Modeling Transition Paths for the Energy and Transport Sectors : A Literature Review

Meeting the dual challenge of providing reliable and affordable energy and transport to a growing population while reducing environmental impacts, including mitigating greenhouse gas emissions, requires a deep understanding of both the unit- and system-level responses. These responses arise from the ongoing energy and transport system evolution, such as the transition toward lower carbon fuels and the expanded deployment of new low-carbon generation technologies. This literature review takes stock of the advantages and disadvantages of alternative approaches, by offering a taxonomy of the current modeling approach, focusing inter alia on the characteristics of the models. Current analyses often employ integrated assessment models to quantify the effects (for example, economywide greenhouse gas emissions) of various policies and decision processes on representative unit operations. The accuracy of the modeling approaches used to estimate these costs depends on several factors: for example, modeling approaches (ranging from partial equilibrium energy-land models to computable general equilibrium models of the global economy, from myopic to perfect foresight models, and from models with or without endogenous technological change), covered area, time horizon, determination of baseline scenarios, detailed sectoral representation, emissions sources, inclusion of efficiency and renewable energy options, and so forth. Some of the biggest challenges for improving the design and use of integrated assessment models include accounting for the trade-off between efficiency and equity, capturing interactions between impact sectors and feedbacks to the climate system, and dealing with uncertainty and risk. This review focuses on the treatment of the energy and transport sectors.