The Effects on Energy Markets of Achieving a 1.5 °C Scenario

Lars Lindholt and Taoyuan Wei ()
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Lars Lindholt: Research Department, Statistics Norway, 0177 Oslo, Norway

IJERPH, 2023, vol. 20, issue 5, 1-20

Abstract: Net zero emission scenarios are aligned with the criteria for the Paris Agreement to keep global warming below 1.5 °C. By soft-linking an energy model with a macroeconomic model, we create a similar pathway to the net zero emission scenario from the International Energy Agency (IEA) to 2050 both of demand for fossil fuels and total CO 2 emissions. Soft-linking entails that we insert endogenous variables from one model into the other model. We implement measures such as CO 2 taxes, improved energy efficiency, more renewables in electricity production and other sectors, easier substitution between electricity and fossil fuels for final users, and drastically limiting future production of oil, gas and coal. Our conclusion is that net zero is possible by introducing very strict measures, e.g., a high rate of energy efficiency improvement, far above what has been achieved in the past. While our partial equilibrium energy model, similar to the IEA model, overlooks the potential rebound effects, i.e., more energy used by consumers due to lower prices caused by energy efficiency improvement, our macroeconomic model does capture the rebound effects and has to implement stricter supply-side measures to reduce fossil fuel use to achieve the 1.5 °C scenario.

Keywords: net zero; climate change; mitigation; energy model; integrated assessment; CGE model; fossil fuel; energy transition (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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