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Business-as-Unusual: Existing policies in energy model baselines

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  • Strachan, Neil
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    Abstract

    Baselines are generally accepted as a key input assumption in long-term energy modelling, but energy models have traditionally been poor on identifying baselines assumptions. Notably, transparency on the current policy content of model baselines is now especially critical as long-term climate mitigation policies have been underway for a number of years. This paper argues that the range of existing energy and emissions policies are an integral part of any long-term baseline, and hence already represent a "with-policy" baseline, termed here a Business-as-Unusual (BAuU). Crucially, existing energy policies are not a sunk effort; as impacts of existing policy initiatives are targeted at future years, they may be revised through iterative policy making, and their quantitative effectiveness requires ex-post verification. To assess the long-term role of existing policies in energy modelling, currently identified UK policies are explicitly stripped out of the UK MARKAL Elastic Demand (MED) optimisation energy system model, to generate a BAuU (with-policy) and a REF (without policy) baseline. In terms of long-term mitigation costs, policy-baseline assumptions are comparable to another key exogenous modelling assumption -- that of global fossil fuel prices. Therefore, best practice in energy modelling would be to have both a no-policy reference baseline, and a current policy reference baseline (BAuU). At a minimum, energy modelling studies should have a transparent assessment of the current policy contained within the baseline. Clearly identifying and comparing policy-baseline assumptions are required for cost effective and objective policy making, otherwise energy models will underestimate the true cost of long-term emissions reductions.

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    Bibliographic Info

    Article provided by Elsevier in its journal Energy Economics.

    Volume (Year): 33 (2011)
    Issue (Month): 2 (March)
    Pages: 153-160

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    Handle: RePEc:eee:eneeco:v:33:y:2011:i:2:p:153-160

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    Web page: http://www.elsevier.com/locate/eneco

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    Keywords: Baselines Policy Energy modelling;

    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Strachan, Neil & Kannan, Ramachandran, 2008. "Hybrid modelling of long-term carbon reduction scenarios for the UK," Energy Economics, Elsevier, vol. 30(6), pages 2947-2963, November.
    2. Strachan, Neil & Pye, Steve & Kannan, Ramachandran, 2009. "The iterative contribution and relevance of modelling to UK energy policy," Energy Policy, Elsevier, vol. 37(3), pages 850-860, March.
    3. Pilavachi, P.A. & Dalamaga, Th. & Rossetti di Valdalbero, D. & Guilmot, J.-F., 2008. "Ex-post evaluation of European energy models," Energy Policy, Elsevier, vol. 36(5), pages 1726-1735, May.
    4. Das, Anjana & Rossetti di Valdalbero, Domenico & Virdis, Maria R., 2007. "ACROPOLIS: An example of international collaboration in the field of energy modelling to support greenhouse gases mitigation policies," Energy Policy, Elsevier, vol. 35(2), pages 763-771, February.
    5. Kannan, Ramachandran & Strachan, Neil, 2009. "Modelling the UK residential energy sector under long-term decarbonisation scenarios: Comparison between energy systems and sectoral modelling approaches," Applied Energy, Elsevier, vol. 86(4), pages 416-428, April.
    6. Kuik, Onno & Brander, Luke & Tol, Richard S.J., 2009. "Marginal abatement costs of greenhouse gas emissions: A meta-analysis," Energy Policy, Elsevier, vol. 37(4), pages 1395-1403, April.
    7. Rebeca Jimenez-Rodriguez, 2009. "Oil Price Shocks and Real GDP Growth: Testing for Non-linearity," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 1-24.
    8. Fischer, Carolyn & Morgenstern, Richard, 2003. "Carbon Abatement Costs: Why the Wide Range of Estimates?," Discussion Papers dp-03-42-rev, Resources For the Future.
    9. Neil Strachan, 2007. "Setting greenhouse gas emission targets under baseline uncertainty: the Bush Climate Change Initiative," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 12(4), pages 455-470, May.
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    Cited by:
    1. Neil Strachan & Will Usher, 2012. "Failure to achieve stringent carbon reduction targets in a second-best policy world," Climatic Change, Springer, vol. 113(2), pages 121-139, July.

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