This paper introduces a novel approach to the hybrid modelling of technological change climate stabilisation cost literature. We describe how a post-Keynesian macroeconomic model of sectoral demand, E3MG, has been combined with investments in 26 energy technologies from a submodel, ETM. E3MG is a 20-region global energy-environment-economy (E3) econometric, dynamic simulation model. It is a component of the UK Tyndall Center’s Community Integrated Assessment System. Technological change is endogenous, through its effects on general energy use and sectoral demand, and on energy technologies through the cost-reducing effects o f learning by doing and economies of scale. This approach directly challenges the notion that historically estimated models cannot be use for long-term analysis. The paper concludes with an account of how technological progress is induced in this hybrid system by high relative prices of carbon designed to achieve climate stabilization at 450ppmv.
AbadirK. M. (2004). “Cointegration Theory, Equilibrium and Disequilibrium Economics.” The Manchester School72(1): 60-71.
2.
AndersonDWinneS. (2003). Innovation and Threshold Effects in Technology Responses to Climate Change: Tyndall Centre Working Paper 43.
3.
AndersonD.WinneS. (2004). “Modelling Innovation and Threshold Effects in Climate Change Mitigation.” Tyndall Centre working paper 59.
4.
AndersonDKohlerJ.BarkerT.PanH.WarrenR.WinneS.AgnolucciP.EkinsP.FoxonT.GreenK..(2005). Technology Policy and Technical Change a Dynamic Global and UK Approach: Tyndall Centre Technical Report 23.
5.
BarkerT.PetersonW. (eds.) (1987). The Cambridge Multisectoral Dynamic Model of the British Economy. Cambridge: Cambridge University Press.
6.
BarkerT.KohlerJ.VillenaM. (2002). “The Costs of Greenhouse Gas Abatement: A MetaAnalysis of Post-SRES Mitigation Scenarios.” Environmental Economics and Policy Studies5(2): 135-166.
7.
BarkerT (1999). “Achieving a 10% cut in Europe’s Carbon Dioxide Emissions Using Additional Excise Duties: Coordinated, Uncoordinated and Unilateral Action Using the Econometric Model E3ME.” Economic Systems Research11(4): 401-421.
8.
BarkerT.De-RamonS. (2006). “Testing the Representative Agent Assumption: The Distribution of Parameters in a Large-scale Model of the EU 1972-1998.” Applied Economic Letters13(6): 395-398.
9.
BarkerT.PanH.KohlerJ.WarrenR.WinneS. (2005). “Avoiding Dangerous Climate Change by Inducing Technological Progress: Scenarios Using a Large-scale Econometric Model.” In SchellnhuberH.J., eds., Avoiding Dangerous Climate Change. Cambridge University Press. Ch. 38.
10.
BarkerT.PanH.KohlerJ.WarrenR.WinneS. (2006). Decarbonizing the Global Economy with Induced Technological Change: Scenarios to 2100 using E3MG. The Energy JournalSpecial Issue, Endogenous Technological Change and the Economics of Atmospheric Stabilization. 241258.
CrassousR.HourcadeJ-CSassiO. (2006). Endogenous Structural Change and Climate Targets: Modeling Experiments with Imaclim-R. The Energy Journal Special Issue, Endogenous Technological Change and the Economics of Atmospheric Stabilization. 161-178.
13.
CriquiP.KitousA.BerkM.den ElzenM.EickhoutB.LucasP.Van VuurenD.KouvaritakisN.VanregemorterD. (2003). Greenhouse Gas Emission Reduction Pathways in the UNFCCC Process up to 2025. Technical Report. Study contract B4-3040/2001/325703/MAR/E.1 for DG Environment.
14.
DewickP.GreenK.MiozzoM. (2004). “Technological Change, Industrial Structure and the Environment.” Futures36(3): 267-294.
15.
EngleR.F.GrangerC.W.J. (1987). “Cointegration and Error Correction: Representation, Estimation and Testing.” Econometrica. 55.
16.
GrubbM.KohlerJ.AndersonD. (2002). “Induced Technical Change in Energy and Environmental Modelling: Analytical Approached and Policy Implications.” Ann. Ren. Energy Environ.27: 271-308.
17.
HargreavesC. P. ed. (1992). Macroeconomic Modelling of the Long-run. Edward Elgar, UK.
18.
HourcadeJ.C.JaccardM.BatailleC.GhersiF.. (2006). Introductory editorial to Hybrid Modeling of Energy-Environment Policies: Reconciling Bottom-up and Top-down - Special Issue of the Energy Journal.
19.
KaldorN. (1957). “A Model of Economic Growth.” Economic Journal.67: 591-624.
20.
KohlerJ. (2003). Long-run Technical Change in an Energy-environment-Economy (E3) Model for an IA System: A Model of Kondratiev Waves. Integrated Assessment4(2): 126-133.
21.
KohlerJ. (2005). “Making (Kondratiev) waves: simulating long run technical change.” in:DewickP.MiozzoM.GreenK. (eds.) Technology, Knowledge and the Firm: Implications for Strategy and Industrial Change, Edward Elgar.
22.
KohlerJ.GrubbM.PoppD.EdenhoferO. (2006). “The Transition to Endogenous Technical Change in Climate-Economy Models: a Technical overview to the Innovation Modeling Comparison Project.” The Energy Journal Special Issue, Endogenous Technological Change and the Economics of Atmosperic Stabilization, 17-55.
23.
KohlerJ.JinY.BarkerT. (forthcoming) Integrated Modelling of EU Transport Policy: Assessing Economic Growth Impacts from Social Marginal Cost Pricing and the TEN-T Programmes.Forthcoming in Journal of Transport Economics and Policy.
24.
McCombieJ. M.ThirlwallA.P. (1994). Economic Growth and the Balance of Payments Constraint. Macmillan.
25.
McDonaldA.SchrattenholzerL. (2001). “Learning Rates for Energy Technologies.” Energy Policy29: 255-261.
26.
NordhausW. (1994). Managing the Global Commons: The Economics of Climate Change. MIT Press, Cambridge, MA.
27.
OgdenJ.M (1999). “Prospects for Building a Hydrogen Energy Infrastructure.” Annual Review of Energy &Environment24: 227-79.
28.
ScottM. (1989). A New View of Economic Growth, Oxford: Clarendon Press.
29.
SetterfieldM. (ed.) (2002). The Economics of Demand-led Growth - Challenging the Supply-side Vision of the Long Run. Cheltenham, UK: Edward Elgar.
30.
Watson (2001). IPCC Third Assessment Report, Climate Change 2001: Mitigation, Summary for Policymakers, IPCC/WMO, Geneva.
31.
WigleyT.M.L.RaperS.C.B.. (1997). Model for the Assessment of Greenhouse-gas Induced Climate Change (MAGICC Version 2.3.), The Climate Research Unit, University of East Anglia, UK.
