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GTAP Resource #6894

"A dynamic Path to a Low Carbon Economy"
by Bellora, Cecilia, Lionel Fontagné and Yu Zheng

Achieving the climate goals set by the Paris Agreement requires a transition to low-carbon energy and therefore the structural transformation of our economies. Our reference is the long-term trajectory of the world economy based on the macroeconomic projections of the MaGE 3.1 model
including demographics, education, life-cycle savings, technological catch-up, energy efciency and current account balance of each country by 2050. We incorporate these projections of current account balance, investment and savings rates, labor force, skills, and GDP trajectories as exogenous variables into a dynamic sectoral CGE model of the world economy characterized by imperfect competition, an electricity mix including renewables, and emissions of all greenhouse gases. This reference trajectory of the world economy is then compared to a scenario imposing the updated unconditional Paris Nationally Determined Contributions (NDCs). We consider that the European Union (EU) has adjusted its cap-and-trade market by introducing a border carbon adjustment, while other countries committed to reducing their emissions also stick to their unconditional NDCs. We quantify the level explicit or implicit taxation of carbon needed to meet these targets, the shift in demand and investment to lower-emitting sectors, and the extent and direction of leakage.

Resource Details (Export Citation) GTAP Keywords
Category: 2023 Conference Paper
Status: Not published
By/In: Presented during the 26th Annual Conference on Global Economic Analysis (Bordeaux, France)
Date: 2023
Version: #0
Created: Fontagné, L. (4/13/2023)
Updated: Fontagné, L. (6/8/2023)
Visits: 376
- Advances in quantitative methods
- Baseline development
- Dynamic modeling
- Climate change policy

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