Analysis of the Relative Roles of Supply-Side and Demand-Side Measures in Tackling the Global 1.5 °C Target

This chapter explores, in a systematic manner, the required energy system transformations and the associated price-dependent energy-service demands reductions in order to hold the increase in global average temperature below 1.5 °C above pre-industrial levels. It also evaluates the macroeconomic implications of the climate mitigation policy. The analysis is carried out using the global hybrid TIAM-MACRO model. The major findings show that a rapid decarbonisation of all sectors in the global energy system is fundamental in achieving a 1.5 °C consistent goal. This requires a portfolio of supply-side and demand-side mitigation measures. While technological measures are essential to meet the decarbonisation target, reducing energy-service demands is found to be a mitigation measure that facilitates a cost-effective transition. In addition, energy-service demands reductions play an important role in offsetting the macroeconomic impacts of the climate policy. Finally, any overshoot of the energy sector carbon budget must be counterbalanced by a significant deployment of negative emissions technologies.