Climate change policy targets and the role of technological change

In this paper, we present results of simulation experiments with the TIME-model on the issue of mitigation strategies with regard to greenhouse gases. The TIME-model is an integrated system dynamics world energy model that takes into account the fact that the system has an inbuilt inertia and endogenous learning-by-doing dynamics, besides the more common elements of price-induced demand response and fuel substitution. First, we present four scenarios to highlight the importance of assumptions on innovations in energy technology in assessing the extent to which CO₂ emissions have to be reduced. The inertia of the energy system seems to make a rise of CO₂ emissions in the short term almost unavoidable. It is concluded that for the population and economic growth assumptions of the IPCC IS92a scenario, only a combination of supply- and demand-side oriented technological innovations in combination with policy measures can bring the target of CO₂-concentration stabilization at 550 ppmv by the year 2100 within reach. This will probably be associated with a temporary increase in the overall energy expenditures in the world economy. Postponing the policy measures will be more disadvantageous, and less innovation in energy technology will happen.