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Abstract:
The UN Framework Convention on Climate Change (UNFCCC) demands
stabilization of atmospheric greenhouse gas concentrations at levels
that prevent dangerous anthropogenic interference with the climate
system. This requires an unprecedented degree of international action
for emission reductions and technological change in the energy sector.
Extending the established optimal control approach, the paper combines
the concepts of adaptive control, inverse modeling and local
optimization to climate change decision making and management. An
alternative decision model is described where controls are adjusted
towards a moving target under changing conditions. A framework for
integrated assessment is introduced, where a basic climate model is
coupled to an economic production function with energy as a production
factor, which is controlled by the allocation of investments to
alternative energy technologies. Investment strategies are shaped by
value functions, including utility, costs and climate damages for a
given future time horizon, which are translated into admissible emission
limits to keep atmospheric carbon concentrations and global mean
temperature asymptotically below a given threshold. Conditions for
switching between management and technology paths with different costs
and carbon intensities are identified. To take account of the
substantial uncertainties, an exemplary case discusses the sensitivity
of the results to variation of crucial parameters, in particular time
discounting, climate damage, taxes and time horizon for decision-making.
