Thomas Stoerk
- Welcome. I hold a PhD in Economics from Universitat Pompeu Fabra and currently work as Climate Economist at the Research Department of the National Bank of Belgium.
I am also a Visiting Fellow at the Grantham Research Institute on Climate Change and the Environment at the LSE, and a Guest Professor at the Barcelona School of Economics.
I was previously a Policy Officer in the Strategy and Economic Assessment team of the Directorate-General for Climate Action of the European Commission in Brussels, and before that a High Meadows Post-Doctoral Economist with the Office of the Chief Economist at the Environmental Defense Fund in New York.
None of the materials listed below should be taken as representing the views of the National Bank of Belgium or the Eurosystem. The views expressed are my own.
- t.a.stoerk@lse.ac.uk
- My CV
- My profile on Google Scholar
- Economics of Climate Change, Central Banking and Climate Change, Environmental Economics, Climate Policy Design, Climate Finance, Integrated Assessment Modelling
- Large economic benefits of global methane action (2024), with Simon Dietz, James Rising and Drew Shindell.
- Ratcheting up Paris (2024), with Humberto Llavador and John Roemer.
- Charting a Course for Research on Industrial Decarbonization (2024), with Ken Gillingham, Lint Barrage et al. R&R at Science (Policy Forum).
- Effectiveness and cost of air pollution control in China (2020). LSE Grantham Research Institute on Climate Change and the Environment Working Paper No. 273. [Blog]
- Previously circulated as Compliance, Efficiency, and Instrument Choice: Evidence from Air Pollution Control in China.
Abstract
Climate policy is paying increasing attention to methane action, exemplified by the Global Methane Pledge of at least a 30% reduction in global methane emissions below the 2020 level by 2030. But research on the economic benefits of methane action is still sparse. In this paper, we seek to advance the literature by providing the first comprehensive assessment of the economic benefits of methane abatement via avoided climate change. We do so using one of a new generation of social-cost Integrated Assessment Models, META, which couples a benchmark simple climate model from the climate science literature with a relatively comprehensive and nationally disaggregated representation of climate damages, and includes a set of climate tipping points that have been incorporated in the climate economics literature to date. Relative to current policies/trends, we estimate the Global Methane Pledge and continued methane abatement thereafter would avoid 0.13°C of warming in 2050. This may sound small, but it would be highly beneficial. It would reduce climate damages in 2050 from 3.5% of global GDP to 3.1%, equivalent to gross benefits of more than $1trn per year in 2050. Using abatement cost data from the Global Methane Assessment, we estimate discounted net benefits of methane action of $3.4-10.2trn, yielding a lower bound of more than three for the benefit-cost ratio of methane action. We provide evidence of how global methane action would improve equity, providing larger relative benefits in low-income than high-income countries. We quantify how methane action reduces tipping point intensity and tail risk with respect to damages. Our best estimate of the social cost of methane (SC-CH4), i.e., the marginal damage cost of methane, is $7,327/tCH4, towards the top end of the range of estimates in the existing literature. We provide the first country-level estimates of the SC-CH4, which indicate that key economies such as the United States, the European Union, China and India would be motivated to act on methane at marginal abatement costs exceeding 500/tCH4 even if they took a parochial view of climate damages, only valuing damages within their own borders.
Abstract
The Paris Agreement is designed to increase climate ambition gradually, through a process called 'ratcheting up'. What could the end result of ratcheting up the Paris Agreement be? We build a tractable integrated assessment model to show that there is room for unanimous agreement on a global carbon market. We show the existence of a decentralized general equilibrium in which all mitigation takes place via carbon pricing. Global carbon pricing revenue is redistributed to each country proportional to a country's marginal climate damages. In our quantitative assessment, we find that ratcheting up the Paris Agreement is possible for both temperature targets and the often-overlooked climate finance ambition. In equilibrium, global mean surface temperature increase is limited to 1.86°C, at an average carbon price of $137/tCO2. Annual international financial flows of carbon pricing revenue would be at 0.7% of global GDP, about 20 times the climate finance ambition of the Paris Agreement.
Abstract
I evaluate the effectiveness and cost of China’s first serious air pollution control policy. Using both official, misreporting-prone data as well as NASA satellite data in a differences-indifferences strategy that exploits variation in reduction targets, I find that the policy reduced air pollution by 11% as intended. Compliance was initially rhetorical but later real, and did not differ by intensity of enforcement. I construct marginal abatement cost curves for SO2 for each province in China to calculate the cost of a counterfactual market-based policy instrument compared to the command-and-control policy that China used. I find that the market-based policy instrument would increase average (marginal) efficiency by 25% (49%). I further provide cost estimates for the total cost of a one unit decrease in PM2.5 concentrations in China to complement recent WTP estimates.
- Searching for carbon leaks in multinational companies (2022), with Antoine Dechezleprêtre, Caterina Gennaioli, Ralf Martin and Mirabelle Muûls. Journal of Environmental Economics and Management, 112: 102601.
- Economic impacts of tipping points in the climate system (2021), with Simon Dietz, James Rising and Gernot Wagner. Proceedings of the National Academy of Sciences, 118(34): e2103081118.
- Cited in the IPCC's 6th Assessment Report.
- Watch a recording of me presenting this work at the Virtual Seminar on Climate Economics, organized by the San Francisco Fed.
- The IAM we built for this project (META - Model for Economic Tipping point Analysis) is available on Github.
- Turning the corner on US power sector CO2 emissions - a 1990-2015 state level analysis (2019), with Kristina Mohlin, Alex Bi, Susanne Brooks and Jonathan Camuzeaux. Environmental Research Letters, 14(084049): 1-13.
Abstract
Does unilateral climate change policy cause companies to shift the location of production, thereby creating carbon leakage? In this paper, we analyse the effect of the European Union Emissions Trading System (EU ETS) on the geographical distribution of carbon emissions by multinational companies. The empirical evidence is based on unique data for the period 2007-2014 from the Carbon Disclosure Project, which tracks emissions of multinational businesses by geographical region within each company. Because they already operate from multiple locations, multinational firms should be the most prone to carbon leakage. Our data includes regional emissions of 1,122 companies, of which 261 are subject to EU ETS regulation. We find no evidence that the EU ETS has led to a displacement of carbon emissions from Europe towards the rest of the world, including to countries with lax climate policy and within energy-intensive companies. A large number of robustness checks confirm this finding. Overall, the paper suggests that modest differences in carbon prices between countries do not induce carbon leakage.
Abstract
Climate scientists have long emphasized the importance of climate tipping points like thawing permafrost, ice sheet disintegration, and changes in atmospheric circulation. Yet, save for a few fragmented studies, climate economics has either ignored them, or represented them in highly stylised ways. We provide unified estimates of the economic impacts of all eight climate tipping points covered in the economic literature so far, using a meta-analytic integrated assessment model (IAM) with a modular structure. The model includes national-level climate damages from rising temperatures and sea levels for 180 countries, calibrated on detailed econometric evidence and simulation modelling. Collectively, climate tipping points increase the social cost of carbon (SCC) by ~25% in our main specification. The distribution is positively skewed, however. We estimate a ~10% chance of climate tipping points more than doubling the SCC. Accordingly, climate tipping points increase global economic risk. A spatial analysis shows that they increase economic losses almost everywhere. The tipping points with the largest effects are dissociation of ocean methane hydrates and thawing permafrost. Most of our numbers are probable underestimates, given some tipping points, tipping point interactions and impact channels have not been covered in the literature so far, but our method of structural meta-analysis means that future modelling of climate tipping points can be integrated with relative ease, and we present a reduced-form tipping points damage function that could be incorporated in other IAMs.
Abstract
Total CO2 emissions from the United States power sector increased over the period 1990-2005, but peaked soon after, and by 2015 they had declined by 20% compared to 2005. This study analyzes the supply-side drivers of the increasing trend up until 2005 as well as the factors across US states that enabled significant reductions in the following decade. Using index decomposition analysis, we show that the two main factors driving the CO2 decrease were natural gas substituting for coal and petroleum, and large increases in renewable energy generation (primarily wind) – which were responsible for 60% and 30% of the decline respectively since 2005. Both effects were concentrated in states where low natural gas prices or a combination of federal tax credits, state energy policies, decreasing costs of renewables, and advantageous wind conditions drove significant reductions of CO2 emissions – resulting in the overall national emissions decline.
- China’s National Carbon Emissions Trading Scheme: Lessons from the pilot emission trading schemes, academic literature, and known policy details (2019), with Daniel J. Dudek and Jia Yang. Climate Policy, 19(4): 472-486.
Abstract
Upon completion, China’s national emissions trading scheme (C-ETS) will be the largest carbon market in the world. Recent research has evaluated China’s seven pilot ETSs launched from 2013 on, and academic literature on design aspects of the C-ETS abounds. Yet little is known about the specific details of the upcoming C-ETS. This article combines currently understood details of China’s national carbon market with lessons learned in the pilot schemes as well as from the academic literature. Our review follows the taxonomy of Emissions Trading in Practice: A Handbook on Design and Implementation (PMR & ICAP, 2016): The 10 categories are: scope, cap, distribution of allowances, use of offsets, temporal flexibility, price predictability, compliance and oversight, stakeholder engagement and capacity building, linking, implementation and improvements.
We note that (i) Accurate emissions data is paramount for both design and implementation, and its availability dictates the scope of the C-ETS. (ii) The stakeholder consultative process is critical for effective design, and China is able to build on its extensive experience through the pilot ETSs. (iii) Current policies and positions on intensity targets and Clean Development Mechanism (CDM) credits constrain the market design of the C-ETS. (iv) Most critical is the nature of the cap. The currently discussed rate-based cap with ex post adjustment is risky. Instead, an absolute, mass-based emissions cap coupled with the conditional use of permits would allow China to maintain flexibility in the carbon market while ensuring a limit on CO2 emissions.
- Policy Brief - Recommendations for Improving the Treatment of Risk and Uncertainty in Economic Estimates of Climate Impacts in the Sixth IPCC Assessment Report
(2018), with Gernot Wagner and Bob Ward. Review of Environmental Economics and Policy, 12 (2): 371–376. [Supplementary materials]. [Media coverage 1]. [Media coverage 2]. [Letter to the IPCC]. [Cited in The Uninhabitable Earth by David Wallace-Wells].
Abstract
Large discrepancies persist between projections of the physical impacts of climate change and economic damage estimates. These discrepancies increase with increasing global average temperature projections. Based on this observation, we recommend that in its Sixth Assessment Report (AR6), the Intergovernmental Panel on Climate Change (IPCC) improve its approach to the management of the uncertainties inherent in climate policy decisions. In particular, we suggest that the IPCC (1) strengthen its focus on applications of decision making under risk, uncertainty, and outright ambiguity and (2) estimate how the uncertainty itself affects its economic and financial cost estimates of climate damage and, ultimately, the optimal price for each ton of carbon dioxide released. Our hope is that by adopting these recommendations, AR6 will be able to resolve some of the documented inconsistencies in estimates of the physical and economic impacts of climate change and more effectively fulfill the IPCC’s mission to provide policymakers with a robust and rigorous approach for assessing the potential future risks of climate change.
- Statistical corruption in Beijing's air quality data has likely ended in 2012
(2016). Atmospheric Environment, 127(February 2016): 365–371.
Abstract
This research documents changes in likely misreporting in official air quality data from Beijing for the years 2008-2013. It is shown that, consistent with prior research, the official Chinese data report suspiciously few observations that exceed the politically important Blue Sky Day threshold, a particular air pollution level used to evaluate local officials, and an excess of observations just below that threshold. Similar data, measured by the US Embassy in Beijing, do not show this irregularity. To document likely misreporting, this analysis proposes a new way of comparing air quality data via Benford's Law, a statistical regularity known to fit air pollution data. Using this method to compare the official data to the US Embassy data for the first time, I find that the Chinese data fit Benford's Law poorly until a change in air quality measurements at the end of 2012. From 2013 onwards, the Chinese data fit Benford's Law closely. The US Embassy data, by contrast, exhibit no variation over time in the fit with Benford's Law, implying that the underlying pollution processes remain unchanged. These findings suggest that misreporting of air quality data for Beijing has likely ended in 2012. Additionally, I use aerosol optical density data to show the general applicability of this method of detecting likely misreporting in air pollution data.
- From intention to action: Can nudges help consumers choose renewable energy? (2014), with Katharina Momsen. Energy Policy, 74(2014): 376–382.
Abstract
In energy consumption, individuals feature a gap between intention and action. Survey data from the US, the UK, and other European countries show that 50–90% of respondents favour energy from renewable sources, even at a small premium. Yet less than 3% actually buy renewable energy. We investigate how nudges – a slight change in the information set that an individual faces when taking a decision – can help individuals align behaviour with intention. We present evidence from an original survey experiment on which nudges affect the choice whether to contract renewable energy or conventional energy. We find that only a default nudge has a significant effect, while all other nudges prove ineffective. In our setting, a default nudge increases the share of individuals who choose renewable energy by 44.6%
- Firm-level effects of climate policy across the production network: Evidence from Belgium, with Ralf Martin and Mirabelle Muûls.
- The role of fossil energy prices in greenhouse gas marginal abatement cost estimates, with Pierre Wunsch.
- The Low-carbon Transition: An Empirical Look at US Counties, with Jeremy Proville.
- The macroeconomic aspects of climate neutrality – a European perspective (2023), with Pierre Wunsch and Carine Swartenbroekx. NBB Blog 6 June 2023.
- Do all roads lead to Paris? Climate change mitigation policies in the world’s largest greenhouse gas emitters (2023), with Flore De Sloover and Dennis Essers. NBB Economic Review 2023 No 6.
- Global unanimity agreement on the carbon budget (2022), with Humberto Llavador and John Roemer. Cuadernos Económicos de ICE No 04. 2022/II.
- Towards the climate policy of 1.5°C climate change (29th April 2019), with Tom Van Ierland. EAERE Magazine.
- The price of carbon around the world (7th December 2018). Personal slides based on data from ICAP Quarterly.
- How China is cleaning up its air pollution faster than the post-Industrial UK (18th May 2018). Market Forces Blog, Environmental Defense Fund.[Media coverage].
- Why climate policy is good economic policy (14th November 2017). Market Forces Blog, Environmental Defense Fund [Chinese translation].
Summary
This blog argues that the transition to climate neutrality is economically feasible. It furthermore discusses associated macroeconomic changes.
Summary
Where do the world's largest greenhouse gas emitters stand regarding their mitigation policy?
Summary
How can a unanimous agreement on global greenhouse gas emissions be modeled?
Summary
What tools can we use to identify climate policy for Europe in line with 1.5°C? What would such policy look like?
Summary
These slides graph the price of traded carbon in all active carbon emissions trading systems around the world since 2015. All prices are in USD/tCO2 based on contemporaneous exchange rates.
I made 4 different versions (i) a line plot of allowance prices over time, (ii) a bar chart of allowance prices over time, (iii) a line plot of allowance prices over time with a line for the social cost of carbon (SCC), and (iv) a logarithmic line plot of allowance prices over time with a line for the SCC.
All slides are freely available, though I'd appreciate an email to let me know you are using them.
Summary
Widespread air pollution has accompanied humanity since the industrial use of fossil fuels. In this blog, I use historical data to compare China's air pollution over time to how London fared after the Industrial Revolution. I show that air pollution levels in both places were remarkably similar, and that China has been decreasing its air pollution levels more than twice as fast as London did in the past.
Summary
Economists agree that the ideal policy to address climate change is a global carbon price. Unfortunately, such a carbon price does not currently exist. The blog discusses how to identify cost-effective climate policies in the absence of a carbon price, and why climate policies typically show large economic gains, as the benefits of avoiding climate change far outweigh the costs.
- Policy Lessons: The Use of Economics in Climate Policy (May 2024).
- An introduction to the social cost of carbon for a climate policy audience (November 2021).
- Two graduate lectures in climate change economics (on tipping points, and on emissions trading), taught as guest lecturer at Department of Economics, Universitat Pompeu Fabra (2020-2023).
- Non-technical overview on Methods of empirical ex post policy evaluation (December 2018).
Overview
A newly developed course of 5 lectures of 2h geared at an economics graduate audience. In this course, I teach how economic tools are used to set climate policy in the real world. Drop me a line in case you would like me to teach (parts) of this course at your institution.
Overview
Slides for a 45'-60' lecture on the uses and misuses of climate economics geared towards a policy audience. Please drop me an email if you'd like to use this material for your teaching.
Overview
Link to 2020 teaching evaluation (students rated my teaching a 4.81/5). Also taught at CEI International Affairs, Universitat de Barcelona. Please contact me if you are interested these in these lectures or for a copy of the slides.
Overview
A non-technical introduction to the tools of applied microeconometrics. Aimed at policy-makers who would like to understand the effect of past policies.
- 12/2024: CEPR Paris Symposium
- 11/2024: Workshop "Raising Awareness of Earth System Tipping Points: Implications for EU Governance", European Commission
- 07/2024: EAERE 2024
- 06/2024: NGFS (Research Webinar)
- 06/2024: European Commission (ENER)
- 06/2024: Workshop "The role of carbon markets in climate neutrality" (European University Institute)
- 05/2024: ECSB Research Cluster on Climate Change
- 05/2024: Barcelona School of Economics (Keynote)
- 02/2024: Umweltbundesamt
- 01/2024: EMEE 2024 (ETH Zurich)
- 12/2023: Resources for the Future
- 12/2023: NBER Conference "The Economics of Decarbonizing Industrial Production"
- 06/2023: EAERE 2023
- 06/2023: Environmental Defense Fund
- 01/2023: ASSA 2023
- 12/2022: London School of Economics and Political Science
- 10/2022: Frontiers of Climate and Nature in Macroeconomics and Finance, Banque de France
- 06/2022: EAERE 2022
- 05/2022: 15th Belgian Environmental Economics Day
- 05/2022: Ghent University (Keynote)
- 04/2022: Barcelona School of Economics
- 03/2022: Banco de España
- 01/2022: Hertie School
- 01/2022: Environmental Defense Fund
- 12/2021: European Central Bank
- 12/2021: International Monetary Fund (Research Seminar)
- 11/2021: First Technical Workshop of EUTL data users, GROW, European Commission
- 09/2021: Virtual Seminar on Climate Economics [Watch recording]
- 07/2021: Mercator Research Institute on Global Commons and Climate Change
- 06/2021: EAERE 2021 (Policy Session)
- 04/2021: National Bank of Belgium
- 11/2020: Universitat Autònoma de Barcelona
- 06/2020: EAERE 2020
- 06/2020: AERE 2020
- 11/2019: University College Dublin (Earth Institute)
- 11/2019: LSE (Grantham Research Institute on Climate Change and the Environment)
- 06/2019: EAERE 2019 (Policy Session)
- 11/2018: FSR Climate Annual Conference (European University Institute)
- 06/2018: WCERE 2018
- 04/2018: Interdisciplinary Ph.D. Workshop in Sustainable Development (Columbia University)
- 10/2017: Environmental Defense Fund Economics Advisory Council
- 06/2017: EAERE 2017