Decarbonizing the Global Economy with Induced Technological Change: Scenarios to 2100 using E3MG

Terry Barker, Haoran Pan, Jonathan Köhler, Rachel Warren and Sarah Winne

The Energy Journal, 2006, vol. 27, issue 1_suppl, 241-258

Abstract: This paper reports how endogenous economic growth and technological change have been introduced into a global econometric model. It explains how further technological change might be induced by mitigation policies so as to reduce greenhouse gas emissions and stabilize atmospheric concentrations. These are the first results of a structural econometric approach to modeling the global economy using the model E3MG (energy-environment-economy model of the globe), which in turn constitutes one component in the Community Integrated Assessment System (CIAS) of the UK Tyndall Centre. The model is simplified to provide a post-Keynesian view of the long-run, with an indicator of technological progress affecting each region’s exports and energy use. When technological progress is endogenous in this way, long-run growth in global GDP is partly explained by the model. Average permit prices and tax rates about $430/tC (1995) prices after 2050 are sufficient to stabilize atmospheric concentrations at 450ppm CO2 after 2100. They also lead to higher economic growth.

Keywords: Induced technical change; E3MG model; CO2 mitigation; carbon taxes; permit trading (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:sae:enejou:v:27:y:2006:i:1_suppl:p:241-258

DOI: 10.5547/ISSN0195-6574-EJ-VolSI2006-NoSI1-12

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