Showing posts with label Economic Modeling. Show all posts
Showing posts with label Economic Modeling. Show all posts

April 25, 2011

General Equilibrium, Electricity Generation Technologies and the Cost of Carbon Abatement

by Bruno Lanz and Sebastian Rausch

- Electricity generation is a major contributor to carbon dioxide emissions, and a key determinant of abatement costs. Ex-ante assessments of carbon policies mainly rely on either of two modeling paradigms: (i) partial equilibrium models of the electricity sector that use bottom-up engineering data on generation technology costs, and (ii) multi-sector general equilibrium models that represent economic activities with smooth top-down aggregate production functions. In this paper, we examine the structural assumptions of these numerical techniques using a suite of models sharing common technological features and calibrated to the same benchmark data.

Lanz, B. and S. Rausch (2011). "General Equilibrium, Electricity Generation Technologies and the Cost of Carbon Abatement." Joint Program Report Series Report No. 194, Feb 2011.

March 6, 2011

General Equilibrium, Electricity Generation Technologies and the Cost of Carbon Abatement

by Lanz, B., and S. Rausch

- Electricity generation is a major contributor to carbon dioxide emissions, and a key determinant of abatement costs. Ex-ante assessments of carbon policies mainly rely on either of two modeling paradigms: (i) partial equilibrium models of the electricity sector that use bottom-up engineering data on generation technology costs, and (ii) multi-sector general equilibrium models that represent economic activities with smooth top-down aggregate production functions. In this paper, we examine the structural assumptions of these numerical techniques using a suite of models sharing common technological features and calibrated to the same benchmark data.

Lanz, B., and S. Rausch (2011). "General Equilibrium, Electricity Generation Technologies and the Cost of Carbon Abatement." MIT Joint Program Report Series, Report No. 194, Feb 2011.

February 13, 2011

A Note on Computational Aspects of Farsighted Coalitional Stability

by Dritan Osmani

- Farsighted stability of Chwe (1994) is discussed while attention is played on the computational framework of finding farsightedly stable coalition structures. The idea of farsightedness means that one should check for multi-step stability by comparing the profits of a coalition member after a series of deviations has come to an end. The deviation is possible only if players display a cooperate attitude by forming a coalition in order to increase their payoffs. The connections of farsighted stabilitywith a positive, negative spillover property and profitability condition are shown. Algorithms are developed, which can find all farsighted stable coalition structures.

Osmani, D. (2011). "A Note on Computational Aspects of Farsighted Coalitional Stability." Hamburg University and Centre for Marine and Atmospheric Science, Working Paper No. FNU-194, Jan 2011.

January 30, 2011

Energy Abundance, Trade and Industry Location

by Reyer Gerlagh and Nicole A. Mathys

- We study the effect of countries’ energy abundance on trade and sector activity, conditional on sector’s energy intensity, using an unbalanced panel with 14 high-income countries from Europe, America and Asia, 10 broad sectors, and years 1970-1997. We find that energy is a major driver for sector location through specialisation. We show that capital and energy are complements in the production function and use various controls in our analysis. The results give insights into delocalisation effects that may take place among rich countries with heterogeneous energy policy.

Gerlagh, R. and N.A. Mathys (2011). "Energy Abundance, Trade and Industry Location." FEEM Note di lavoro No. 2011.003, Jan 2011.

December 19, 2010

AEO2011 Early Release Overview

by the Energy Information Administration

- This release is an abridged version of the Annual Energy Outlook that highlights changes in the AEO Reference case projections for key energy topics. The Early Release includes data tables for the Reference case only. The full AEO2011 will be released March 2011.

EIA (2010). "AEO2011 Early Release Overview." The Energy Information Administration, Dec 2010.

December 13, 2010

Interfuel Substitution and Energy Use in the UK Manufacturing Sector

by Jevgenijs Steinbuks

- This paper investigates interfuel substitution in the UK manufacturing sector. Econometric models of interfuel substitution are applied to energy inputs aggregated by their energy use, and separately for thermal heating processes, where interfuel substitution is technologically feasible. Compared to aggregate data, estimated own-price fuel demand elasticities for all fuels and cross-price elasticities for fossil fuels are considerably higher for thermal heating processes. Nonetheless, electricity is found to be a poor substitute for other fuels based on both aggregate data and separately for the heating process.

Steinbuks, J. (2010). "Interfuel Substitution and Energy Use in the UK Manufacturing Sector." EPRG Working Paper 1015, May 2010.

Risk Aversion and CO2 Regulatory Uncertainty in Power Generation Investment: Policy and Modeling Implications

by Lin Fan, Benjamin F. Hobbs and Catherine S. Norman

- Our simulation considers producers in a competitive energy market. Risk averse producers face uncertainty about future carbon regulation. Investment decisions are a two-stage equilibrium problem. Initially, investment is made under regulatory uncertainty; then the regulatory state is revealed and producers realize returns. We consider taxes, grandfathered permits and auctioned permits and show that outcomes vary under risk aversion; some anticipated policies yield perverse investment incentives, in that investment in the dirty technology is encouraged. Beliefs about the policy instrument that will be used to price carbon may be as important as certainty that carbon will be priced. More generally, a failure to consider risk aversion may bias policy models of the power sector.

Fan, L., B.F. Hobbs and C.S. Norman (2010). "Risk Aversion and CO2 Regulatory Uncertainty in Power Generation Investment: Policy and Modeling Implications." EPRG Working Paper 1014, May 2010.

November 28, 2010

Adaptation and Mitigation in Long-Term Climate Policies

by Thierry Brechet, Natali Hritonenko and Yuri Yatsenko

- The paper analytically explores the optimal policy mix between mitigation and environmental adaptation against climate change at a macroeconomic level. The constructed economic-environmental model is formulated as a social planner problem with the adaptation and abatement investments as separate decision variables. The authors prove the existence of a unique steady state and provide a comparative static analysis of the optimal investment. Data calibration and numerical simulation are provided to illustrate theoretical outcomes.

Brechet, T., N. Hritonenko and Y. Yatsenko (2010). "Adaptation and Mitigation in Long-Term Climate Policies." Core Discussion Paper No. 2010.65, Oct 2010.

The Benefits of Cooperation under Uncertainty: the Case of Climate Change

by Thierry Brechet, Julien Thenien, Thibaut Zeimes and Stéphane Zuber

- This article presents an analysis of the behavior of countries defining their climate policies in an uncertain context. The analysis is made using the S-CWS model, a stochastic version of an integrated assessment growth model. The model includes a stochastic definition of the climate sensitivity parameter. We show that the impact of uncertainty on policy design critically depends on the shape of the damage function. We also examine the benefits of cooperation in the context of uncertainty: we highlight the existence of an additional benefit of cooperation, namely risk reduction.

Brechet, T., J. Thenien, T. Zeimes and S. Zuber (2010). "The Benefits of Cooperation under Uncertainty: the Case of Climate Change." CORE Discussion Paper No. 2010.62, Oct 2010.

November 15, 2010

The Carbon-Budget Approach to Climate Stabilization: Cost-Effective Subglobal versus Global Action

by Thomas Eichner and Rüdiger Pethig

- Scientific expertise suggests that mitigating extreme world-wide climate change damages requires avoiding increases in the world mean temperature exceeding 2°C. To achieve the two degree target, the cumulated global emissions must not exceed some limit, the so-called global carbon budget. In a two-period two-country general equilibrium model with a finite stock of fossil fuels we compare the cooperative cost-effective policy with the unilateral cost-effective policy of restricting emissions to the global carbon budget.

Eichner, T. and R. Pethig (2010). "The Carbon-Budget Approach to Climate Stabilization: Cost-Effective Subglobal versus Global Action." CESifo Working Paper No. 3232, Nov 2010.

October 17, 2010

Economics of Endogenous Technical Change in CGE Models - The Role of Gains from Specialization

by Florentine Schwark

- Computable general equilibrium models simulate the reaction of industries on carbon taxes. Their results differ strongly on the assumption of the underlying technologies. This paper compares two models and emphasizes the differences between their approaches to technology. The first model is the CITE model, which is the fi rstmodel with endogenous growth based on gains from specialization so that growth dynamics result from investment incentives. The second model is a model with exogenous growth of endowments, which is the basis for many other CGE models.

Schwarkz, F. (2010). "Endogenous Growth, Asymmetric Trade and Resource Taxation." CER-ETH, Center of Economic Research, ETH Zürich, Economics Working Paper Series, Working Paper No. 10/130, Jun 2010.

June 6, 2010

Comparing Climate Commitments: A Model-Based Analysis of the Copenhagen Accord

by Warwick J. McKibbin, Adele Morris and Peter J. Wilcoxen

- This paper provides such a comparison by analyzing the Copenhagen targets using the GCubed model of the global economy. We begin by formulating a no-policy baseline projection for major world economies. We then model the Copenhagen Accord’s economy-wide commitments, with a focus on fossil-fuel-related CO2. We show how different formulations make the same targets appear quite different in stringency, and we estimate and compare the likely economic and environmental performance of major emitters’ Copenhagen targets. The analysis also explores the spillover effects of emission reductions efforts on countries that did not adopt economy-wide emissions targets at Copenhagen.

McKibbin, W.J., A. Morris and P.J. Wilcoxen (2010). "Comparing Climate Commitments: A Model-Based Analysis of the Copenhagen Accord." Discussion Paper 10-35, Harvard Project on International Climate Agreements, Belfer Center for Science and International Affairs, Harvard Kennedy School, Jun 2010.

Economic Growth, the Recession and Greenhouse Gas Emissions

by Alex Bowen and Sophia Parker

- This paper looks at how economic growth, the recession or other factors influence greenhouse gas emissions.

Bowen, A. and S. Parker (2010). "Economic Growth, the Recession and Greenhouse Gas Emissions." Climate Strategies, May 2010.

May 30, 2010

Annual Energy Outlook 2010

by the U.S. Energy Information Administration

- The Annual Energy Outlook presents a projection and analysis of US energy supply, demand, and prices through 2035. The projections are based on results from the Energy Information Administration's National Energy Modeling System. The AEO2010 includes Reference case, additional cases examining alternative energy markets.

EIA (2010). "Annual Energy Outlook 2010." The U.S. Energy Information Administration, May 2010.

Complete Report [1.3M]

Executive Summary

May 10, 2010

How Will the Billions of 'Free' Climate Change Allowances under Cap And-Trade Affect U.S. Companies’ Balance Sheets?

by Paul A. Griffin

- This study examines the impact of the "free" climate change allowances under the proposed American Clean Energy and Security Act of 2009 on the balance sheets and income statements of companies in the S&P 500. This study states and tests an economic model that accounts for the relation between greenhouse gas emissions and financial statement variables at the individual company level to assess this contention.

Griffin, P.A. (2010). "How Will the Billions of 'Free' Climate Change Allowances under Cap And-Trade Affect U.S. Companies’ Balance Sheets?" Graduate School of Management University of California, Davis, May 2010.

Thirty-Five Years of Long-Run Energy Forecasting: Lessons for Climate Change Policy

by Jean-Charles Hourcade and Franck Nadaud

- This paper sheds light on an implicit dimension of the climate policy debate: the extent to which supply-side response (emission-reducing energy technologies) may substitute for the transformation of consumption behavior and thus help get around the political difficulties surrounding such behavioral transformation. The paper performs a meta-review of long-term energy forecasts since the end of the 1960s in order to put in perspective the controversies around technological optimism about the potential for cheap, large-scale, carbon-free energy production.

Hourcade, J-C and F. Nadaud (2010). "Thirty-Five Years of Long-Run Energy Forecasting: Lessons for Climate Change Policy." World Bank Policy Research Working Paper, no. WPS 5298, May 2010.

Can Pollution Tax Rebates Protect Low-Income Families? The Effects of Relative Wage Rates

by Don Fullerton and Holly Monti

- Pollution taxes are believed to burden low-income households that spend a greater than average share of income on pollution-intensive goods. Some propose to offset that effect by returning revenue to low-income workers via reduced labor tax. We build analytical general equilibrium models with both skilled and unskilled labor, and we solve for expressions that show the change in the real net wage of each group.

Fullerton, D. and H. Monti (2010). "Can Pollution Tax Rebates Protect Low-Income Families? The Effects of Relative Wage Rates." NBER Working Paper No. 15935, Apr 2010.

May 4, 2010

Long-Run Effects of Post-Kyoto Policies: Applying a Fully Dynamic CGE Model with Heterogeneous Capital

by Lucas Bretschger, Roger Ramery and Florentine Schwarkz

- The paper develops a new type of CGE model to predict the e ects of carbon policies on consumption, welfare, and sectoral development in the long run.
Growth is fully endogenous, based on increasing specialization in capital varieties, and speci c in each sector of the economy. The benchmark scenario is calculated based on the endogenous gains from specialization which carry over to policy simulation. Applying the model to the Swiss economy we nd that a carbon policy following the Copenhagen Accord entails a moderate but not negligible welfare loss compared to development without any negative e ects of climate change. Energy extensive as well as capital and knowledge intensive sectors pro t in the form of increased growth rates.

Bretschger, L., R. Ramery and F. Schwarkz (2010). "Long-Run Effects of Post-Kyoto Policies: Applying a Fully Dynamic CGE Model with Heterogeneous Capital." ETH, Apr, 2010.

April 18, 2010

Sectoral Targets for Developing Countries: Combining "Common but Differentiated Responsibilities" with "Meaningful participation"

by Meriem Hamdi-Cherif, Céline Guivarch and Philippe Quirion

- Although a global cap-and-trade system is seen by many researchers as the most cost-efficient solution to reduce greenhouse gas emissions, developing countries governments refuse to enter into such a system in the short term. Hence, many scholars and stakeholders, including the European Commission, have proposed various types of commitments for developing countries that appear less stringent, such as sectoral approaches. In this paper, we assess such a sectoral approach for developing countries.

Hamdi-Cherif, M., C. Guivarch and P. Quirion (2010). "Sectoral Targets for Developing Countries: Combining "Common but Differentiated Responsibilities" with "Meaningful participation"" FEEM Note di Lavoro 2010.037 , Apr 2010.

The Optimal Climate Policy Portfolio when Knowledge Spills across Sectors

by Emanuele Massetti and Lea Nicita

- This paper studies the implications for climate policy of the interactions between environmental and knowledge externalities. Using a numerical analysis performed with the hybrid integrated assessment model WITCH, extended to include mutual spillovers between the energy and the non-energy sector, we show that the combination between environmental and knowledge externalities provides a strong rationale for implementing a portfolio of policies for both emissions reduction and the internalisation of knowledge externalities.

Massetti, E. and L. Nicita (2010). "The Optimal Climate Policy Portfolio when Knowledge Spills across Sectors." CESifo Working Paper No. 2988, Mar 2010.