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GTAP Resource #1991

"Probabilistic GHG Emissions Forecasts under Energy Prices Uncertainty"
by Thalmann, Philippe, Marc Vielle and Laurent Viguier

In this paper we use a multi-country and multi-sector computable general equilibrium (CGE) model to assess the effects of future energy prices uncertainty on global and regional greenhouse gases (GHG) emissions projections by 2015. In the last Annual Energy Outlook of the U.S. Department of Energy (IEA-DOE, 2005), world oil prices are set in an environment where the members of OPEC are assumed to act as the dominant producers, with lower production costs than other supply regions or countries. As explained in the report, the behavior and ability of OPEC member countries to set the price of oil will be influenced by many factors about which there is considerable uncertainty. These factors include the risk of oil supply disruptions, and the forces that will drive world oil demand, such as the rate of economic growth in the developed and developing world and the degree to which oil demand is linked to economic growth. This paper proposes to include this uncertainty in the CGE model by estimating and introducing probability distribution functions for oil prices, and for the indexation of coal and gas prices to oil prices. These PDFs are exogenously set from bottom-up studies and expert thinking. Using a Monte Carlo approach, we obtain probability distribution functions for energy consumption and GHG emissions in the baseline-as-usual scenario by 2015. The main result is that to show that GHG emissions are not only sensitive to oil price forecasts but also to gas and coal prices indexation to oil prices. It appears that the effect of high oil prices on GHG emissions levels depends largely on coal and gas indexation parameters.

Resource Details (Export Citation) GTAP Keywords
Category: 2006 Conference Paper
Status: Published
By/In: Presented at the 9th Annual Conference on Global Economic Analysis, Addis Ababa, Ethiopia
Date: 2006
Version: 1
Created: Vielle, M. (4/27/2006)
Updated: Vielle, M. (4/27/2006)
Visits: 3,006
No keywords have been specified.

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