percentage in perspective, 0.9 percent of estimated 2014 U.S. GDP is approximately $150 billion. The next degree increase, from 3° to 4°, would incur additional costs of 1.2 percent of global output. Moreover, these costs are not one-time, rather they recur year after year because of the permanent damage caused by increased climate change resulting from the delay. It should be stressed that these illustrative estimates are based on a single (albeit leading) model, and there is uncertainty associated with the aggregate monetized damage estimates from climate change; see for example the discussion in IPCC WG II AR5 (2014).
Increased Mitigation Costs from Delay
The second type of cost of delay arises if policy is delayed but still hits the climate target, for example stabilizing CO2e concentrations at 550 ppm. Because a delay results in additional nearterm accumulation of GHGs in the atmosphere, delay means that the policy, when implemented, must be more stringent to achieve the given long-term climate target. This additional stringency increases mitigation costs, relative to those that would be incurred under the least-cost path starting today.
This section reviews the recent literature on the additional mitigation costs of delay, under the assumption that both the original and delayed policy achieve a given climate target. We review 16 studies that compare 106 pairs of policy simulations based on integrated climate mitigation models (the studies are listed and briefly described in the Appendix). The simulations comprising each pair implement similar policies that lead to the same climate target (typically a concentration target but in some cases a temperature target) but differ in the timing of the policy implementation, nuanced in some cases by variation in when different countries adopt the policy. Because the climate target is the same for each scenario in the pair, the environmental and economic damages from climate change are approximately the same for each scenario. The additional cost of delaying implementation thus equals the difference in the mitigation costs in the two scenarios in each paired comparison. The studies reflect a broad array of climate targets, delayed timing scenarios, and modeling assumptions as discussed below. We focus on studies published in 2007 or later, including recent unpublished manuscripts.
In each case, a model computes the path of cost-effective mitigation policies, mitigation costs, and climate outcomes over time, constraining the emissions path so that the climate target is hit. Each path weighs technological progress in mitigation technology and other factors that encourage starting out slowly against the costs that arise if mitigation, delayed too long, must be undertaken rapidly. Because the models typically compute the policy in terms of a carbon price, the carbon price path computed by the model starts out relatively low and increases over the course of the policy. Thus a policy started today typically has a steadily increasing carbon price, whereas a delayed policy typically has a carbon price of zero until the start date, at which point it jumps to a higher initial level then increases more rapidly than the optimal immediate policy.
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