Production system and representation of economic sectors - COFFEE-TEA

Note: The documentation of COFFEE-TEA is 'under review' and is not yet 'published'!

Model Documentation - COFFEE-TEA
Model scope and methods - COFFEE-TEA Model concept, solver and details - COFFEE-TEA Temporal dimension - COFFEE-TEA Spatial dimension - COFFEE-TEA Macro-economy - COFFEE-TEA Production system and representation of economic sectors - COFFEE-TEA Capital and labour markets - COFFEE-TEA Monetary instruments - COFFEE-TEA Trade - COFFEE-TEA Technological change - COFFEE-TEA Energy - COFFEE-TEA Energy resource endowments - COFFEE-TEA Fossil energy resources - COFFEE-TEA Uranium and other fissile resources - COFFEE-TEA Bioenergy - COFFEE-TEA Non-biomass renewables - COFFEE-TEA Energy conversion - COFFEE-TEA Electricity - COFFEE-TEA Heat - COFFEE-TEA Gaseous fuels - COFFEE-TEA Liquid fuels - COFFEE-TEA Solid fuels - COFFEE-TEA Grid, pipelines and other infrastructure - COFFEE-TEA Energy end-use - COFFEE-TEA Transport - COFFEE-TEA Residential and commercial sectors - COFFEE-TEA Industrial sector - COFFEE-TEA Other end-use - COFFEE-TEA Energy demand - COFFEE-TEA Technological change in energy - COFFEE-TEA Land-use - COFFEE-TEA Agriculture - COFFEE-TEA Forestry - COFFEE-TEA Land-use change - COFFEE-TEA Bioenergy land-use - COFFEE-TEA Other land-use - COFFEE-TEA Agricultural demand - COFFEE-TEA Technological change in land-use - COFFEE-TEA Emissions - COFFEE-TEA GHGs - COFFEE-TEA Pollutants and non-GHG forcing agents - COFFEE-TEA Carbon dioxide removal (CDR) options - COFFEE-TEA Climate - COFFEE-TEA Modelling of climate indicators - COFFEE-TEA Climate damages, temperature changes - COFFEE-TEA Non-climate sustainability dimension - COFFEE-TEA Air pollution and health - COFFEE-TEA Water - COFFEE-TEA Other materials - COFFEE-TEA Other sustainability dimensions - COFFEE-TEA Appendices - COFFEE-TEA Mathematical model description - COFFEE-TEA Data - COFFEE-TEA References - COFFEE-TEA
Corresponding documentation
AIM-Hub BLUES C3IAM COFFEE-TEA DNE21+ GEM-E3 GRACE IMACLIM IMAGE POLES PROMETHEUS REMIND-MAgPIE TIAM-UCL
Previous versions
Archive of COFFEE-TEA version v1
Model information
Model link
Institution	COPPE/UFRJ (Cenergia), Brazil, http://www.cenergialab.coppe.ufrj.br/.
Solution concept	General equilibrium (closed economy)
Solution method	The COFFEE model is solved through Linear Programming (LP). The TEA model is formulated as a mixed complementary problem (MCP) and is solved through Mathematical Programming System for General Equilibrium -- MPSGE within GAMS using the PATH solver.
Anticipation

The production system in TEA model is based on nested Constant Elasticity of Substitution (CES) functions. Representative consumers maximize welfare subject to budget constraint in each region. Such choices are determined by the parameters of substitution and transformation elasticities in the utility and production functions. The CES functions describe the substitution possibilities between factors of production and intermediate inputs in the productive process, in a least cost approach. The CES production function can be expressed by the following Equation 1:

$Y=A\cdot {\bigg (}\sum _{i=1}^{n}{\beta _{i}X_{i}^{\rho }{\bigg )}^{\frac {1}{\rho }}}$

where Y represents the output, A is a constant for productivity, $\beta$ is the share of input i and X is the factor of production (capital, labor, resources etc.). The elasticity of substitution is a positive constant $s={\frac {1}{(1-\rho )}}$. The CES production function leads to the linear production function as $\rho \rightarrow 1$, to the Cobb - Douglas production function as $\rho \rightarrow 0$, and to the production function with fixed proportions (Leontief) as $\rho \rightarrow \infty$.

Production functions follow a nested technological structure. For instance, the electricity production includes emission factors to account for the CO2 emissions, the fuel used to produce electricity, capital (K), labor (L) and other fixed factors, as shown in <xr id="fig:TEA_1"/>.

<figure id="fig:TEA_1">

TEA Electricity generation technological structure -- fuel and emissions

</figure>.

As a CGE model, all the economic activity is consistently represented in the TEA model. The economic system is represented by 16 sectors in the TEA model.

Agriculture	Energy	Industry	Transport	Services
Agriculture crops and vegetables	Coal	Iron and Steel	Transport nec	Services
Livestock	Crude Oil	Chemical rubber and plastic	Water transport	Dwellings
	Electricity	Manufacture of non-metallic mineral products	Air transport
	Natural Gas	Other manufacture
	Petroleum products

The production systems that are explicitely represented in the COFFEE model, as a partial equilibrium model, are the energy and land-use systems (described in the following sections). The economic sectors are exougenously represented through the demand projections from external sources.