The window of opportunity for climate policy is narrow and closing. If the world continues to emit as scheduled until 2030, stabilizing atmospheric CO2 concentrations at 450 ppm will no longer be possible. Reaching 450 ppm CO2 stabilization by 2100 remains feasible only if ambitious mitigation policies at global scale are postponed until 2020, but this delay will boost global mitigation cost by at least 46%. It also entails overshooting of CO2 concentrations, thus lowering the probability of staying below 2°C. Climate policy aiming at CO2 stabilization at 410 ppm leaves even less leeway for a delay of cooperative mitigation action.

RECIPE (Report on Energy and Climate Policies in Europe) was made by four climate science research institutes: PIK (Potsdam Institute for Climate Impact Research), CIRED (Centre International de Recherche sur l’Environnement et le Développement), EPRG (Electricity Policy Research Group), and CMCC (Centro Euro-Mediterraneo per i Cambiamenti Climatici).

Read the summary below or download the RECIPE synthesis report [pdf-8MB]

RECIPE summary

In RECIPE, three structurally different energy-economy models (IMACLIM, REMIND, and WITCH) were used to explore possible future development paths under a range of different assumptions about the nature of the low-carbon transition. RECIPE projects that without measures to decarbonize energy systems, unabated carbon emissions will raise atmospheric concentrations to between 730 parts per million (ppm) and 840 ppm CO2, inducing a global mean temperature increase of 3–7°C above pre-industrial levels.

RECIPE shows that stabilizing atmospheric CO2 concentrations at 450 ppm is technically feasible and economically affordable. For this target, discounted welfare losses range between 0.1 % and 1.4 % of the global GDP relative to baseline levels. More ambitious climate policy aiming at CO2 stabilization at 410 ppm improves the chance of limiting global warming to no more than 2°C above pre-industrial levels. Here, the costs lie in the range of 0.7 to 4 %.

RECIPE provides a set of policy recommendations to reach a low carbon economy :

• Investments into conventional coal-fired power generation capacity need to be halted immediately to keep mitigation costs low.
• CCS and renewables have the highest potential to act as low-cost mitigation options, but strong investments have to start right away.
• Projected investments in low-carbon technologies will amount to US$ 1200 billion by 2050 or to about 0.2 % to 1 % of world GDP by 2100 over the course of the 21st century, with the largest part targeted at renewable energy sources and CCS.
• On the short term, energy efficiency improvements and demand side management hold significant low-cost and short-term emissions abatement potential.
• Credible long-term climate policies reduce uncertainty for private investors, and provide incentives for early movers to establish technological leadership in this sizeable market.
• Private sector involvement will be crucial to raise investments in clean energy technologies.
• The decarbonization of power generation is achievable with relative ease due to the availability of a broad portfolio of economically viable mitigation technologies.
• In the European industry sector, emissions reductions mainly depends on the improvement of existing installations, as only few new installations are scheduled for construction in the mid-term.
• For the power sector, the EU Renewables Directive provides a crucial framework to deliver a portfolio of renewable technologies.
• The transport sector is more difficult to decarbonize at least if the electrification of this sector is not an option. At this regard, R&D and pilot projects should be given highest priority in order to assess the viability of alternative options.
• National economy-wide caps and emissions trade on the government level can be complemented with bottom-up linking of emerging OECD cap-and-trade schemes operating at company level.
• R&D, demonstration projects, and policies to broaden the portfolio of mitigation options can help to provide insurance against uncertainty in future technology development. Countries can reduce costs and risks by jointly engaging in R&D and coordinating national R&D efforts.

RECIPE also describes in details for the main EU emitting sectors (power generation, transport, industry and agriculture) the status quo, the scenarios for future development, and the policy instruments.

RECIPE Key messages for EU Power generation

• Power generation is the key sector for the mitigation of greenhouse gases. The sector has a large potential to make a significant contribution to overall GHG emissions mitigation in the EU.
• A wide array of ( mature and immature ) mitigation technologies with significant abatement potential is and will be available at moderate costs in this sector. Many of these will be required in parallel to achieve ambitious mitigation targets.
• Most low-carbon technologies have a significant potential for cost reductions, if the appropriate policies are in place to encourage their development and diffusion.

Policy implications

• Cap-and-trade is the central instrument for fostering the low carbon transition in the European power sector.
• Many low-carbon technologies, particularly renewables, are characterized by considerable learning potential. The European Renewables Directive ensures that Member States provide regulatory frameworks, complementing infrastructure and where necessary financial support for a 20% renewable energy share by 2020.

RECIPE Key messages for EU Trasport

• Without policy intervention, CO2 emissions from transport will continue to increase strongly. GDP growth, removal of trade barriers, cost reduction and a shift to faster transport modes are the main drivers for growth.
• The future development of low-carbon technologies in the transport sector like electrification, hydrogen and advanced biofuels is highly uncertain.

Policy implications

• The short-term priority for the transport sector lies in research, development and demonstration in order to assess the viability of alternative options, to reduce uncertainties and to bring costs down.
• The economic availability of CO2 neutral fuels, specifically biofuels and hydrogen from renewable sources, will be limited for a long time. Policies promoting the use of biofuels should take the well-to-wheel energy efficiency and greenhouse gas emissions of the production of these fuels into account.
• For the transport sector to contribute to ambitious long term targets in an economically efficient manner, inclusion of transport into emissions trading is unlikely to be sufficient. A combination of complementary policy tools addressing specific market failures and consumer behavior is required, e. g. transport-reducing spatial planning, the provision of public transport systems and efficiency standards.

RECIPE Key messages for EU Industry

• Absent policy intervention, the industry sector’s primary energy mix will be dominated by fossil fuels, in particular coal. In presence of climate policy more electricity is used and the energy mix is decarbonized in accordance with the power sector generation mix.
• The industry sector holds significant potential for energy efficiency improvements.
• Asymmetric carbon prices bear limited risk of carbon leakage for a few sectors, i. e. cement, iron and steel, aluminium, refineries and fertilizers.

Policy implications

• A key barrier to mitigation is the slow rate of capital turnover. In Europe, emission reductions in the near to medium term will not be implemented by investing in new installations but rather by improving technologies of existing installations as only a few new installations are scheduled for construction in the mid-term. After 2020, a new capital turnover cycle is expected in Europe. This dynamic has to be taken into account when implementing a carbon constraint for the industrial sector.
• Due to the long-lived nature of the production capital, reliability is of key importance. Industry thus needs a stable, transparent policy regime to encourage investments in more expensive but more carbon-efficient technology.
• Asymmetric carbon prices raise leakage concerns, typically resulting in the full free allowance allocation to most industry sectors. This creates investment uncertainty and distortions to the carbon price signal, limiting incentives for low-carbon innovation, investment and substitution. Border adjustment could allow for a shift from free allocation to full auctioning, but raises serious concerns about discrimination or trade sanctions. International cooperation would be essential to limit the use of border measures to create trust and avoid discrimination

RECIPE Key messages for EU Agriculture

• A range of mitigation options for the agricultural sector is available at low, zero or even negative costs. These include soil management, precision fertilizing, and manure management. However, considerable non-price-related barriers such as difficulty of monitoring, uncertainty, and non-permanence have to be overcome.

Policy implications

• Due to potentially high transaction costs, an expansion of the emission trading system to the agricultural sector is not appropriate to incentivize the available mitigation potentials in a cost efficient manner.
• A climate change mitigation strategy in European agriculture should be part of a wider policy approach towards sustainable agriculture and rural development, consistent with related goals in environment policy and development policy.

Read more on RECIPE

• Edenhofer, O., C. Carraro, J.-C. Hourcade, K. Neuhoff, G. Luderer, C. Flachsland, M. Jakob, A. Popp, J. Steckel, J. Strohschein, N. Bauer, S. Brunner, M. Leimbach, H. Lotze-Campen, V. Bosetti, E. de Cian, M. Tavoni, O. Sassi, H. Waisman, R. Crassous-Doerfler, S. Monjon, S. Dröge, H. van Essen, P. del Río, A. Türk (2009): RECIPE – The Economics of Decarbonization. Synthesis Report.
• Luderer, G., V. Bosetti, J. Steckel, M. Jakob, H. Waisman, O. Edenhofer (2009): Towards a better understanding of disparities in scenarios of decarbonization : sectorally explicit results from the RECIPE project. CMCC Research paper RP0069.
• Luderer, G., V. Bosetti, J. Steckel, H. Waisman, N. Bauer, E. De Cian, M. Leimbach, O. Sassi, M. Tavoni (2009): The Economics of Decarbonzation: Results from the RECIPE model intercomparison. RECIPE Working Paper.
• Jakob, M., V. Bosetti, H. Waisman, E. De Cian, J. Steckel, M. Leimbach, L. Baumstark (2009): The RECIPE reference scenarios. RECIPE Working Paper.

• Jakob, M., H. Waisman, V. Bosetti, E. De Cian, M. Leimbach, L. Baumstark, G. Luderer (2009): Description of the RECIPE models. RECIPE Working Paper. Appendix (to the Working Paper “Description of the RECIPE models”) – Detailed model descriptions.
• Bodirsky, B., R. Crassous-Doerfler, H. van Essen, J.-C. Hourcade, B. Kampman, H. Lotze-Campen, A. Markowska, S. Monjon, K. Neuhoff, S. Noleppa, A. Popp, P. del Río González, S. Spielmans, J. Strohschein, H. Waisman (2009): How can each sector contribute to 2C? RECIPE Working paper.
• Neuhoff, K., S, Dröge, O. Edenhofer, C. Flachsland, H. Held, M. Ragwitz, J. Strohschein, A. Türk and A. Michaelowa (2009): Translating model results to economic policies. RECIPE Working Paper.
• RECIPE project description