A myopic bias will not change investments and consumption behavior sufficiently and choices made for the medium term will lock us into too fossil-fuel-reliant patterns for many decades. If these mechanisms are at play, the climate strategy must include policy action designed to avoid costly lock-in situations.
We will both analytically and numerically in a dynamic, macroeconomic framework, investigate the severity of lock-in mechanisms and possible ways out. One merit of our modelling approach is that we will integrate many types of responses to climate policy instruments in a common framework: technological, changes in industry and consumption patterns, and changes in social norms and preferences; the latter virtually unexamined in large-scale models.
We will combine two types of lock-in in the numerical model. Besides modelling that investments are long-lived, we will also investigate possible consumer response inertia. Examples can be habit formation, psychological mechanisms or network externalities that call for coordinated action. Our choice among behavioral models will be based on their explanatory power, their compatibility with our framework and data availability.
We will also check the robustness of alternative climate strategies to changes in the external surroundings, including technology, demography, and global (particularly European) economic development. We will base these shifts on a set of storylines that we will develop by means of explorative scenario building and global technological and economic model simulations.
Finally, we will develop transformation indicators that can be used for monitoring and facilitating adjustments on the way towards the low-emission society.
Start: 2017 – End: 2021