Policy - GCAM
Note: The documentation of GCAM is 'under review' and is not yet 'published'!| Corresponding documentation | |
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| Previous versions | |
| No previous version available | |
| Model information | |
| Model link | |
| Institution | Pacific Northwest National Laboratory, Joint Global Change Research Institute (PNNL, JGCRI), USA, https://www.pnnl.gov/projects/jgcri. |
| Solution concept | General equilibrium (closed economy)GCAM solves all energy, water, and land markets simultaneously |
| Solution method | Recursive dynamic solution method |
| Anticipation | GCAM is a dynamic recursive 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. For long-lived investments, decision-makers may account for future profit streams, but those estimates would be based on current prices. For some parts of the model, economic agents use prior experience to form expectations based on multi-period experiences. |
One of GCAM’s uses is to explore the implications of different future policies. There are a number of types of policies that can be easily modeled in GCAM, including policies related to emissions, land-use, and energy production. The most common of these are discussed in the documentation's policy section.
Emissions-Related Policies
There are three main policy approaches that can be applied in GCAM to reduce emissions of CO2 or other greenhouse gases: carbon or GHG prices, emissions constraints, or climate constraints. In all cases, GCAM implements the policy approach by placing a price on emissions. This price then filters down through all the systems in GCAM and alters production and demand. For example, a price on carbon would put a cost on emitting fossil fuels. This cost would then influence the cost of producing electricity from fossil-fired power plants that emit CO2, which would then influence their relative cost compared to other electricity generating technologies and increase the price of electricity. The increased price of electricity would then make its way to consumers that use electricity, decreasing its competitiveness relative to other fuels and leading to a decrease in electricity demand. The three policy approaches, carbon or GHG prices, emissions constraints, and climate constraints, are discussed in detail here.
Energy Production Policies
There are times in which users would like to explore the implications of a constraint on production or a minimum production requirement. This capability allows GCAM users to model policies such as renewable portfolio standards and biofuels standards. Across sectors, these constraints must be applied as quantity constraints, but they can be applied as share constraints within individual sectors (e.g., fraction of electricity that comes from solar power). In implementing these policies, this can either be a lower bound or upper bound. The model will solve for the tax (upper bound) or subsidy (lower bound) required to reach the given constraint.
Land-Use Policies
There are a number of ways that policies can be applied directly to influence the land sector in GCAM. These include the following.
- Protected lands
- Valuing carbon in land
- Bioenergy constraints
- Land constraints
See the Land-Use Policies section in the documentation for more details.
Calculating Emissions Policy Costs
The cost of GHG emissions mitigation is a concept that is not uniquely defined. A wide range of measures are used in the literature. These include, the price of carbon (or as appropriate given the policy) needed to achieve a desired emission mitigation goal, reduction in Gross Domestic Product (GDP), consumption loss, deadweight loss, and equivalent variation. Beyond that the concept of net cost, which includes the benefits of emissions mitigation as well as the resource cost of emissions reduction and the social cost of carbon are also encountered. GCAM makes no attempt to calculate the benefits. See Calculating Emissions Policy Costs for details.