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Achieving the G8 50% target: modelling induced and accelerated technological change using the macro-econometric model E3MG

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  • TERRY BARKER
  • S. SERBAN SCRIECIU
  • TIM FOXON

Abstract

This article assesses the feasibility of a 50% reduction in CO 2 emissions by 2050 using a large-scale Post Keynesian simulation model of the global energy-environment-economy system. The main policy to achieve the target is a carbon price rising to $100/tCO 2 by 2050, attained through auctioned CO 2 permits for the energy sector, and carbon taxes for the rest of the economy. This policy induces technological change. However, this price is insufficient, and global CO 2 would be only about 15% below 2000 levels by 2050. In order to achieve the target, additional policies have been modelled in a portfolio, with the auction and tax revenues partly recycled to support investment in low-GHG technologies in energy, manufacturing and transportation, and 'no-regrets' options for buildings. This direct support supplements the effects of the increases in carbon prices, so that the accelerated adoption of new technologies leads to lower unit costs. In addition the $100/tCO 2 price is reached earlier, by 2030, strengthening the price signal. In a low-carbon society, as modelled, GDP is slightly above the baseline as a consequence of more rapid development induced by more investment and increased technological change.

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  • Terry Barker & S. Serban Scrieciu & Tim Foxon, 2008. "Achieving the G8 50% target: modelling induced and accelerated technological change using the macro-econometric model E3MG," Climate Policy, Taylor & Francis Journals, vol. 8(sup1), pages 30-45, December.
    • Handle: RePEc:taf:tcpoxx:v:8:y:2008:i:sup1:p:s30-s45
    DOI: 10.3763/cpol.2007.0490
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    1. Mark Setterfield (ed.), 2002. "The Economics of Demand-Led Growth," Books, Edward Elgar Publishing, number 1864.
    2. Stern,Nicholas, 2007. "The Economics of Climate Change," Cambridge Books, Cambridge University Press, number 9780521700801.
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    1. van Vuuren, Detlef P. & Hoogwijk, Monique & Barker, Terry & Riahi, Keywan & Boeters, Stefan & Chateau, Jean & Scrieciu, Serban & van Vliet, Jasper & Masui, Toshihiko & Blok, Kornelis & Blomen, Eliane , 2009. "Comparison of top-down and bottom-up estimates of sectoral and regional greenhouse gas emission reduction potentials," Energy Policy, Elsevier, vol. 37(12), pages 5125-5139, December.
    2. Kronenberg, Tobias, 2010. "Finding common ground between ecological economics and post-Keynesian economics," Ecological Economics, Elsevier, vol. 69(7), pages 1488-1494, May.
    3. Galindo, Luis Miguel & Beltrán, Allan & Ferrer, Jimy & Alatorre, José Eduardo, 2017. "Efectos potenciales de un impuesto al carbono sobre el producto interno bruto en los países de América Latina: estimaciones preliminares e hipotéticas a partir de un metaanálisis y una función de tran," Documentos de Proyectos 41867, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    4. Gupta, Monika & Bandyopadhyay, Kaushik Ranjan & Singh, Sanjay K., 2019. "Measuring effectiveness of carbon tax on Indian road passenger transport: A system dynamics approach," Energy Economics, Elsevier, vol. 81(C), pages 341-354.
    5. Fouquet, Roger, 2010. "The slow search for solutions: Lessons from historical energy transitions by sector and service," Energy Policy, Elsevier, vol. 38(11), pages 6586-6596, November.
    6. Sijm, Jos & Lehmann, Paul & Chewpreecha, Unnada & Gawel, Erik & Mercure, Jean-Francois & Pollitt, Hector & Strunz, Sebastian, 2014. "EU climate and energy policy beyond 2020: Are additional targets and instruments for renewables economically reasonable?," UFZ Discussion Papers 3/2014, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
    7. Rout, Ullash K. & Blesl, Markus & Fahl, Ulrich & Remme, Uwe & Voß, Alfred, 2009. "Uncertainty in the learning rates of energy technologies: An experiment in a global multi-regional energy system model," Energy Policy, Elsevier, vol. 37(11), pages 4927-4942, November.
    8. Pollitt, Hector & Park, Seung-Joon & Lee, Soocheol & Ueta, Kazuhiro, 2014. "An economic and environmental assessment of future electricity generation mixes in Japan – an assessment using the E3MG macro-econometric model," Energy Policy, Elsevier, vol. 67(C), pages 243-254.
    9. Scrieciu, S. Şerban & Barker, Terry & Ackerman, Frank, 2013. "Pushing the boundaries of climate economics: critical issues to consider in climate policy analysis," Ecological Economics, Elsevier, vol. 85(C), pages 155-165.
    10. Terry Barker & Douglas Crawford-Brown, 2013. "Are estimated costs of stringent mitigation biased?," Climatic Change, Springer, vol. 121(2), pages 129-138, November.
    11. Shum, Kwok L., 2017. "Renewable energy deployment policy: A transition management perspective," Renewable and Sustainable Energy Reviews, Elsevier, vol. 73(C), pages 1380-1388.
    12. Timilsina, Govinda R. & Csordás, Stefan & Mevel, Simon, 2011. "When does a carbon tax on fossil fuels stimulate biofuels?," Ecological Economics, Elsevier, vol. 70(12), pages 2400-2415.
    13. Kum Yeen Wong & Joon Huang Chuah & Chris Hope, 2019. "As an emerging economy, should Malaysia adopt carbon taxation?," Energy & Environment, , vol. 30(1), pages 91-108, February.

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