An OLG Approach to Model the GHG Mitigation Mechanism of the Paris Agreement

Abstract The Paris Agreement set up a blueprint for global GHG mitigation. Specifically, it specifies the temperature target by the end of the 21st century, outlines nationally determined contributions (NDCs), and periodical communication arrangements. In the literature on climate change economics, the above components of the Paris Agreement are not modeled simultaneously. In this paper, we adopt an overlapping generations (OLG) approach in the RICE2020 model to capture the above mechanisms of the Paris Agreement. Incorporating the OLG approach in an integrated assessment model (IAM) provides a rigorous economic interpretation of the mechanism set in the Paris Agreement. Through multi-scenario simulations in RICE2020, we conclude that the temperature target is not achievable under the NDCs and periodical communications mechanisms.