The higher carbon prices after a delay typically lead to higher total costs than a policy that would impose the carbon price today.[1]
The IPCC WG III AR5 (2014) includes an overview of the literature on the cost of delayed action on climate change. They cite simulation studies showing that delay is costly, both when all countries delay action and when there is partial delay, with some countries delaying acting alone until there is a more coordinated international effort. The present report expands on that overview by further analyzing the findings of the studies considered by the IPCC report as well as additional studies. Like the IPCC report, we find broad agreement across the scenario pairs examined that delayed policy action is more costly compared to immediate action conditional on a particular climate target. This finding is consistent across a range of climate targets, policy participants, and modeling assumptions. The vast majority of studies estimate that delayed action incurs greater mitigation costs compared to immediate action. Furthermore, some models used in the research predict that the most stringent climate targets are feasible only if immediate action is taken under full participation. One implication is that considering only comparisons with numerical cost estimates may understate the true costs of delay, as failing to reach a climate target means incurring the costs from the associated climate change.
The costs of delay in these studies depend on a number of factors, including the length of delay, the climate target, modeling assumptions, future baseline emissions, future mitigation technology, delay scenarios, the participants implementing the policy, and geographic location. More aggressive targets are more costly to achieve, and meeting them is predicted to be particularly costly, if not infeasible, if action is delayed. Similarly, international coordination in policy action reduces mitigation costs, and the cost of delay depends on which countries participate in the policy, as well as the length of delay.
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- ↑ Some models explicitly identify the carbon price path that minimizes total social costs. These optimization models always find equal or greater costs for scenarios with a delay constraint. Other models forecast carbon prices that result in the climate target but do not demand that the path results in minimal cost. These latter models can predict that delay reduces costs, and a small number of comparisons we review report negative delay costs.
