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A hybrid electricity-economy model to assess the aggregate impacts of low-carbon transition: An application to France

Author

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  • Corbier, Darius
  • Gonand, Frédéric

Abstract

The article investigates different macroeconomic channels of transmission of the low-carbon transition in two official scenarios for the French power system under different oil price scenarios. A hybrid model combines, with a two-way soft link, a dynamic general equilibrium model and a partial equilibrium model for the power generation mix. The results show that the decarbonization of the economy and growth can be driven by technical progress and substitution mechanisms triggered by low-carbon transition policies. The main transmission channels are the demand for energy through the relative price of energy and the relative efficiency of energy, and the demand for durable goods. Considering the evolution of relative electricity prices, for an economy transitioning toward mass electrification, seems to be key in our model. And, if recycled, the carbon tax may not significantly harm the economic welfare of households but weigh (slightly) on the firms in the long run.

Suggested Citation

  • Corbier, Darius & Gonand, Frédéric, 2024. "A hybrid electricity-economy model to assess the aggregate impacts of low-carbon transition: An application to France," Ecological Economics, Elsevier, vol. 216(C).
    • Handle: RePEc:eee:ecolec:v:216:y:2024:i:c:s0921800923002902
    DOI: 10.1016/j.ecolecon.2023.108027
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    More about this item

    Keywords

    Low-carbon energy transition; Macroeconomics; Hybrid modelling; Power system; Interfuel elasticities;
    All these keywords.

    JEL classification:

    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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