These fundamentally linear models are the result of the intertemporal optimization by representative agents of objective functions under conditions of uncertainty, given technological and budget constraints and the “rationality” of their expectations (i.e. perfect foresight barring a random error). Indeed, going beyond the assumption that society and nature always behave uniformly and consistently over time has deep implications in policy making as well.
•  Growth would have to fall to an unrealistic degree to make a meaningful dent in emissions. •  Instead, policy action can shift incentives in favour of renewable energies and away from fossil fuels, such as carbon taxes and emission standards, in additional to technical solutions. Different estimates of the need for financing are illustrated in the box to the left.