Template-type: ReDIF-Paper 1.0
Author-Name: David, Paul
Author-Email: pad@stanford.edu
Author-Workplace-Name: Stanford University, All Souls College, Oxford,
	 and UNU-MERIT/MGSoG
Author-Name: Van Zon, Adriaan
Author-Email: vanzon@merit.unu.edu
Author-Workplace-Name: UNU-MERIT/MGSoG, Maastricht University
Title: Optimal multi-phase transition paths toward a global green economy    
Abstract: Economic growth thus far has been closely linked to the bulk conversion 
	 of energy stored in carbon based fuels (wood, coal, oil, natural gas) 
	 into useful work. Burning such fuels gives rise to CO2-emissions. These 
	 emissions, together with other greenhouse gasses (GHG's) like methane, 
	 are now thought to be responsible for a considerable warming of the 
	 earth's atmosphere in the present and for years to come. That is bad 
	 news on a number of accounts: sea levels will rise, tropical diseases 
	 will become more wide-spread, storms will be more violent, patterns of 
	 rainfall will change (affecting agriculture), fresh water supply 
	 shortages will become a problem due to global glacier retreat, and so 
	 on. Most of these changes represent significant costs to society. There 
	 is much to be said then for avoiding these consequences of global 
	 warming, by reducing emissions or by adapting to the new situation. 
	 This paper summarizes part of the work conducted by the authors on the 
	 construction (and further extension) of a multi-phase transition model 
	 that incorporates the notion of embodiment of technical change on the 
	 one hand, the irreversibility of investment decisions, and the fact that 
	 the 'smooth' transition toward a carbon-free future will need to be 
	 prepared by means of the accumulation and subsequent run down of 
	 carbon-based production capacity, simply because capital, whether 
	 carbon-based or carbon free, is a produced means of production. The 
	 focus of the paper is therefore on the selective build-up and 
	 deactivation of different types of capital stocks, the time this takes, 
	 and the implications this has for the development over time of welfare 
	 specified in terms of the flow of consumption.  
Classification-JEL: Q54, Q55, O31, O32, O33, O41, O44
Keywords: global warming, tipping point, catastrophic climate instability,
	 extreme weather related damages, R&D based technical change,
	 embodied technical change, optimal sequencing, multi-stage optimal
	 control, sustainable endogenous growth.
Series: UNU-MERIT Working Papers
Creation-Date: 2012
Number: 079
File-URL: http://www.merit.unu.edu/publications/wppdf/2012/wp2012-079.pdf
File-Format: application/pdf
File-Size: 275 Kb
Handle: RePEc:unm:unumer:2012079