Informing the political economy of energy and climate transitions: modelling tools, pathways design frameworks and analytical challenges

Abstract

Measures adopted to reduce greenhouse gas emissions will have major impacts on human activities, with heterogeneous effects according to national circumstances and differential impacts on various sectors, activities and categories of households. Climate mitigation is therefore not a question of pure economics but of political economy, involving the resolution of conflicts of interest. A careful attention to redistributive effects is required when designing low emission development strategies and selecting policy instruments and measures.

This chapter starts by analyzing the emergence of research communities and models investigating the economic and social dimensions of energy and climate policies. It discusses the use of economic assessment models in climate debates and negotiations. It further highlights the strengths and limitations of conventional economic modelling approaches. The chapter then describes how a new assessment paradigm, based on national decarbonization scenarios, progressively emerged in the lead-up to the Paris Agreement and it discusses how this new paradigm is relevant to inform the political economy dimensions of climate action. Two illustrations are considered, one from a French standpoint and one in an international perspective.

The chapter finally presents key insights from recent literature investigating the major implications of the carbon neutrality objective resulting from the Paris Agreement and subsequent IPCC 1.5 report. They are characterized in terms of the political economy of the impacts, efforts and benefits of the carbon neutrality transition for different types of stakeholders in different societies. The magnitude of these impacts calls for new approaches and new sociotechnical solutions. It also opens new research avenues for the economic analysis of climate policies.