Energy and Climate

Carbon Emissions: Working from Home Leads to Longer Commutes

The Covid-19 pandemic has profoundly changed mobility patterns in urban areas, not least because people have frequently been working from home. This has spawned hopes of a reduction in carbon emissions in the event that commuters continue to stay off the road. However, our research shows this optimism may be misplaced. In the medium term, people who commute less also tend to buy vehicles that are less fuel efficient. Furthermore, working from home makes a move to the countryside more attractive, where rents are cheaper. As a result, commuting distances increase and emissions bounce back from the initial fall caused by people working from home. These trends eliminate between 84 and 90 percent of the initial environmental gains. Meanwhile, policymakers should note that while mandatory standards on fuel economy slow the shift toward inefficient vehicles, they also exacerbate the long-term increase in commuting distances. Standards regulating the combined consumption of individual automaker fleets lead manufacturers, for example, to reduce the price of clean vehicles at the expense of dirtier ones.

Geoengineering: Unilateral Climate Management?

Geoengineering may well offer a route to combating global warming. In a recent project, researchers investigated a method of reducing solar radiation that involves injecting tiny particles of matter, for instance sulfur, into the stratosphere. As in the wake of a major volcanic eruption, the introduction of such particles leads to some incident sunlight being reflected back into space, thereby lowering global temperatures. Compared to the projected costs of climate change, these measures are so inexpensive that individual countries or regions could use them to regulate global temperatures unilaterally. There are, however, some risks. The research paper looks at recent findings on the effectiveness of sulfur-based geoengineering in the context of an integrated assessment of climate change. A key scenario shows that individual countries, such as China or the United States, might have an interest in unilaterally mitigating the increase in global temperatures. Almost all regions would benefit from this, including Europe. Only Russia would lose out. However, most regions – except for Africa and India – favor a more limited use of geoengineering. Furthermore, geoengineering reduces the incentive worldwide to reduce greenhouse gas emissions; although, in the short term, this effect remains small.

Extreme Weather Events: Flood Risks Impact Homeowners Unevenly

The flooding that struck Germany in July 2021 damaged thousands of properties. It offered a portent of the potential costs of climate change. The increasingly frequent occurrence of increasingly extreme weather events can mean people paying higher insurance premiums, investing more in lfood protection, and facing restricted access to credit. Using data from the UK, we examined how the market for mortgages and real-estate insurance is impacted by spreading the risk between areas subject to flooding and those not. We discovered that the main beneficiaries of this distribution of risk are the owners of expensive real estate in areas with a high average income. The introduction in 2016 of subsidized insurance seems to have offset the negative effects of flooding on property prices. At present, the average impact of these effects is limited, though not negligible, and it may well rise should extreme weather events become more frequent. In the mortgage market, banks do not fully factor in the negative effects of flooding on real estate prices.

Shaper of the Economic Policy Debate

Paving the Way for a Sustainable Future

In an open letter, leading scientists from a wide range of disciplines appealed to German policymakers to provide a strategy for the rapid transition to climate neutrality while also maintaining competitiveness and preventing social divisions. Among the signatories was Prof. Karen Pittel, Director of the ifo Center for Energy, Climate, and Resources.