Climate - ENV-Linkages
A recent paper focused on six key policies to decarbonise the economy, which were chosen because (i) they reach all key sources of CO2 emissions,10 and (ii) they contain some of the most widely used instruments available to governments.
The instruments considered are:
- Carbon pricing
- Fossil fuel support removal (FFSR)
- Regulations in the power sector to enforce a switch away from fossil fuels
- Regulations to stimulate investments to decarbonise building and transport emissions
- Policies to stimulate firms’ energy efficiency improvement
- Subsidies to reduce and decarbonise energy consumption by households.
Instruments other than carbon pricing and fossil fuel support removal are calibrated using preliminary scenarios, because calibrating all the required endogenous variables at the same time using multiple MCP is too complex in a large scale model like ENV-Linkages for the solver to find easily a solution.
Therefore, a total of 16 scenarios are implemented to calibrate the full set of instruments:
1. For each of the four activities group (Power, Transport services, Other services, Households), a scenario calibrating energy efficiency or energy mix.
2. For each of the four activities group, and for each instrument type (regulation or subsidy), a scenario calibrating input efficiency or subsidies rate, on top of the same assumptions as step 1.
3. Four scenarios gathering the information from steps 1 and 2: regulation for households and regulation for firms, regulation for households and subsidies for firms, subsidies for households and regulation for firms, and finally regulation for households and regulation for firms.
The calibration steps 1 and 2 use information for the World Energy Outlook. In the end, only the 3rd step is used the results for the combination of policy instruments other than carbon pricing and fossil fuel support removal.
Note: The documentation of ENV-Linkages is 'in preparation' and is not yet 'published'!| Corresponding documentation | |
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| Previous versions | |
| No previous version available | |
| Model information | |
| Model link | |
| Institution | Organisation for Economic Co-operation and Development (OECD), France, https://www.oecd.org/. |
| Solution concept | General equilibrium (closed economy) |
| Solution method | Optimization |
| Anticipation | The ENV-Linkages model is a recursive dynamic neo-classical general equilibrium model, meaning that decision-makers do not know the future when making a decision today. After it solves each period, the model then uses the resulting state of the world, including the consequences of decisions made in that period - such as resource depletion, capital stock retirements and installations, and changes to the landscape - and then moves to the next time step and performs the same exercise. |