Advanced Search
MyIDEAS: Login

Effects of the Uncertainty about Global Economic Recovery on Energy Transition and CO2 Price

Contents:

Author Info

  • Olivier Durand-Lasserve
  • Axel Pierru
  • Yves Smeers
Registered author(s):

    Abstract

    This paper examines the impact that uncertainty over economic growth may have on global energy transition and CO2 prices. We use a general-equilibrium model derived from MERGE, and define several stochastic scenarios for economic growth. Each scenario is characterized by the likelihood of a rapid global economic recovery. More precisely, during each decade, global economy may - with a given probability - shift from the EIA's (2010) low-economic-growth path to the EIA's (2010) high-economic-growth path. The climate policy considered corresponds in the medium term to the commitments announced after the Copenhagen conference, and in the long term to a reduction of 25% in global energy-related CO2 emissions (with respect to 2005). For the prices of CO2 and electricity, as well as for the implementation of CCS, the branches of the resulting stochastic trajectories appear to be heavily influenced by agents’ initial expectations of future economic growth and by the economic growth actually realized. Thus, in 2040, the global price of CO2 may range from $21 (when an initially-anticipated economic recovery never occurs) to $128 (in case of non-anticipated rapid economic recovery). In addition, we show that within each region, the model internalizes the constraints limiting the expansion of each power-generation technology through the price paid by the power utility for the acquisition of new production capacity. As a result, in China, the curves of endogenous investment costs for onshore and offshore wind are all bubble-shaped centered on 2025, a date which corresponds to the establishment of a global CO2 cap-and-trade market in the model.

    Download Info

    If 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.
    File URL: http://tisiphone.mit.edu/RePEc/mee/wpaper/2011-005.pdf
    Our checks indicate that this address may not be valid because: 500 Can't connect to tisiphone.mit.edu:80 (10060). If this is indeed the case, please notify (Sharmila Ganguly)
    Download Restriction: no

    Bibliographic Info

    Paper provided by Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research in its series Working Papers with number 1105.

    as in new window
    Length:
    Date of creation: Mar 2011
    Date of revision:
    Handle: RePEc:mee:wpaper:1105

    Contact details of provider:
    Postal: 77 Massachusetts Ave. (Building E40-279), Cambridge, MA 02139-4307
    Phone: (617) 253-3551
    Fax: (617) 253-9845
    Email:
    Web page: http://tisiphone.mit.edu/RePEc
    More information through EDIRC

    Related research

    Keywords:

    This paper has been announced in the following NEP Reports:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:mee:wpaper:1105. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sharmila Ganguly) The email address of this maintainer does not seem to be valid anymore. Please ask Sharmila Ganguly to update the entry or send us the correct address.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.