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The Economics of a Lost Deal: Kyoto - The Hague - Marrakesh

Jean-Charles Hourcade and Frederic Ghersi

Year: 2002
Volume: Volume23
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol23-No3-1
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Abstract:
This paper examines prospects for compromise between competing perspectives on four key climate change issues: costs, level of domestic action, environmental integrity, and developing world involvement. It focuses on the policy issues stemming from uncertainty about abatement costs. Based on extensive simulations of a model integration tool, SAP12 (Stochastic Assessment of Climate Policies, 12 models), the analysis considers options for fine-tuning the Kyoto Protocol, such as concrete ceilings or levies on carbon imports; "environmental restoration payments" to be made on excess emissions; and credits for sequestration activities in Annex B countries. It demonstrates that a restoration payment (implemented through a safety valve) emerges as a superior means of addressing the cost uncertainty issue. The paper concludes that had this approach been taken at the COP6 climate negotiations in The Hague, there would have been substantial room for compromise on payments of $35 to $100 per ton of carbon. Examining the Marrakesh (COP7) climate accord, it derives some lessons for attempts at completing Kyoto's unfinished business or at moving on to a new framework.



Hybrid Modeling: New Answers to Old Challenges Introduction to the Special Issue of The Energy Journal

Jean-Charles Hourcade, Mark Jaccard, Chris Bataille, and Frederic Ghersi 

Year: 2006
Volume: Hybrid Modeling
Number: Special Issue #2
DOI: 10.5547/ISSN0195-6574-EJ-VolSI2006-NoSI2-1
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Abstract:
After nearly two decades of debate and fundamental disagreement, top-down and bottom-up energy-economy modelers, sometimes referred to as modeling �tribes�, began to engage in productive dialogue in the mid-1990s (IPCC 2001). From this methodological conversation have emerged modeling approaches that offer a hybrid of the two perspectives. Yet, while individual publications over the past decade have described efforts at hybrid modeling, there has not as yet been a systematic assessment of their prospects and challenges. To this end, several research teams that explore hybrid modeling held a workshop in Paris on April 20�21, 2005 to share and compare the strategies and techniques that each has applied to the development of hybrid modeling. This special issue provides the results of the workshop and of follow-up efforts between different researchers to exchange ideas.



Macroeconomic Consistency issues in E3 Modeling: The Continued Fable of the Elephant and the Rabbit

Frederic Ghersi and Jean-Charles Hourcade

Year: 2006
Volume: Hybrid Modeling
Number: Special Issue #2
DOI: 10.5547/ISSN0195-6574-EJ-VolSI2006-NoSI2-3
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Abstract:
Starting from a short presentation of the limits of using conventional production functions to hybridize energy-economy relationships, this paper presents a methodology aiming at a better integration of bottom-up policy scenarios in a top-down static general equilibrium framework. Along the lines of Ahmad�s innovation possibility curve, the methodology consists in implementing top-down envelopes of production and demand functions, whose variable point elasticities of substitution provide a flexible interface for calibration on any bottom-up expertise. Numerical experiments assessing the impact of a rising carbon tax on the global 2030 economy compare the application of this methodology to that of two standard CES-based approaches. Results confirm that, in case of large departures from reference scenarios or of strong convexities in bottom-up results, the use of conventional CES production and utility functions may lead to a significant bias in cost assessment.



Structural Transformation Options of the Saudi Economy Under Constraint of Depressed World Oil Prices

Salaheddine Soummane, Frédéric Ghersi, and Franck Lecocq

Year: 2022
Volume: Volume 43
Number: Number 3
DOI: 10.5547/01956574.43.3.ssou
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Abstract:
We implement the hybrid (energy-economy) recursive-dynamic multisector IMACLIM model with important adaptations to Saudi macroeconomics. We design two scenarios reflecting both the Saudi Vision 2030 economic development program and Nationally Determined Contribution (NDC) to greenhouse gas mitigation: Continuity of previous plans to expand energy-intensive activities under maintained energy-pricing policies, versus Transformation by economic diversification away from hydrocarbon-related activities and fiscal and energy-pricing reforms. We show that, compared to Continuity, Transformation improves activity, employment and public budget outlooks, while considerably abating the energy intensity of GDP and total CO2 emissions. Our results thus point at the relevance of economic diversification as both a hedging strategy against international climate change mitigation depressing oil markets and a national climate mitigation strategy for Saudi Arabia. However, the successful advancement of the reforms necessary for diversification remains conditional to setting a suitable institutional framework for a competitive economy.





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