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Abatement can be performed by measures that have an impact on present emissions, but no lasting effect, and by long-lived infrastructure investments. We study the optimal combination of short and long-lived options for reducing greenhouse gas (GHG) emissions, by specifying abatement cost functions depending on abatement from these two options. Electrification of the transport sector is used as an example. A transition from internal combustion engines vehicles (ICEVs) to electric vehicles (EVs) can be incentivized by both subsidies on purchases of EVs and increased density of fast chargers. Subsidizing the purchase of EVs only leads to emissions reductions in the next few years (static option), whereas investment in infrastructure also will reduce abatement costs in several years to come (dynamic option). We find that the present marginal abatement cost of the dynamic alternative exceeds the costs of static abatement in optimum, thus the dynamic option may be profitable even if it is more expensive. A higher expected abatement cost in later periods most likely makes it even more profitable to use the dynamic policy instrument. This framework is used for a numerical study on electrification of the transport sector in Norway. The numerical simulations confirm the results of the theory model. Flexibility in the domestic target over time and the presence of an international permit market affect the combination of static and dynamic abatement. This stresses the importance of early and time consistent plans for international regulations of GHG emissions. This paper is funded by the Norwegian Research Council through the Electrans project, which is part of the ENERGIX program, and PLATON - PLATform for Open and Nationally accessible climate policy knowledge.

In the Paris Agreement, it was agreed to limit global warming to well below 2°C, and preferably to 1.5°C, compared to pre-industrial levels. At the follow-up meeting in Glasgow in 2021, the goal was strengthened to 1.5°C. Based on previous studies and a review of the relevant policies and measures to achieve the 1.5°C target, this report describes one specific 1.5°C scenario with chosen measures that will be used in three models, i.e., a global macroeconomic computable general equilibrium model GRACE, a global energy market model FRISBEE, and a Norwegian macroeconometric model KVARTS. Our chosen 1.5°C pathway follows roughly the pathway of total CO2 emissions from fossil fuels combustion in the Net Zero Emission scenario by the International Energy Agency. We present possible supply-side and demand-side measures in the energy sectors that can be implemented to reduce CO2-emissions to achieve the 1.5°C target. We also discuss to what extent we will implement these policies and measures in the three models.