Estimates of the costs of climate change, and the costs of climate change mitigation, have been critical to climate conversations and climate change policy discussions.

Economic modeling, however, has a limited capacity to capture the technological innovation that would result from a climate change policy framework associated with a low-carbon transition. This would tend to mean that today’s estimates over-state the costs of a low carbon transition. 

Economic modeling is also not good at forecasting the economy’s responsiveness to things like material carbon pricing or emissions mandates. This would tend to suggest that today’s estimates over-state the costs of a low carbon transition. 

Conversely, economic analysis around a low-carbon transition tends to assume an optimized response, and doesn’t account well for forseeable barriers and disruptions. This would tend to mean that an actual low carbon transition would be slower, and probably more costly, than anticipated.