We aim to investigate the stability of various stock-flow consistent economic models, and the potential causes for economic collapse therein. Through parameter sensitivity analysis, we study models that feature a public sector, an active central bank, and a household sector with independent consumption. Our final, most comprehensive economic system combines all of the intricacies of each model, prominently featuring a demand-driven economy that is stabilized by an expansionary monetary policy. In addition, we incorporate a climate module for each economic system, and analyze public sector intervention through carbon taxes and abatement subsidies. We find that the most common feature of economic instability is a lack of demand, driven by decreases in capital investment from firms, as well as a decline in household consumption. In order to maintain a stable growth path and prevent a permanent economic contraction, we propose the implementations of an expansionary monetary policy, increased public sector subsidies of abatement costs, and stricter carbon taxes. / Thesis / Master of Science (MSc)

Radiationmanagement (RM), as an option to engineer the climate, is highly controversial and suffers from a number of ethical and regulatory concerns, usually studied in the context of the objective to mitigate the global mean temperature. In this article, we discuss the idea that RM can be differentiated and scaled in several dimensions with potential objectives being to influence a certain climate parameter in a specific region. Some short-lived climate forcers (e.g., tropospheric aerosols) exhibit strong geographical and temporal variability, potentially leading to limited-area climate responses. Marine cloud brightening and thinning or dissolution of cirrus clouds could be operated at a rather local scale. It is therefore conceivable that such schemes could be applied with the objective to influence the climate at a regional scale. From a governance perspective, it is desirable to avoid any substantial climate effects of regional RM outside the target region. This, however, could prove impossible for a sustained, long-term RM. In turn, regional RM during limited time periods could prove more feasible without effects beyond the target area. It may be attractive as it potentially provides the opportunity to target the suppression of some extreme events such as heat waves. Research is needed on the traceability of regional RM, for example, using detection and attribution methods. Incentives and implications of regional RM need to be examined, and new governance options have to be conceived.

EMEC är en allmänjämviktsmodell som har använts av Konjunkturinstitutet för att beräkna samhällsekonomiska kostnader av styrmedel, och utvärdera kostnadseffektivitet som en del av det svenska klimatpolitiska beslutsunderlaget. Med anledning av kritik som har riktats mot modellen har detta examensarbete syftat till att analysera EMEC och dess effekter i klimatpolitiken, samt belysa och diskutera aspekter som eventuellt behövs utvecklas eller hanteras på ett annat sätt i den svenska klimatpolicyutvärderingen. En intervju - och litteraturstudie bidrog med ett kontrasterande aktörsperspektiv på olika identifierade nyckelaspekter som sedan utgjorde ett ramverk för analysen av en efterföljande empirisk studie. Resultaten visar att det finns starka skäl att påstå att modellen har överskattat kostnader av utsläppsminskningar vilket sannolikt har påverkat Sveriges klimatpolitiska inriktning. I direkt anknytning till modellen argumenteras detta bero på svårigheten i att göra antaganden om framtida teknik-och prisutvecklingar, samt på modellens statiska utformning. I samband med modellens klimatpolitiska roll kan det argumenteras bero på ett relativt kortsiktigt tidsperspektiv och en endimensionell bedömning av klimatomställningens nytta i relation till klimatfrågans långsiktighet och flerdimensionella nyttosida. Det kan också påpekas att detta fördyrar klimatpolitiken på lång sikt. En alternativ klimatpolicyutvärdering tillämpar ett bredare grepp genom att exempelvis inkludera de dynamiska kostnader som är förknippade med inlåsningseffekter i kolintensiva strukturer, vilket med en kontrafaktisk jämförelse sänker kostnaden av en klimatpolicy. Vid fortsatt styrmedelsutvärdering med EMEC föreslås en förändring av hur resultaten ska tolkas. Givet att det politiska sammanhanget också fortsättningsvis kräver kvantitativa underlag finns det ett behov av en mer varierad klimatpolicyutvärdering, där också kvalitativa aspekter och fler indikatorer än BNP beaktas som komplement. / EMEC is a computational general equilibrium (CGE) model used for calculation of societal costs and evaluation of cost-effectiveness in the decision basis of Swedish climate policy. The model has been criticized for exaggerating societal costs of policies, exemplified by Sweden's relative decoupling of GDP and carbon dioxide emissions during 1990-2010. Thereby, one could argue that the model results possibly have led to less ambitious climate targets in Sweden. With the model's suitability being questioned and an expressed need for better climate policy evaluation, this master thesis aims to analyse EMEC and its effects on Sweden's climate policy. It also aims to highlight key aspects for improved climate policy evaluation. Literature and interview studies were conducted in order to form a balanced framework of different actors' perspectives on the issue. This related to several identified aspects that were considered important by the authors in the context of the EMEC model. The subsequent empirical study of three periods of Swedish climate-political processes used these results as a basis for discussion. The results imply that the critique about exaggerated costs very likely is justified, which probably also has affected Sweden's climate-political direction. Regarding the model itself, the principal reasons are argued to be its static nature and the difficulties associated with predicting future technological- and world-market price developments. Connected to the model's role, the principal reasons are argued to be rooted in its relatively short-term perspective and one-dimensional definition of benefits, compared to the long-term and multi-dimensional nature of a transition to a low-carbon society. These features have, in this study, been argued to weaken the long-term cost-effectiveness of Sweden's climate policy. The EMEC-model's principal effects in this respect have been constituted in the arguments for general policies over sector-specific goals as well as emission reductions abroad. An alternative evaluation framework would include a wider range of benefits and costs associated with climate policy, for example dynamic costs of lock-in effects in carbon intensive structures. This would decrease the costs of climate policy in a counter-factual comparison. It could be argued that a qualitative decision basis would be more appropriate considering the complexities and difficulties associated with modelling a largely uncertain future. Especially, since model results are based on the same historic trends that need to be abandoned in order to reach future climate targets. However, considering that the climate-political process demands a quantitative decision-basis, qualitative aspects should function as a complement and gain increased emphasis in the Swedish climate- political decision basis. This would purposively broaden the framework and serve as a necessary balance to the indications given by results on GDP. Given that the EMEC model to some extent continues to constitute a basis for climate policy, suggestions for alternative interpretations of the model results have also been provided.

Radiationmanagement (RM), as an option to engineer the climate, is highly controversial and suffers from a number of ethical and regulatory concerns, usually studied in the context of the objective to mitigate the global mean temperature. In this article, we discuss the idea that RM can be differentiated and scaled in several dimensions with potential objectives being to influence a certain climate parameter in a specific region. Some short-lived climate forcers (e.g., tropospheric aerosols) exhibit strong geographical and temporal variability, potentially leading to limited-area climate responses. Marine cloud brightening and thinning or dissolution of cirrus clouds could be operated at a rather local scale. It is therefore conceivable that such schemes could be applied with the objective to influence the climate at a regional scale. From a governance perspective, it is desirable to avoid any substantial climate effects of regional RM outside the target region. This, however, could prove impossible for a sustained, long-term RM. In turn, regional RM during limited time periods could prove more feasible without effects beyond the target area. It may be attractive as it potentially provides the opportunity to target the suppression of some extreme events such as heat waves. Research is needed on the traceability of regional RM, for example, using detection and attribution methods. Incentives and implications of regional RM need to be examined, and new governance options have to be conceived.

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