Where Are the Industrial Technologies in Energy-Economy Models?: An Innovative CGE Approach for Steel Production in Germany
AbstractTop-down computable general equilibrium (CGE) models are used extensively for analysis of energy and climate policies. Energy-intensive industries are usually represented in top-down economic models as abstract economic production functions, of the constantelasticity-of-substitution (CES) functional form. This study explores methods for improving the realism of energy-intensive industries in top-down economic models. We replace the CES production function with a set of specific technologies and provide a comparison between the traditional production function approach in CGE models and an approach with separate technologies for making iron and steel. In particular, we investigate the response of the iron and steel sector to a set of CO2 price scenarios. Our technology-based, integrated approach permits a choice between several technologies for producing iron and steel and allows for shifts in technology characteristics over time towards best practice, innovative technologies. In addition, the general equilibrium framework allows us to analyze interactions between production sectors, for example between electricity generation and iron and steel production, investigate simultaneous economy-wide reactions and capture the main driving forces of greenhouse gas emissions reductions under a climate policy. We conclude that technology specific effects are crucial for the economic assessment of climate policies, in particular the effects relating to process shifts and fuel input structure.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 605.
Length: 29 p.
Date of creation: 2006
Date of revision:
Publication status: Published in: Energy Economics 29 (2007) 4, 799-825
Industrial technologies; energy use; iron and steel production; technological change; general equilibrium modeling;
Other versions of this item:
- Schumacher, Katja & Sands, Ronald D., 2007. "Where are the industrial technologies in energy-economy models? An innovative CGE approach for steel production in Germany," Energy Economics, Elsevier, vol. 29(4), pages 799-825, July.
- C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
- D5 - Microeconomics - - General Equilibrium and Disequilibrium
- L6 - Industrial Organization - - Industry Studies: Manufacturing
- Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
- Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-07-28 (All new papers)
- NEP-CMP-2006-07-28 (Computational Economics)
- NEP-ENE-2006-07-28 (Energy Economics)
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.:
- Ruth, Matthias & Amato, Anthony, 2002. "Vintage structure dynamics and climate change policies: the case of US iron and steel," Energy Policy, Elsevier, vol. 30(7), pages 541-552, June.
- Kim, Yeonbae & Worrell, Ernst, 2002. "International comparison of CO2 emission trends in the iron and steel industry," Energy Policy, Elsevier, vol. 30(10), pages 827-838, August.
- Shoven,John B. & Whalley,John, 1992.
"Applying General Equilibrium,"
Cambridge University Press, number 9780521266550, December.
- Perroni, Carlo & Rutherford, Thomas F., 1995.
"Regular flexibility of nested CES functions,"
European Economic Review,
Elsevier, vol. 39(2), pages 335-343, February.
- Mark K. Jaccard & John Nyboer & Crhis Bataille & Bryn Sadownik, 2003. "Modeling the Cost of Climate Policy: Distinguishing Between Alternative Cost Definitions and Long-Run Cost Dynamics," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 49-73.
- Andreas Schafer and Henry D. Jacoby, 2006. "Experiments with a Hybrid CGE-MARKAL Model," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 171-177.
- Sands, Ronald D., 2004. "Dynamics of carbon abatement in the Second Generation Model," Energy Economics, Elsevier, vol. 26(4), pages 721-738, July.
- Gielen, Dolf & Moriguchi, Yuichi, 2002. "CO2 in the iron and steel industry: an analysis of Japanese emission reduction potentials," Energy Policy, Elsevier, vol. 30(10), pages 849-863, August.
- Worrell, Ernst & Price, Lynn & Martin, Nathan & Farla, Jacco & Schaeffer, Roberto, 1997. "Energy intensity in the iron and steel industry: a comparison of physical and economic indicators," Energy Policy, Elsevier, vol. 25(7-9), pages 727-744.
- Gale A. Boyd & Stephen H. Karlson, 1993. "The Impact of Energy Prices on Technology Choice in the United States Steel Industry," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 47-56.
- Lutz, Christian & Meyer, Bernd & Nathani, Carsten & Schleich, Joachim, 2005. "Endogenous technological change and emissions: the case of the German steel industry," Energy Policy, Elsevier, vol. 33(9), pages 1143-1154, June.
- Katja Schumacher & Ronald D. Sands, 2005.
"Innovative Energy Technologies and Climate Policy in Germany,"
Discussion Papers of DIW Berlin
509, DIW Berlin, German Institute for Economic Research.
- Schumacher, Katja & Sands, Ronald D., 2006. "Innovative energy technologies and climate policy in Germany," Energy Policy, Elsevier, vol. 34(18), pages 3929-3941, December.
- Worrell, Ernst & Biermans, Gijs, 2005. "Move over! Stock turnover, retrofit and industrial energy efficiency," Energy Policy, Elsevier, vol. 33(7), pages 949-962, May.
- McFarland, J. R. & Reilly, J. M. & Herzog, H. J., 2004. "Representing energy technologies in top-down economic models using bottom-up information," Energy Economics, Elsevier, vol. 26(4), pages 685-707, July.
- Chris Bataille, Mark Jaccard, John Nyboer and Nic Rivers, 2006. "Towards General Equilibrium in a Technology-Rich Model with Empirically Estimated Behavioral Parameters," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 93-112.
- Saunders, Harry D., 2000. "Does predicted rebound depend on distinguishing between energy and energy services?," Energy Policy, Elsevier, vol. 28(6-7), pages 497-500, June.
- Lars Mathiesen and Ottar Maestad, 2004. "Climate Policy and the Steel Industry: Achieving Global Emission Reductions by an Incomplete Climate Agreement," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 91-114.
- Jaffe, Adam B. & Newell, Richard G. & Stavins, Robert N., 2003. "Chapter 11 Technological change and the environment," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 11, pages 461-516 Elsevier.
- Greening, Lorna A. & Boyd, Gale & Roop, Joseph M., 2007. "Modeling of industrial energy consumption: An introduction and context," Energy Economics, Elsevier, vol. 29(4), pages 599-608, July.
- Zhou, Sheng & Kyle, G. Page & Yu, Sha & Clarke, Leon E. & Eom, Jiyong & Luckow, Patrick & Chaturvedi, Vaibhav & Zhang, Xiliang & Edmonds, James A., 2013. "Energy use and CO2 emissions of China's industrial sector from a global perspective," Energy Policy, Elsevier, vol. 58(C), pages 284-294.
- Boeters, Stefan & Koornneef, Joris, 2011.
"Supply of renewable energy sources and the cost of EU climate policy,"
Elsevier, vol. 33(5), pages 1024-1034, September.
- Stefan Boeters & J. Koornneef, 2010. "Supply of renewable energy sources and the cost of EU climate policy," CPB Discussion Paper 142, CPB Netherlands Bureau for Economic Policy Analysis.
- Flues, Florens & Rübbelke, Dirk & Vögele, Stefan, 2013.
"Energy efficiency and industrial output: The case of the iron and steel industry,"
ZEW Discussion Papers
13-101, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Florens Flues & Dirk Rübbelke & Stefan Vögele, 2013. "Energy Efficiency and Industrial Output: The Case of the Iron and Steel Industry," Working Papers 2013.96, Fondazione Eni Enrico Mattei.
- Fleiter, Tobias & Worrell, Ernst & Eichhammer, Wolfgang, 2011. "Barriers to energy efficiency in industrial bottom-up energy demand models--A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(6), pages 3099-3111, August.
- Alexeeva-Talebi, Victoria & Böhringer, Christoph & Löschel, Andreas & Voigt, Sebastian, 2012.
"The value-added of sectoral disaggregation: Implications on competitive consequences of climate change policies,"
Elsevier, vol. 34(S2), pages S127-S142.
- Alexeeva-Talebi, Victoria & Böhringer, Christoph & Löschel, Andreas & Voigt, Sebastian, 2012. "The value-added of sectoral disaggregation: Implications on competitive consequences of climate change policies," ZEW Discussion Papers 12-069, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Marlene Arens & Ernst Worrell & Joachim Schleich, 2012. "Energy Intensity Development of the German Iron and Steel Industry between 1991 and 2007," Grenoble Ecole de Management (Post-Print) hal-00805730, HAL.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bibliothek).
If references are entirely missing, you can add them using this form.