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Decarbonizing the Global Economy with Induced Technological Change: Scenarios to 2100 using E3MG

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  • Terry Barker, Haoran Pan, Jonathan Kohler, Rachel Warren, and Sarah Winne

Abstract

This paper reports how endogenous economic growth and technological change have been introduced into a global econometric model. It explains how further technological change might be induced by mitigation policies so as to reduce greenhouse gas emissions and stabilize atmospheric concentrations. These are the first results of a structural econometric approach to modeling the global economy using the model E3MG (energy-environment-economy model of the globe), which in turn constitutes one component in the Community Integrated Assessment System (CIAS) of the UK Tyndall Centre. The model is simplified to provide a post-Keynesian view of the long-run, with an indicator of technological progress affecting each regionÕs exports and energy use. When technological progress is endogenous in this way, long-run growth in global GDP is partly explained by the model. Average permit prices and tax rates about $430/tC (1995) prices after 2050 are sufficient to stabilize atmospheric concentrations at 450ppm CO2 after 2100. They also lead to higher economic growth.

Suggested Citation

  • Terry Barker, Haoran Pan, Jonathan Kohler, Rachel Warren, and Sarah Winne, 2006. "Decarbonizing the Global Economy with Induced Technological Change: Scenarios to 2100 using E3MG," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 241-258.
  • Handle: RePEc:aen:journl:2006se-a12
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    Cited by:

    1. Mercure, J.-F. & Pollitt, H. & Chewpreecha, U. & Salas, P. & Foley, A.M. & Holden, P.B. & Edwards, N.R., 2014. "The dynamics of technology diffusion and the impacts of climate policy instruments in the decarbonisation of the global electricity sector," Energy Policy, Elsevier, vol. 73(C), pages 686-700.
    2. Kahouli-Brahmi, Sondes, 2008. "Technological learning in energy-environment-economy modelling: A survey," Energy Policy, Elsevier, vol. 36(1), pages 138-162, January.
    3. 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.
    4. Kai LESSMANN & Robert MARSCHINSKI & Ottmar EDENHOFER, "undated". "The Effects of Trade Sanctions in International Environmental Agreements," EcoMod2008 23800079, EcoMod.
    5. Jean-Francois Mercure & Pablo Salas, 2013. "An assessment of energy resources for global decarbonisation," 4CMR Working Paper Series 002, University of Cambridge, Department of Land Economy, Cambridge Centre for Climate Change Mitigation Research.
    6. Wei, Yi-Ming & Mi, Zhi-Fu & Huang, Zhimin, 2015. "Climate policy modeling: An online SCI-E and SSCI based literature review," Omega, Elsevier, vol. 57(PA), pages 70-84.
    7. Mercure, Jean-François & Salas, Pablo, 2012. "An assessement of global energy resource economic potentials," Energy, Elsevier, vol. 46(1), pages 322-336.
    8. Takanobu Kosugi, 2010. "Assessments of ‘Greenhouse Insurance’: A Methodological Review," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 17(4), pages 345-363, December.
    9. Dagoumas, [alpha].S. & Barker, T.S., 2010. "Pathways to a low-carbon economy for the UK with the macro-econometric E3MG model," Energy Policy, Elsevier, vol. 38(6), pages 3067-3077, June.
    10. 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.
    11. Kronenberg, Tobias, 2010. "Finding common ground between ecological economics and post-Keynesian economics," Ecological Economics, Elsevier, vol. 69(7), pages 1488-1494, May.
    12. J. -F. Mercure & H. Pollitt & A. M. Bassi & J. E Vi~nuales & N. R. Edwards, 2015. "Modelling complex systems of heterogeneous agents to better design sustainability transitions policy," Papers 1506.07432, arXiv.org, revised Feb 2016.
    13. 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.
    14. 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).
    15. Kosugi, Takanobu, 2013. "A paradox regarding economic support to deploy renewable energy technologies," Energy Policy, Elsevier, vol. 61(C), pages 1111-1115.
    16. Lessmann, Kai & Marschinski, Robert & Edenhofer, Ottmar, 2009. "The effects of tariffs on coalition formation in a dynamic global warming game," Economic Modelling, Elsevier, vol. 26(3), pages 641-649, May.
    17. Anna Creti & Alena Kotelnikova & Guy Meunier & Jean-Pierre Ponssard, 2015. "Defining The Abatement Cost In Presence Of Learning-By-Doing: Application To The Fuel Cell Electric Vehicle," Working Papers hal-01158461, HAL.
    18. Scrieciu, S. Serban, 2007. "The inherent dangers of using computable general equilibrium models as a single integrated modelling framework for sustainability impact assessment. A critical note on Bohringer and Loschel (2006)," Ecological Economics, Elsevier, vol. 60(4), pages 678-684, February.
    19. repec:eee:appene:v:202:y:2017:i:c:p:447-458 is not listed on IDEAS
    20. Mercure, Jean-François & Salas, Pablo, 2013. "On the global economic potentials and marginal costs of non-renewable resources and the price of energy commodities," Energy Policy, Elsevier, vol. 63(C), pages 469-483.
    21. Ekins, Paul & Pollitt, Hector & Summerton, Philip & Chewpreecha, Unnada, 2012. "Increasing carbon and material productivity through environmental tax reform," Energy Policy, Elsevier, vol. 42(C), pages 365-376.
    22. Mercure, Jean-François, 2012. "FTT:Power : A global model of the power sector with induced technological change and natural resource depletion," Energy Policy, Elsevier, vol. 48(C), pages 799-811.
    23. 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.

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    JEL classification:

    • F0 - International Economics - - General

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