Incorporating CO2 emissions into macroeconomic models through primary energy use

Grant Allan, Kevin Connolly (), Andrew Ross and Peter McGregor
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Kevin Connolly: Department of Economics, University of Strathclyde

No 1818, Working Papers from University of Strathclyde Business School, Department of Economics

Abstract: Two key pillars of the energy quadrilemma (which measure the sustainability of energy policy) are a reduction in greenhouse gas emissions and economic development. Recent worldwide energy policy has focused on the reduction of greenhouse gas emissions to combat climate change, which will influence, and in turn be influenced by, economic activity and energy use. As such, it is critically important to identify and incorporate emissions into macroeconomic models. Typically, emissions are linked to economic activity via the level of output, both calculated at a sectoral level. However, this approach - while consistent with linear models such as Input-Output - assumes that emissions per unit of output remains constant, which can be problematic with more complex economic systems. In this paper we detail a method for incorporating sectoral and aggregate CO2 emissions into a macroeconomic model (CGE) of the UK through the use of sectoral primary energy use.

Keywords: Emissions; macroeconomic models; primary use energy (search for similar items in EconPapers)
JEL-codes: F64 O13 Q43 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2018-11
New Economics Papers: this item is included in nep-ene, nep-env, nep-mac and nep-reg
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:str:wpaper:1818

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