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Modelling low stabilization with E3MG: towards a ‘New Economics’ approach to simulating energy-environment-economy system dynamics

Modelling low stabilization with E3MG: towards a ‘New Economics’ approach to simulating energy-environment-economy system dynamics

Barker, Terry and Scrieciu, S. Şerban (2010) Modelling low stabilization with E3MG: towards a ‘New Economics’ approach to simulating energy-environment-economy system dynamics. Energy Journal, 31. pp. 137-164. ISSN 0195-6574 (Print), 1944-9089 (Online) (doi:10.5547/ISSN0195-6574-EJ-Vol31-NoSI)

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Abstract

The literature on climate stabilization modeling largely refers to either energy-system or inter-temporal computable general equilibrium/optimal growth models. We contribute with a different perspective by deploying a large-scale macro-econometric hybrid simulation model of the global energy-environment-economy (E3MG) adopting a “New Economics” approach. We use E3MG to assess the implications of a low-stabilization target of 400ppm CO2 equivalent by 2100, assuming both fiscal instruments and regulation. We assert that if governments adopt more stringent climate targets for rapid and early decarbonisation, such actions are likely to induce more investment and increased technological change in favor of low-carbon alternatives. Contrary to the conventional view on the economics of climate change, a transition towards a low-carbon society as modeled with E3MG leads to macroeconomic benefits, especially in conditions of unemployment, with GDP slightly above a reference scenario, depending on use of tax or auction revenues. In addition, more stringent action can lead to higher benefits.

Item Type: Article
Additional Information: The Quarterly Journal of the IAEE's Energy Economics Education Foundation Volume 31, Special Issue
Uncontrolled Keywords: climate economics, climate change, decarbonisation, global mitigation benefits, energy-environment-economy modelling, E3MG, new economics, system dynamics
Subjects: G Geography. Anthropology. Recreation > GE Environmental Sciences
H Social Sciences > HB Economic Theory
Faculty / Department / Research Group: Faculty of Engineering & Science > Natural Resources Institute
Related URLs:
Last Modified: 15 Jan 2014 11:41
Selected for GREAT 2016: None
Selected for GREAT 2017: None
Selected for GREAT 2018: None
URI: http://gala.gre.ac.uk/id/eprint/9862

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