Multi-actor optimization of greenhouse gas emission paths using coupled integral climate response and economic models

The simple Structural Integrated Assessment Model (SIAM) applied previously to optimization studies for the abatement of CO2 emissions for an integrated global economy with a single decision maker is extended to the multi-actor case. The general non-cooperative multi-actor optimization problem is formulated both for the case of non-trading actors, in which the coupling between actors is limited to the jointly modified global climate, and for trading actors, where the control variables of individual actors also directly affect the welfare of other actors, Numerical examples are presented for both classes of interaction. In the non-trading case, the optimal CO2 emission paths are less affected by the change from a single-actor cooperative strategy to a non-cooperative multi-actor strategy than may have been anticipated intuitively. For a modest number of identical actors (5 - 20), the abatement of the individually optimized emission paths is generally weakened but is of the same order as in the single-actor case. For the case of a single actor undertaking mitigation measures in the presence of (n - 1) actors pursuing a 'business-as-usual' policy, the lone mitigator even enhances his (or her) abatement measures for n < 10. To illustrate the impact of trade, a two-actor fossil fuel supplier-consumer model is considered. The conflicting goals of the two actors can lead to an effective neutralization of the consumer's attempts to mitigate climate change through reduced fossil fuel consumption by the supplier, who has a motivation to stimulate consumption by reducing the fossil fuel price