Activities

 

The bulk of the IPTS Energy, Transport, and Climate Change group activities focus on the development of scenarios for energy supply and demand utilizing the appropriate modeling and forecasting tools, mainly the POLES model. In particular, we focus on the following activities:

  • Continuous update of techno-economic information (energy databases, etc.) and upgrade, update, demonstration and maintenance of the models and tools used.

  • Run scenarios to provide the policy making process with a common context and a vehicle for presentation of concepts and information on energy technologies.

  • Analyze the impact of technology progress and accelerated technology substitution in curbing GHG emissions and the associated emission reduction costs.

  • Analyze the different implementation schemes of economic instruments (flexible mechanisms, domestic policies and measures, etc).

  • Analyze the relationship between the process of technology adoption and substitution and the general regulatory framework in energy markets (both related to environmental externalities and to market organization and competition).

  • Elaboration of reports on particular technological filières (fuel cells, renewables, hydrogen, large industrial sectors, etc) according to policy requests.

  • Support the prioritization of R&D in the energy field by providing relevant prospective scientific and techno-economic quantitative and qualitative information.

  • Analyze the interaction of GHG reduction policies with other environmental regulations promoted at EU-level (IPPC directive, etc).

  • Incorporate elements concerning the economics of GHG sinks to the analytical tools addressing the search for the cost-efficient solution to fulfil specific target

Tools

 

The group uses the following tools: the ESTO network , the POLES model, and computable general equilibrium models

ESTO network

The development and maintenance of reference information on specific energy technologies is a basic requisite for our activities. We largely rely on networks of experts providing techno-economic expertise. The sector addressed are both those of energy demand and supply, paying particular attention to energy-intensive sectors exhibiting rapid technological evolution. A basic partner in this activity is the IPTS-managed European Science and Technology Observatory (ESTO).

The POLES model

The POLES model is a world simulation model for the energy sector. It works in a year-by-year recursive simulation and partial equilibrium framework, with endogenous international energy prices and lagged adjustments of supply and demand by world region. Developed under EU research programs at the Institute of Energy Policy and Economics (IEPE) and currently also operated, expanded and maintained by the IPTS, the model is fully operational since 1997. It has been used for policy analyses by EU-DGs Research, Environment, and Transport and Energy, and by the French Ministry of Environment. The model enables to produce:

POLES world regions

POLES world regions

  • detailed long-term (2030) world energy outlooks with demand, supply and price projections by main region.

  • CO2 emission marginal abatement cost curves by region, and emission trading systems analyses, under different market configurations and trading rules.

  • technology improvement scenarios, with exogenous or endogenous technological change, and analyses of the value of technological progress in the context of CO2 abatement policies.

At present IPTS is developing a series of modules for energy intensive industries (iron and steel, cement, aluminium, refineries and petrochemicals, and pulp and paper) as well as a detailed transportation model to be integrated in the POLES model.

General Equilibrium Modelling Approach

The group of IPTS is currently starting to work with computable general equilibrium (CGE) models, in order to complement the analyses provided by the other quantitative tools, and in particular by the POLES model. Climate and energy policies do not only influence the energy sector but the economy as a whole. The partial equilibrium approach of the POLES model does not capture the consequences of policies on the rest of the economy. General equilibrium models can assess the effects of climate and energy policy measures on the equilibrium prices of goods, services, labour and capital, while keeping all these markets simultaneously in equilibrium. Furthermore, the CGE framework does model the microeconomic behaviour of the relevant economic agents (e.g. households, firms), and makes it consistent with the macroeconomic context. Another advantage of the general equilibrium approach is that it can explore the sectoral effects of the policies. For instance, the effects of a carbon tax on the employment levels of the various sectors of the economy can be quantified.

The already accomplished Siadcero project implemented a very simple general equilibrium model, the RICE model of Nordhaus and Boyer in order to study the determination of climate policies in a multi-regional context, when the strategic-game interactions between regions are taken into account. In particular, a sequential game approach (feedback Nash equilibrium, versus the traditional open-loop approach of the literature) was implemented, following the scheme developed in Císcar and Soria (2002).

 

 

 

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Last revised: 15 March 2006

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