Assessment of the Effectiveness of Global Climate Policies Using Coupled Bottom-Up and Top-Down Models

Abstract

(150 words)In order to assess climate mitigation agreements, we propose an iterative procedure linking TIAM-WORLD, a global technology-rich optimization model, and GEMINI-E3, a global general equilibrium model. The coupling methodology combines the precise representation of energy and technology choices with a coherent representation of the macro-economic impacts, especially in terms of trade effects of climate policies on energy-intensive products. In climate mitigation scenarios, drastic technology breakthroughs are required as soon as possible, especially in large emitting countries, and in all sectors of the economy. Energy-intensive industries tend to be delocalized in regions where low-carbon production is feasible and cheap, or in regions without emission cap. However, emission leakage remains small, mainly due to global lower oil demand, and energy exporting countries are extremely penalized given lower energy exports. Emission reduction at least in the power sector and in energy-intensive industries of developing countries must be considered to reach the 2°C target.

Hybrid Bottom-up/Top-down Energy and Economy Outlooks: A Review of IMACLIM-S Experiments

“…• Harmonizing all the exogenous parameters common to both models, i.e., typically demography, but also possibly international energy prices, if these are exogenous to the sustaining any modeling output of IMACLIM-S with reduced forms is not easily pinpointed. 23 The approach is similar to that of Dai et al (2015) but with data exchange extended to prices; or to that of Fortes et al (2014) or Labriet et al (2015), although energy prices, rather than exogenously taken from the bottom-up source, remain largely endogenous variables of IMACLIM-S (cf. below).…”

“…Our latest hybrid modeling endeavor is part of the RISKERGY research program, which aims at developing a method of sovereign risk rating that pays due attention to energy issues. 47 Schäfer and Jacoby (2006), Martinsen (2011) (although not iterating to convergence) or Labriet et al (2015) have similarly coupled optimisation models of the MARKAL family with recursive TD models. The bottom-up model to which we couple IMACLIM-S is again the POLES simulation model but in its most recent version.…”

Energy contribution to Latin American INDCs: Analyzing sub-regional trends with a TIMES model

“…Venezuela produces heavy oil at relatively high costs (breakeven price estimated at US$ 30, compared to US$ 10 for Saudi Arabian wells) and would be among the first impacted by such a slowdown (its budget breakeven is considered by most analysts to be around US$ 120). This assumption is confirmed by authors such as Labriet et al (2015). In fact, this scenario is already happening in Venezuela, where the 2015 drop in oil prices worsened the existing economic crisis and triggered major street protests urging President Maduro to step down in 2016.…”

A Review of Criticisms of Integrated Assessment Models and Proposed Approaches to Address These, through the Lens of BECCS

“…Real world complexities of transition to low carbon economies (e.g., economic rigidity, informal markets for biomass) could be studied outside of IAMs (e.g., [99]).…”