Capturing Key Energy and Emission Trends in CGE Models: Assessment of Status and Remaining Challenges

Abstract

Limiting global warming in line with the goals in the Paris Agreement will require substantial technological and behavioural transformations. This challenge drives many of the current modelling trends. This article undertakes a review of 17 state-of-the-art recursive-dynamic computable general equilibrium (CGE) models and assesses the key methodologies and applied modules they use for representing sectoral energy and emission characteristics and dynamics. The purpose is to provide technical insight into recent advances in the modelling of current and future energy and abatement technologies and how they can be used to make baseline projections and scenarios 20-80 years ahead. Numerical illustrations are provided. In order to represent likely energy system transitions in the decades to come, modern CGE tools have learned from bottom-up studies. Three different approaches to baseline quantification can be distinguished: (a) exploiting bottom-up model characteristics to endogenize responses of technological investment and utilization, (b) relying on external information sources to feed the exogenous parameters and variables of the model, and (c) linking the model with more technology-rich, partial models to obtain bottom-up-and pathwayconsistent parameters.

Involving stakeholders in scenario-building: Lessons from a case study of the global context of Norway’s climate policies

“…Also, backstop technology trends can be extracted, which help estimating marginal abatement costs. For more on calibration procedures for global CGE models like SNOW based on sectoral information from external sources, including energy system model simulations like ETSAP-TIAM, see Faehn et al (2020a). There, an example is given that illustrates how a naïve baseline, merely relying on macroeconomic drivers without any adjustments in efficiency assumptions and altered technological compositions, is likely to fail.…”

CARBON FOOTPRINTS & GLOBAL CLIMATE CHANGE IN RELATIONSHIP TO PUBLIC HEALTH & LOCAL ECONOMIC EFFECTS

“…Today, most global production relies heavily on energy produced from burning fossil fuels which emit carbon dioxide as a byproduct. Although over recent decades carbon-free energy sources such as wind and solar have greatly increased, there still exists an enormous challenge in decarbonizing our electricity, especially concerning the transportation and industrial sectors (Faehn et al, 2020). Because of the foregoing, the carbon footprint threshold of economic activity will continue to dominate our climate throughout the 21 st century.…”