Christian Lutz and Ulrike Lehr
Energy efficiency and renewable energy sources are the two main pillars of the future energy system the German government aims at with its long-term energy concept. This chapter reports the economic impacts of these mitigation policies based on two recently completed studies with the economy–energy–environment model PANTA RHEI. Results show both for energy efficiency and for renewables positive macroeconomic impacts concerning gross domestic product and employment. Additional investment increases demand in the short run and reduces energy costs in the long term. Sensitivity analyses look into different assumptions for fossil fuel prices, domestic installations, and international trade. The development of world markets and German exports is very important. Globally, countries will change their energy system. The necessary transition from fossil fuels to energy-saving and renewable investment opens excellent export opportunities for German industries.
Lucas Bernard and Willi Semmler
This Handbook analyzes the macroeconomics of global warming, especially the economics of possible preventative measures, various policy changes, and the potential consequences of climate change on developing and developed nations. The problems are complex as, for example, the developed world will tend to increase its consumption of energy in order to mitigate climate change effects, leaving developing countries, which are most vulnerable, even more exposed to the dangerous consequences of a rise in global temperatures. Additionally, both adaptation and other efforts will cause changes in industries and, consequently, in employment and demographic profiles. Constructing models which are both accurate and fair to myriad competing interests is difficult. The present work presents state-of-the-art attempts achieve this balance by focusing on the macroeconomic modeling of climate change policies, i.e., although we touch upon scientific topics, it is through an economic lens, as it were. Thus, we address broad issues, but with a narrower perspective: that of the economist.
In this chapter we sketch a dynamic framework within which the discussion on the macro economic effects of climate change take place. The problem setting is characterized by scientific uncertainties about the development of climate, potential large economic losses, and specific characteristics of human beings having their specific features. Some considerations about climate change, macroeconomics, and their relationship are given. A characteristic feature of the problem setting is that there are multiple decision makers interacting in a dynamic world with large uncertainties. Problems of this type have been studied extensively by (dynamic) game theory. A rough literature review is provided and some items open for future research are indicated.