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Report

Teaser, summary, work performed and final results

Periodic Reporting for period 1 - GEMCLIME (Global Excellence in Modelling of Climate and Energy)

Teaser

Summary

The project Global Excellence in Modelling of Climate and Energy (GEMCLIME) focuses on significant aspects of energy economics and climate change. The project tackles global and complex scientific and policy problem. It follows an integrated approach to modelling the effects of climate and energy policies. The project is structured in three main areas: the drivers of climate change, the impacts of the climate and energy policies, and the responses to climate and energy challenges.

(Area A) What are the economic drivers of climate change and energy transition? The first part of the project deals with the behaviour and attitude of consumers in energy markets. One goal is to analyse household transportation patterns, the ownership of passenger vehicles, and the potential for electro-mobility. What are the preferences of users of transportation means about electric cars? Economic models explain how energy users behave under given economic and policy conditions.

The second part focuses on the analysis of non-competitive markets. The objectives include analysing the potential for the use of bioenergy, the characteristics of the energy-food-environment linkages, and energy security and supply reliability in case of the increased share of renewable energy sources. For example, what would be the effect of increased energy efficiency on the use of energy in households?

(Area B) What are the impacts of the climate and energy policies? The third part concerns the modelling of the effects of mitigation and adaptation policies. The objective is to incorporate the effects of climate change policies into integrated impact assessment models. This objective means to extend and update the economic models used to assess the impacts of greenhouse gas mitigating policies, the regulations of energy markets, the changes in the fuel-mix in energy generation or policies aimed at reducing climate change.

The fourth part analyses the interconnections, benefits and externalities among different markets and phenomena. How are markets in the energy sector interconnected? What are the effects of trends and volatility in one market on the prices and trade in other markets? The project will among other analyse health risks, examine the perception of climate change risks, and quantify external costs attributable to energy generation.

(Area C) What are the responses to climate and energy challenges? The fifth part deals with the political economy of climate change and energy-related policies and investigates their public acceptance. Researchers models international environmental negotiations, consider the interaction of climate change risks with the private sector and improve the modelling of carbon markets. The institutional framework in developing countries is studied to understand public perception and, ultimately, the impact of climate and energy policies.

The sixth part aims to analyse the economics of climate and energy concerning distribution and development. One crucial objective concerns the distributive effects and economic inequality. What are the ethical foundations of economic analysis of climate policies? How do climate change mitigation and economic growth interact in developing countries?

To execute the research work, GEMCLIME is coordinating the secondment of staff members between five beneficiary institutions in the European Union and fifteen partner institutions in the rest of the world. One line of cooperation is being traced between the institutions in the European Union and renowned institutions in Australia, Canada, New Zealand, and the United States. Another line of cooperation is linking European institutions with those of developing countries, namely South Africa, Singapore, and Chile.

To enrich the secondments, the project is supporting advanced training and knowledge exchange activities. PhD students, early stage researchers, and experienced researchers are all embracing this stimulating experience. Among other examples,

Work performed

During its first period of implementation, the project made big leaps in the direction of its specific scientific goals, moving more in-depth in the three areas of research. Firstly, the research work has produced advanced economic mod-els on the drivers of climate change and energy. It added markedly to the understanding of the behaviour of economic agents, from energy saving behaviour to energy choices for households and transportation. At another level of analysis, the research work shed light on non-competitive markets for low-carbon technologies, such as wind, sun, and biofuels, and fossil fuel sources of energy such as coal.

Secondly, the research work has pushed forward the modelling on the impacts of climate change and energy. Original results have been obtained by developing, refining, and testing models on the effects of mitigation and adaptation policies. These policies concern the problems of air pollution, droughts, floods, and water reservoirs. The research work made finely grained contributions to advanced economic modelling that encompass non-market effects, benefits, and externalities of climate change and energy policies.

Thirdly, the research work in the area of responses to climate change and energy challenges has focused mainly on political economy aspects and the distribution and development of cli-mate policies. Importantly, several results revealed stark differences in the average willingness to pay for greenhouse gas emission reductions, while others pointed to the fact that the public cultivates varying images of climate change and energy policies. Finally, the research work add-ed to the growing body of literature on the role of energy and climate policies in developing countries. It went well beyond the well-established observation of the natural resource curse.

Final results

A significant part of the project has the potential to lead to policy-relevant advice and recommendations. These recommendations are be based on sound economic knowledge and modelling that goes beyond the state-of-the-art economic approaches and techniques. They contribute to the public policy impact of energy and climate change research. Indeed, the project plays an active role in climate policy discourse.

The policy implications are relevant not only in the European Union, with respects to the 20-20-20 targets, but also in the rest of the world. Policy makers in countries concerned with climate change have, for most of them, the issues of mitigating the emissions of greenhouse gas, the increased use of renewable sources of energy, and improving energy efficiency in residential and industrial sectors.