments

What policy works

What works what’s not

• Carbon tax vs. subsides
  
• Regulations vs markets
  
• Considering
  
  • Societal acceptance
    
  • Political feasibility

Two pillars of climate policy

• Mitigation
• Adaptation

Energy sector emissions

Energy sector mitigation factors

Renewables are getting cheap

Transport sector

Transport emission mitigation

\(E = vehicles \times \frac{Miles}{vehicle} \times \frac{gallon}{mile} \times \frac{carbon}{gallon}\)

Carbon remove technologies

Role of CDR

Non-CO2 by gas

Case study: high appliance efficiency standards

Case study: Empire State Building retrofit

• Save 38% of energy use with a 3-year payback
• Remanufacturing 6,500 windows onsite into super windows
• Installing better lights and equipment
• Envelope improvements and reduced internal loads allowed for a smaller cooling system

Risks and resilience

Adaptation options

Adaptation potential

Ecosystem health

Ecosystem adaptation

Food security

Vulnerable groups

Synthetic adaptation

Steps to resilence

• Understand Exposure
• Assess Vulnerability & Risk
• Investigate Options
• Prioritize & Plan
• Take Action

NYC heat plan case

• Assess climate risks
• Incoporate climate risks in adaptation and response plan
• Educate residents on the threats
• Re-assing vulnerability

What elese can we do?

Mekong River Basin

References

Armitage, Sarah C., Noël Bakhtian, and Adam B. Jaffe. 2023. “Innovation Market Failures and the Design of New Climate Policy Instruments.” Working Paper. Working Paper Series. National Bureau of Economic Research. https://doi.org/10.3386/w31622.

Ehrlich, Paul R., and John P. Holdren. 1971. “Impact of Population Growth: Complacency Concerning This Component of Man’s Predicament Is Unjustified and Counterproductive.” Science 171 (3977): 1212–17. https://doi.org/10.1126/science.171.3977.1212.

Fridley, David, Nina Z Khanna, Nan Zhou, and Michael McNeil. 2016. “Impacts of China’s 2010 to 2013 Mandatory Product Energy Efficiency Standards: A Retrospective and Prospective Look.” In. ACEEE. https://www.aceee.org/files/proceedings/2016/data/papers/5_131.pdf.

Kaya, Yoichi, and Keiichi Yokobori, eds. 1997. Environment, Energy, and Economy: Strategies for Sustainable. Tokyo: United Nations Univ. https://archive.unu.edu/unupress/unupbooks/uu17ee/uu17ee00.htm.

Pacala, Stephen, and Robert Socolow. 2004. “Stabilization Wedges: Solving the Climate Problem for the Next 50 Years with Current Technologies.” Science 305 (5686): 968–72. https://doi.org/10.1126/science.1100103.

Rennert, Kevin, Frank Errickson, Brian C Prest, Lisa Rennels, Richard G Newell, William Pizer, Cora Kingdon, et al. 2022. “Comprehensive Evidence Implies a Higher Social Cost of CO2.” Nature, 1–3. https://doi.org/10.1038/s41586-022-05224-9.

Stechemesser, Annika, Nicolas Koch, Ebba Mark, Elina Dilger, Patrick Klösel, Laura Menicacci, Daniel Nachtigall, et al. 2024. “Climate Policies That Achieved Major Emission Reductions: Global Evidence from Two Decades.” Science 385 (6711): 884–92. https://doi.org/10.1126/science.adl6547.