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The MIT EPPA7: A Multisectoral Dynamic Model for Climate Policy Analysis

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  • Chen, Y.-H. Henry
  • Paltsev, Sergey
  • Gurgel, Angelo
  • Reilly, John
  • Morris, Jennifer

Abstract

The MIT Economic Projection and Policy Analysis (EPPA) model has been widely used in energy, land use, technology, and climate policy studies. Here we provide details of revisions that form the basis of EPPA7, the current version. Key updates include: 1) using the latest Global Trade Analysis Project (GTAP-power) database as the core economic data for the world economy; 2) updating regional economic growth projections; 3) separating extant and vintage capital of the previously aggregated fossil generation; 4) using an innovative approach to calculate the costs of backstop (i.e., advanced) power generation options based on engineering data from the Energy Information Administration; 5) identifying base year biofuel output from existing sectors; and 6) re-parameterizing electric vehicles based on recent studies. Our simulations demonstrate that with widespread mitigation policies worldwide, regions relying heavily on fossil fuel imports benefit from lower global fossil fuel prices when their domestic emissions targets are lenient, but the benefits dissipate when deeper emissions cuts are imposed domestically. We also provide an illustration how the model output can be used to calculate the net present values of unrealized fossil fuel production and stranded assets from idling coal power generation under various policy scenarios.

Suggested Citation

  • Chen, Y.-H. Henry & Paltsev, Sergey & Gurgel, Angelo & Reilly, John & Morris, Jennifer, 2022. "The MIT EPPA7: A Multisectoral Dynamic Model for Climate Policy Analysis," Conference papers 333493, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:333493
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    File URL: https://ageconsearch.umn.edu/record/333493/files/10986.pdf
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    References listed on IDEAS

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    1. Chepeliev, Maksym, 2020. "GTAP-Power 10 Data Base: A Technical Note," GTAP Research Memoranda 5938, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    2. Chen, Y.-H. Henry & Paltsev, Sergey & Reilly, John M. & Morris, Jennifer F. & Babiker, Mustafa H., 2016. "Long-term economic modeling for climate change assessment," Economic Modelling, Elsevier, vol. 52(PB), pages 867-883.
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    1. Cai, Yongxia & Woollacott, Jared & Beach, Robert H. & Rafelski, Lauren E. & Ramig, Christopher & Shelby, Michael, 2023. "Insights from adding transportation sector detail into an economy-wide model: The case of the ADAGE CGE model," Energy Economics, Elsevier, vol. 123(C).

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    Environmental Economics and Policy;

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