A biophysical perspective of IPCC integrated models
Analysis of the costs and benefits of climate mitigation involve extrapolation into the future. However, the long time horizons of interest extend well beyond the range of standard economic-development scenarios. In order to guide policy makers, `transformation pathways’ are derived from integrated assessment models (IAMs). These models represent interactions between human and natural systems, including energy, agriculture, the carbon cycle, and economic systems.
IAMs adopt simplified, stylised, and numerical approaches to complex systems. Since the future evolution of demography, socio-economic development, and technology are highly uncertain, scenarios have been developed that describe plausible alternative pathways for the key socio-economic drivers of greenhouse gas (GHG) emissions.
The IPCC scenario series includes the SA90, IS92, and SRES, published in 1990, 1992 and 2000 respectively. Beginning with the Fifth Assessment Report (AR5), `representative concentration pathways’ (RCPs) were introduced to serve the dual purpose of new socio-economic and emissions scenarios, and form the basis for new climate model simulations. The RCPs are being replaced with `share socioeconomic pathways’ (SSPs).
Scenario drivers can be described by the Kaya identity. The Kaya identity includes population, per-capita income, energy intensity of the economy, and carbon intensity of energy. Since the identity is multiplicative, the component growth rates are additive. Therefore, growth of per-capita income is compatible with a decline of GHG emissions, provided energy and carbon intensity decline sufficiently rapidly. However, a hypothesis of biophysical economics (BPE) is that per-capita income growth is in fact an emergent parameter from the biophysical-economic system. Rather than being independent variables, the Kaya parameters are interlinked in complex ways.
The problem with the adoption of exogenous ‘storylines’ over the long time horizons of climate modelling is that relatively small changes to the Kaya parameters results in large changes over a century. The most outstanding example of this is that baseline IAM scenarios project a 3 to 8-fold increase in GDP-per-capita by 2100 due to compound growth. With an assumed moderate damage function, regardless of climate mitigation we end up being much better off.
One way of explaining this discrepancy is that IAMs adopt the assumptions of standard economics, which assumes the circular flow model of the economy. Money circulates between producers and purchasers (or firms and consumers). Consumers sell their labour and invest their savings in firms, who sell consumers goods and services, and the cycle continues. In this model, the economy is a closed system in a state of equilibrium. The ‘standard model’ is consistent with our everyday experience of money and aligns with double-entry bookkeeping. It is also consistent with the first law of thermodynamics, which states that energy is conserved.
In contrast, the BPE perspective is that the economic system is driven by the linear flow of energy through an economy. Unlike the first law of conservation, the second law states that energy is continuously degraded, and that civilisation is like any other physical process; that is, as an open, nonequilibrium thermodynamic system that sustains material growth through the dissipation of energy. All organisms grow into their available energy, and conform to the maximum power principle, rather than evolving to maximise efficiency. We’ve taken hundreds of millions of years of stored sunlight and we are rapidly converting that into useful work, heat, information and food. One litre of gasoline required about 24 tonnes of ancient plant matter.
The assumption that future economic growth will replicate the 20th century requires the assumption that future energy systems, and end-use productivity, will be at least as good as the development of coal, oil and gas. However, these assumptions are contested within the biophysical literature. We can reasonably assume that energy productivity will continue to improve but the same cannot be assumed for energy supply. While much progress has been made with wind and solar, these energy sources are adding to the overall energy mix rather than large scale substitution. Nuclear power offers a scalable option but progress is slow, and deployment has mostly stalled outside of state-run systems such as in China. All of these produce electricity but substitution of transport fuels remains the largest barrier to decarbonisation. Biofuels possess a low EROI and are ecologically damaging.
I’ve recently published a paper exploring these issues here, in which I explore AR5, with a focus on the key drivers of economic growth, how these are derived and whether IAMs properly reflect the underlying biophysical systems. My conclusion is that the future is much more uncertain and that IAMs insufficiently describe the energy-economy nexus.