The DICE model is one of the most influential Integrated Assessment Models available. Its founder Professor William Nordhaus was recently awarded Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel due to his pioneering work on the economics of climate change. In a recent paper in American Economic Journal: Economic Policy Nordhaus uses the model to conclude that a 2.5°C target is almost out of reach. In this paper we update DICE 2016 R2 with state-of-the art models of the carbon cycle, heat uptake into the oceans and the role of non-CO2 forcers. We find that the allowable remaining carbon budget (over the period 2015-2100) to meet a 2.5°C target to be 2360 GtCO2 whereas the estimate obtained using DICE 2016 R2 is about 460 GtCO2. Nordhaus’s estimate of the remaining carbon budget for this target is hence five times lower than estimates made by our recalibrated version of DICE. We also compare our results with estimates by the Intergovernmental Panel on Climate Change (IPCC) and find our results to be in line with the carbon budgets presented in IPCC SR 1.5. We explain the reasons behind the difference between our result and that of Nordhaus and propose that an updated climate module in DICE is warranted.

It has been claimed that COVID-19 public stimulus packages could be sufficient to meet the short-term energy investment needs to leverage a shift toward a pathway consistent with the 1.5 °C target of the Paris Agreement. Here we provide complementary perspectives to reiterate that substantial, broad, and sustained engagements beyond recovery packages will be needed for achieving the Paris Agreement long-term targets. Low-carbon investments will need to scale up and persist over the next several decades following short-term stimulus packages. The required total energy investments in the real world can be larger than the currently available estimates from Integrated Assessment Models (IAMs). Existing databases from IAMs are not sufficient for analyzing the effect of public spending on emission reduction. To inform what role COVID-19 stimulus packages and public investments may play for reaching the Paris Agreement targets, explicit modelling of such policies is required.