Energy Transition

This project aims to develop a modeling structure to analyze the effects of climate change on water temperature and availability as factors affecting electricity production and other energy facilities and infrastructures.  We also plan to explore the effects possible adaptation strategies could have on reducing impacts of climate change on power production.  To do this work, we will be using data from the Oak Ridge National Lab that is related to power plants in the Gulf Coast region.

Assessing the Impact of Future Climates on the Thermal Electric and Hydroelectric Generating Capacity of the Southeast U.S.

This project is developing a model for analyzing potential U.S greenhouse gas policies proposed within the U.S., with a capability to assess impacts on regions, sectors and industries of various combination of mitigation policies and adaptation measures. The effort builds on the existing capability of the MIT Economic Projection and Policy Analysis (EPPA) model, which has been developed by the Program to analyze the global economic consequences of efforts to mitigate greenhouse gases.

A Model for Economic Assessment of US Climate Policy
What Should the Government Do to Encourage Technical Change in the Energy Sector?

Government support of innovation—both technology creation and technology demonstration—is desirable to encourage private investors to adopt new technology. In this paper, I review the government role in encouraging technology innovation and the success of the U.S. Department of Energy (DOE) and its predecessor agencies in advancing technology in the energy sector. The DOE has had better success in the first stage of innovation (sponsoring R&D to create new technology options) than in the second stage (demonstrating technologies with the objective of encouraging adoption by the private sector). I argue that the DOE does not have the expertise, policy instruments, or contracting flexibility to successfully manage technology demonstration, and that consideration should be given to establishing a new mechanism for this purpose. The ill-fated 1980 Synthetic Fuels Corporation offers an interesting model for such a mechanism.

What Should the Government Do to Encourage Technical Change in the Energy Sector?

Government support of innovation—both technology creation and technology demonstration—is desirable to encourage private investors to adopt new technology. In this paper, I review the government role in encouraging technology innovation and the success of the U.S. Department of Energy (DOE) and its predecessor agencies in advancing technology in the energy sector. The DOE has had better success in the first stage of innovation (sponsoring R&D to create new technology options) than in the second stage (demonstrating technologies with the objective of encouraging adoption by the private sector). I argue that the DOE does not have the expertise, policy instruments, or contracting flexibility to successfully manage technology demonstration, and that consideration should be given to establishing a new mechanism for this purpose. The ill-fated 1980 Synthetic Fuels Corporation offers an interesting model for such a mechanism.

Will Recreation Demand for Land Limit Biofuels Production?

We use a CGE model to investigate the potential of second generation biofuels production under possibilities of land use conversion from natural areas to agricultural land in the U.S, considering the recreational value of forests. We introduce recreational benefits of natural forests through "household" production sectors for hunting and fishing, for wildlife viewing in reserved areas, and wildlife viewing in other forest areas, based on extensive data available in the U.S. about those activities. We test the model assessing the land use changes and welfare impacts from a U.S. climate policy scenario. The new approach resulted in similar land use change as earlier work where land conversion was limited by an elasticity based on observed land supply response. The advantage of the new approach built here using recreation data is that it provides an obviously improved measure of welfare cost of policies that lead to land use change, because the preservation value of the land offsets the increased cost of the policy due to the restriction on use. The results are sensitive to the representation of people's willingness to substitute other inputs for natural land in their recreation experience, parameter not being well investigated empirically. The main contribution of the paper is not for its insights on biofuels potential but for the improved representation of welfare changes from models where the land supply response limits conversion.

© 2008 The Berkeley Electronic Press

World Energy Consumption and Carbon Dioxide Emissions:1950-2050

Emissions of carbon dioxide from combustion of fossil fuels, which may contribute to long-term climate change, are projected through 2050 using reduced form models estimated with national-level panel data for the period 1950 - 1990. We employ a flexible form for income effects, along with fixed time and country effects, and we handle forecast uncertainty explicitly. We find an "inverse-U"relation with a within-sample peak between carbon dioxide emissions (and energy use) per capita and per captia income. Using the income and population growth assumptions of the Intergovernmental Panel on Climate Change (IPCC), we obtain projections significantly and substantially above those of the IPCC.

Vehicle technology dynamics under CO2 constraint: A general equilibrium analysis

A study is presented of the rates of penetration of different transport technologies under policy constraints on CO2 emissions. The response of this sector is analyzed within an overall national level of restriction, with a focus on automobiles, light trucks, and heavy freight trucks. Using the US as an example, a linked set of three models is used to carry out the analysis: a multi-sector computable general equilibrium model of the economy, a MARKAL-type model of vehicle and fuel supply technology, and a model simulating the split of personal and freight transport among modes. Results highlight the importance of incremental improvements in conventional internal combustion engine technology, and, in the absence of policies to overcome observed consumer discount rates, the very long time horizons before radical alternatives like the internal combustion engine hybrid drive train vehicle are likely to take substantial market share. © 2006 Elsevier

Unintended Environmental Consequences of a Global Biofuels Program

Biofuels are being promoted as an important part of the global energy mix to meet the climate change challenge. The environmental costs of biofuels produced with current technologies at small scales have been studied, but little research has been done on the consequences of an aggressive global biofuels program with advanced technologies using cellulosic feedstocks. Here, with simulation modeling, we explore two scenarios for cellulosic biofuels production and find that both could contribute substantially to future global-scale energy needs, but with significant unintended environmental consequences. As the land supply is squeezed to make way for vast areas of biofuels crops, the global landscape is defined by either the clearing of large swathes of natural forest, or the intensification of agricultural operations worldwide. The greenhouse gas implications of land-use conversion differ substantially between the two scenarios, but in both, numerous biodiversity hotspots suffer from serious habitat loss. Cellulosic biofuels may yet serve as a crucial wedge in the solution to the climate change problem, but must be deployed with caution so as not to jeopardize biodiversity, compromise ecosystems services, or undermine climate policy.

Technical Change, Investment and Energy Intensity

This paper analyzes the role of different components of technical change on energy intensity by applying a Translog variable cost function setting to the new EU KLEMS dataset for 3 selected EU countries (Italy, Finland and Spain). The framework applied represents an accounting of technical change components, comprising autonomous as well as embodied and induced technical change. The inducement of embodied technical change is introduced by an equation for the physical capital stock that is a fixed factor in the short-run. The dataset on capital services and user costs of capital in EUKLEMS enables explaining capital accumulation depending on factor prices. The model can be used for explaining and tracing back the long-run impact of prices and technical change on energy intensity.

Technology and technical change in the MIT EPPA model

Potential technology change has a strong influence on projections of greenhouse gas emissions and costs of control, and computable general equilibrium (CGE) models are a common device for studying these phenomena. Using the MIT Emissions Prediction and Policy Analysis (EPPA) model as an example, two ways of representing technology in these models are discussed: the sector-level description of production possibilities founded on social accounting matrices and elasticity estimates, and sub-models of specific supply or end-use devices based on engineering-process data. A distinction is made between exogenous and endogenous technical change, and it is shown how, because of model structure and the origin of key parameters, such models naturally include shifts in production process that reflect some degree of endogenous technical change. As a result, the introduction of explicit endogenous relations should be approached with caution, to avoid double counting. © 2006 Elsevier B.V.

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