You can use En-ROADS to simulate a carbon price that increases over time, such as the U.S. legislative proposal H.R. 763, the Energy Innovation and Carbon Dividend Act (EICDA). Note: En-ROADS is a global model, and the EICDA is a proposal for a U.S. carbon price. The method below simulates a carbon price similar to the EICDA plan, if it were implemented globally rather than solely in the U.S.
Climate Interactive Co-Director Andrew Jones gave a presentation on how to model the EICDA in En-ROADS, available here: https://www.youtube.com/watch?v=3Qdv_TTD-j4
Under the Carbon Price slider, open the advanced settings by clicking on the three dots next to the Carbon Price slider. Then adjust the settings as follows:
The Carbon Price slider in En-ROADS only covers CO2 emissions from energy (fossil fuels and biofuel). Note that a Carbon Price reduces investments in oil and gas, which indirectly reduces emissions of methane. Other gases such as CH4, N2O, and fluorinated gases (F-gases) are also directly affected by the Methane & Other slider. The EICDA includes a tax on F-gases at a rate of 10% of the tax on other greenhouse gases (when measured in CO2-equivalents). To model this in En-ROADS, you can adjust the advanced settings of the Methane & Other slider by clicking on the three dots next to the slider. Then select “Yes” beside “Use detailed settings,” and scroll down to “Energy and industry emissions (CH₄, N₂O, & F-gases).” Adjust this slider to -10%, which is an approximation of the effect of a 90% reduction target on F-gases in the U.S. (again, keep in mind that while we’re approximating a U.S. bill here, En-ROADS is a global model).
You can use the “Revenue & Cost from Taxes & Subsidies” graph to explore the revenue generated by the carbon price.
What’s the basis for these calculations?
Under the EICDA proposal, the carbon price increases by $10/ton per year. However, if cumulative annual emissions targets are not met, starting after Year 5, the price increase changes to $15/ton, where it stays until the targets are met. As modeled in En-ROADS, the carbon price on fuels alone is insufficient to reach the emissions targets each year, and the $15/ton ratchet kicks in. One way to calculate it is to take the maximum carbon price En-ROADS currently allows ($850/ton) and calculate how long it would take to reach that price (58 years). An equivalent average annual price increase over those 58 years is $14.34/ton, which ends up at $847 in 58 years. (We’re grateful to Rick Knight at Citizens Climate Lobby for this accounting). This $14.34 is the average annual increment needed to hit the max allowable En-ROADS price that yields the same annual average price, without exceeding $850, as an EICDA case including a price ratchet. If the targets are not met after 58 years, the price would continue to climb (beyond what is currently allowed in En-ROADS).
This is our understanding of some of the differences between the Carbon Price slider in En-ROADS and the carbon price in the EICDA:
What are other useful FAQs for understanding a carbon price in En-ROADS?
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