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Extending energy portfolio with clean technologies in the ICES model

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  • Bosello, Francesco
  • Campagnolo, Lorenza
  • Eboli, Fabio
  • Parrado, Ramiro
  • Portale, Elisa

Abstract

Promotion of “clean” technologies is among the main challenging issues in climate policy agendas worldwide. Countries are increasingly recognising the potential role of renewable energy within a portfolio of low-carbon and cost-competitive energy technologies capable of responding to the emerging major challenges of climate change, energy security, and access to energy. As confirmed in the last UN Climate Change Conference in Cancun (2010), investments in renewables may lighten the effort or allow for more ambitious goals. Moreover, as a global problem, climate change requires international mitigation policies. These originate changes in world energy prices and lead to a recomposition of global energy demand, with a substantial radical change in the energy productive mix. Top-down models, as a proper tool to investigate such a global issues, have a very reliable macroeconomic structure, with interdependences at sectoral and regional level; unfortunately, they usually present a very poor detailed number of energy technologies within each sector. This paper suggests a newly modified CGE model and database enriched with a range of clean energy alternative technologies. The starting point is the ICES (Inter-temporal Computable Equilibrium System) model, which is a recursive-dynamic multi-regional general equilibrium model, based on the GTAP dataset and GTAP-E model. External data and statistics are used to split selected GTAP7 database sectors in order to isolate six new energy commodities: solar, wind, hydro and waste to energy, the so called renewable energy sources, mainly used in power generation; in addition, nuclear fuel and biofuels are included as primary energy sources. Renewables are presented in the model as imperfect substitutes for electricity from fossil fuels and the intermittency issue is also taken into account. This higher detailed picture of energy sector proposed can give important insights on how inter-fuel substitution, governed by price signals, determines the composition of energy mix and their evolution across time. Referring to this, the paper presents a baseline scenario which reproduces the historical economic trend until 2020 reflecting occurrence and evolution of financial crisis for the EU27 and the rest of the world grouped in 8 regions. Moreover, a climate policy scenario is proposed focusing on the cost-efficient solution in coordinated action under low pledges of the Copenhagen agreement in a global CO2 market.

Suggested Citation

  • Bosello, Francesco & Campagnolo, Lorenza & Eboli, Fabio & Parrado, Ramiro & Portale, Elisa, 2011. "Extending energy portfolio with clean technologies in the ICES model," Conference papers 332035, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332035
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    References listed on IDEAS

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