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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.



The objECTS Framework for integrated Assessment: Hybrid Modeling of Transportation

Son H. Kim, Jae Edmonds, Josh Lurz, Steven J. Smith, and Marshall Wise

Year: 2006
Volume: Hybrid Modeling
Number: Special Issue #2
DOI: 10.5547/ISSN0195-6574-EJ-VolSI2006-NoSI2-4
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Abstract:
Technology is a central issue for the global climate change problem, requiring analysis tools that can examine the impact of specific technologies within a long-term, global context. This paper describes the architecture of the ObjECTS-MiniCAM integrated assessment model, which implements a long-term, global model of energy, economy, agriculture, land-use, atmosphere, and climate change in a framework that allows the flexible incorporation of explicit technology detail. We describe the implementation of a �bottom-up� representation of the transportation sector as an illustration of this approach, in which the resulting hybrid model is fully integrated, internally consistent and theoretically compatible with the regional and global modeling framework. The analysis of the transportation sector presented here supports and clarifies the need for a comprehensive strategy promoting advanced vehicle technologies and an economy-wide carbon policy to cost-effectively reduce carbon emissions from the transportation sector in the long-term.



Towards General Equilibrium in a Technology-Rich Model with Empirically Estimated Behavioral Parameters

Chris Bataille, Mark Jaccard, John Nyboer and Nic Rivers

Year: 2006
Volume: Hybrid Modeling
Number: Special Issue #2
DOI: 10.5547/ISSN0195-6574-EJ-VolSI2006-NoSI2-5
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Abstract:
Most energy-economy policy models offered to policy makers are deficient in terms of at least one of technological explicitness, microeconomic realism, or macroeconomic completeness. We herein describe CIMS, a model which starts with the technological explicitness of the �bottom-up� approach and adds the microeconomic realism and macroeconomic completeness of the �topdown� CGE approach. This paper demonstrates CIMS� direct utility for policy analysis, and also how it can be used to better estimate the long run capital-forenergy substitution elasticity (ESUB) and autonomous energy efficiency index (AEEI) technology parameters used in top-down models. By running CIMS under several possible energy price futures and observing their effects on capital and energy input shares and energy consumption, we estimate an economy-wide ESUB of 0.26 and an AEEI of 0.57%, with significant sectoral differences for both parameters.



Combining Energy Technology Dynamics and Macroeconometrics: The E3MG Model

Jonathan Kohler, Terry Barker, Dennis Anderson and Haoran Pan

Year: 2006
Volume: Hybrid Modeling
Number: Special Issue #2
DOI: 10.5547/ISSN0195-6574-EJ-VolSI2006-NoSI2-6
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Abstract:
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.



Modeling Low Climate Stabilization with E3MG: Towards a 'New Economics' Approach to Simulating Energy-Environment-Economy System Dynamics

Terry Barker and S. Serban Scrieciu

Year: 2010
Volume: Volume 31
Number: Special Issue
DOI: 10.5547/ISSN0195-6574-EJ-Vol31-NoSI-6
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Abstract:
The literature on climate stabilization modeling largely refers to either energy-system or inter-temporal computable general equilibrium/optimal growth models. We contribute with a different perspective by deploying a large-scale macro-econometric hybrid simulation model of the global energy�environment-economy (E3MG) adopting a �New Economics� approach. We use E3MG to assess the implications of a low-stabilization target of 400ppm CO2 equivalent by 2100, assuming both fiscal instruments and regulation. We assert that if governments adopt more stringent climate targets for rapid and early decarbonization, such actions are likely to induce more investment and increased technological change in favor of low-carbon alternatives. Contrary to the conventional view on the economics of climate change, a transition towards a low-carbon society as modeled with E3MG leads to macroeconomic benefits, especially in conditions of unemployment, with GDP slightly above a reference scenario, depending on use of tax or auction revenues. In addition, more stringent action can lead to higher benefits.





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