Global Solutions for the Climate Crisis

: Novel Metrics, Models, and Mechanisms

Abstract

In Chapter One we develop a model of pro-environmental behaviour based on discrete choice theory with social interactions and heterogeneous agents. The model produces pure and hybrid equilibria, and gives rise to social tipping points, providing a novel explanation for the cognitive dissonance experienced when individuals’ environmental behaviour does not match their values.

We are able to indicate policy interventions that can induce complete transitions where the population tips to a more desirable equilibrium, including some which are budget-neutral. The technique is exemplified in a hypothetical analysis of the problem the UK government faces in convincing households to replace their domestic boilers with heat pumps.

Chapter Two presents a general framework and simple metric to compare the effects of any set of circular strategies, including those strategies such as servitisation and refuse which are chronically underrepresented in the literature.

We use this metric to analyse the results of a Supply Chain Equilibrium study and show that circularity can come from any of the circular strategies, suggesting an evolution of the traditionally-held view that strategies can be ranked on a ladder. We thus enable policymakers to make better-informed decisions and choose circular strategies which best deliver the desired goals.

Although the new approach is applied to the case of a plastic bottle reuse scheme, its holistic design makes it broadly applicable to any material and any use-case. Transitioning to Renewable Energy (RE) at scale introduces novel challenges for the electricity generation industry, particularly in balancing load without the dispatchability traditionally provided by fossil fuels.

Chapter Three presents the value factor: a simple method to compensate for systematic temporal and locational correlations which cause some electricity sources to be more valuable than others. We estimate the value factor using data from a wind farm, and find that this supports similar studies. We contribute to the literature on improvements to the Levelised Cost of Electricity (LCOE) with an analysis of the additional value to be obtained from the addition of storage to a generation asset, thus providing an alternative method for calculating the value of storage and dispatchability.

We claim that “dispatchability is the new baseload” and suggest that a simple, widely-available generic set of value factors might enable better investment decisions and help support policymakers in providing the kind of regulatory and market reform that is needed if we are to be able to fully decarbonise our grids.

In Chapter Four we propose a mechanism (Climate-Just Debt Swaps) for funding climate mitigation and adaptation as well as the “Loss and Damage” process described in COP27 and COP28. Climate-Just Debt Swaps provides an incentive for advanced economies to want to commit large amounts of money to climate action. We show how projects can be designed with benefits to all parties, with a special emphasis on aiding developing nations.

The mechanism mobilises finance from both public and private sectors, and at a scale which is commensurate with the trillions of US Dollars needed to meet the Paris objectives. A method is described to address the crisis of sovereign debt in developing nations and ensure that they have the resources they need to meet their own development goals and also address the climate change and biodiversity crises.

The debt restructuring involves the cancellation of the developing nation’s least payable debt and its replacement with a more repayable loan in local currency. Because of the additional returns to the contributing nations, Climate-Just Debt Swaps provide bond markets with a channel for absorbing all the private green and sustainable finance which is currently looking for high-quality projects, while also offering developing nations a considerably better deal than China’s Belt and Road Initiative.

Date of Award	13 Nov 2024
Original language	English
Awarding Institution	University of Bath
Supervisor	Paolo Zeppini (Supervisor) & Bruce Morley (Supervisor)