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This open access book analyzes and seeks to consolidate the use of robust quantitative tools and qualitative methods for the design and assessment of energy and climate policies. In particular, it examines energy and climate policy performance and associated risks, as well as public acceptance and portfolio analysis in climate policy, and presents methods for evaluating the costs and benefits of flexible policy implementation as well as new framings for business and market actors. In turn, it discusses the development of alternative policy pathways and the identification of optimal switching points, drawing on concrete examples to do so. Lastly, it discusses climate change mitigation policies’ implications for the agricultural, food, building, transportation, service and manufacturing sectors.
In the CGE based policy modeling literature, especially recent literature on policy modeling for global climate change, nested CES production functions over multiple inputs have been widely used. Although lack of reliable estimates of substitution elasticities for nested structures has been acknowledged for a long time, the problem has not yet been solved satisfactorily. This is especially the situation for the Chinese case for which modeling work has global implications. This paper reports estimates of substitution elasticities for normalized nested CES aggregate production functions for China with different nested structures of input factors: capital, labor with or without human capital adjustment, and energy using data for the period 1979-2006. We adopt grid search based non-linear optimization techniques for estimation. The results show that all the substitution elasticities we estimate are positive. For the widely used (K,L)E structure, we find that the substitution elasticity between capital and labor for China is below unity. When human capital adjusted labor is used as input instead of unadjusted raw labor, estimates of substitution elasticity between capital and labor become lower. By considering the significance of estimates, our results suggest that the (E,L)K structure seems more appropriate for the Chinese economy.
There is a large and growing literature focusing on economic issues related to climate change and climate policies. This report presents a discussion of some of the recent studies. The focus is on various numerical analyses and not on the purely theoretical studies. The following questions are discussed in the report: What will the development of greenhouse gas emissions be and what climate changes will follow if no new policies are introduced? What can economic analyses tell us about climate policy goals? What are the costs of reducing emissions? What types of policies should be used to reduce emissions? Knowledge about these issues is important for governments when evaluating their own climate policies as well as climate policies of other countries. It is also important for evaluating potential future climate agreements. This report has been commissioned by the Working Group on Environment and Economics under the Nordic Council of Ministers.
Top scholars synthesize and analyze scholarship on this widely used tool of policy analysis in 27 articles, setting forth its accomplishments, difficulties, and means of implementation. Though CGE modeling does not play a prominent role in top U.S. graduate schools, it is employed universally in the development of economic policy. This collection is particularly important because it presents a history of modeling applications and examines competing points of view. Presents coherent summaries of CGE theories that inform major model types Covers the construction of CGE databases, model solving, and computer-assisted interpretation of results Shows how CGE modeling has made a contribution to economic policy
This book highlights how energy-system models are used to underpin and support energy and climate mitigation policy decisions at national, multi-country and global levels. It brings together, for the first time in one volume, a range of methodological approaches and case studies of good modeling practice on a national and international scale from the IEA-ETSAP energy technology initiative. It provides insights for the reader into the rich and varied applications of energy-system models and the underlying methodologies and policy questions they can address. The book demonstrates how these models are used to answer complex policy questions, including those relating to energy security, climate change mitigation and the optimal allocation of energy resources. It will appeal to energy engineers and technology specialists looking for a rationale for innovation in the field of energy technologies and insights into their evolving costs and benefits. Energy economists will gain an understanding of the key future role of energy technologies and policy makers will learn how energy-system modeling teams can provide unique perspectives on national energy and environment challenges. The book is carefully structured into three parts which focus on i) policy decisions that have been underpinned by energy-system models, ii) specific aspects of supply and end-use sector modeling, including technology learning and behavior and iii) how additional insights can be gained from linking energy-system models with other models. The chapters elucidate key methodological features backed up with concrete applications. The book demonstrates the high degree of flexibility of the modeling tools used to represent extremely different energy systems, from national to global levels.
The issues of technology and uncertainty are very much at the heart of the policy debate of how much to control greenhouse gas emissions. The costs of doing so are present and high while the benefits are very much in the future and, most importantly, they are highly uncertain. Whilst there is broad consensus on the key elements of climate change science and agreement that near-term actions are needed to prevent dangerous anthropogenic interference with the climate system, there is little agreement on the costs and benefits of climate policy. The book looks at different ways of reconciling the needs for sustainability and equity with the costs of action now. Presenting a compendium of methodologies for evaluating the economic impact of technological innovation upon climate-change policy, this book describes mathematical models and their predictions. The goal is to provide a practitioner’s guide for doing the science of economics and climate change. Because the assumptions motivating different problems in the economics of climate change have different complexities, a number of models are presented with varying levels of difficulty: reduced-form and structural, partial- and general-equilibrium, closed-form and computational. A unifying theme of these models is the incorporation of a number of price and quantity instruments and an analysis of their respective efficacies. This book presents models that contain structural uncertainty, i.e., uncertainty that economic agents respond to via their risk attitudes. The novelty of this book is to relate the effects of risk and risk attitudes to environment-improving technological innovation.
Systems studied in environmental science, due to their structure and the heterogeneity of the entities composing them, often exhibit complex dynamics that can only be captured by hybrid modeling approaches. While several concurrent definitions of “hybrid modeling” can be found in the literature, it is defined here broadly as the approach consisting in coupling existing modelling paradigms to achieve a more accurate or efficient representation of systems. The need for hybrid models generally arises from the necessity to overcome the limitation of a single modeling technique in terms of structural flexibility, capabilities, or computational efficiency. This book brings together experts in the field of hybrid modelling to demonstrate how this approach can address the challenge of representing the complexity of natural systems. Chapters cover applied examples as well as modeling methodology.