IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v168y2022ics0301421522003391.html
   My bibliography  Save this article

Is economic crisis an opportunity for realizing the low-carbon transition? A simulation study on the interaction between economic cycle and energy regulation policy

Author

Listed:
  • Zhang, Qi
  • Wu, Xifeng
  • Chen, Yu

Abstract

The COVID-19 and the resulting financial crisis have led researchers to focus on the impact of the exogenous shock on the economy and the effectiveness of energy policy for a low-carbon transition. However, measuring this impact sophistically is notoriously fraught with difficulties. In this research, we build a combined agent-based economy–energy model to capture the change in the effectiveness of energy policy in response to an economic crisis. Simulation results show that the government can achieve its low-carbon transition development target using the regulation in the energy market, such as the emissions trading scheme policy. However, this regulation in the energy market will negatively affect the economy, and this adverse effect becomes more severe with either higher energy consumption or a lower energy capacity. Nevertheless, introducing the policy with appropriate timing, typically in the recovery phase of an economic crisis, can effectively reduce the negative impact of government regulation. Finally, some policy implications are proposed for different situations of countries and to reduce the negative effects of energy regulation policy.

Suggested Citation

  • Zhang, Qi & Wu, Xifeng & Chen, Yu, 2022. "Is economic crisis an opportunity for realizing the low-carbon transition? A simulation study on the interaction between economic cycle and energy regulation policy," Energy Policy, Elsevier, vol. 168(C).
  • Handle: RePEc:eee:enepol:v:168:y:2022:i:c:s0301421522003391
    DOI: 10.1016/j.enpol.2022.113114
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421522003391
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.enpol.2022.113114?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ji, Qiang & Guo, Jian-Feng, 2015. "Oil price volatility and oil-related events: An Internet concern study perspective," Applied Energy, Elsevier, vol. 137(C), pages 256-264.
    2. Balint, T. & Lamperti, F. & Mandel, A. & Napoletano, M. & Roventini, A. & Sapio, A., 2017. "Complexity and the Economics of Climate Change: A Survey and a Look Forward," Ecological Economics, Elsevier, vol. 138(C), pages 252-265.
    3. Marshall Burke & Solomon M. Hsiang & Edward Miguel, 2015. "Global non-linear effect of temperature on economic production," Nature, Nature, vol. 527(7577), pages 235-239, November.
    4. Wenzhi Zheng & Yuting Lou & Yu Chen, 2019. "On the Unsustainable Macroeconomy with Increasing Inequality of Firms Induced by Excessive Liquidity," Sustainability, MDPI, vol. 11(11), pages 1-22, May.
    5. Joshua Graff Zivin & Matthew Neidell, 2014. "Temperature and the Allocation of Time: Implications for Climate Change," Journal of Labor Economics, University of Chicago Press, vol. 32(1), pages 1-26.
    6. Frank W. Geels, 2013. "The Impact of the Financial and Economic Crisis on Sustainability Transitions: Financial Investment, Governance and Public Discourse. WWWforEurope Working Paper No. 39," WIFO Studies, WIFO, number 47014.
    7. Matthias Mueller & Kristina Bogner & Tobias Buchmann & Muhamed Kudic, 2017. "The effect of structural disparities on knowledge diffusion in networks: an agent-based simulation model," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 12(3), pages 613-634, October.
    8. Robert S. Pindyck, 2013. "Climate Change Policy: What Do the Models Tell Us?," Journal of Economic Literature, American Economic Association, vol. 51(3), pages 860-872, September.
    9. Rengs, Bernhard & Scholz-Wäckerle, Manuel & van den Bergh, Jeroen, 2020. "Evolutionary macroeconomic assessment of employment and innovation impacts of climate policy packages," Journal of Economic Behavior & Organization, Elsevier, vol. 169(C), pages 332-368.
    10. James J. Heckman, 2001. "Micro Data, Heterogeneity, and the Evaluation of Public Policy: Nobel Lecture," Journal of Political Economy, University of Chicago Press, vol. 109(4), pages 673-748, August.
    11. Tang, Ling & Shi, Jiarui & Bao, Qin, 2016. "Designing an emissions trading scheme for China with a dynamic computable general equilibrium model," Energy Policy, Elsevier, vol. 97(C), pages 507-520.
    12. Gualdi, Stanislao & Tarzia, Marco & Zamponi, Francesco & Bouchaud, Jean-Philippe, 2015. "Tipping points in macroeconomic agent-based models," Journal of Economic Dynamics and Control, Elsevier, vol. 50(C), pages 29-61.
    13. Bernardo, Giovanni & D'Alessandro, Simone, 2014. "Transition to sustainability? Feasible scenarios towards a low-carbon economy," MPRA Paper 53746, University Library of Munich, Germany.
    14. Zhang, Yue-Jun & Wang, Ao-Dong & Tan, Weiping, 2015. "The impact of China's carbon allowance allocation rules on the product prices and emission reduction behaviors of ETS-covered enterprises," Energy Policy, Elsevier, vol. 86(C), pages 176-185.
    15. repec:hal:spmain:info:hdl:2441/1nlv566svi86iqtetenms15tc4 is not listed on IDEAS
    16. Wu, Xifeng & Xu, Yuechao & Lou, Yuting & Chen, Yu, 2018. "Low carbon transition in a distributed energy system regulated by localized energy markets," Energy Policy, Elsevier, vol. 122(C), pages 474-485.
    17. Jean-Charles Hourcade & Priyadarshi Shukla, 2013. "Triggering the low-carbon transition in the aftermath of the global financial crisis," Climate Policy, Taylor & Francis Journals, vol. 13(sup01), pages 22-35, March.
    18. Michael Radzicki & Linwood Tauheed, 2009. "In Defense of System Dynamics: A Response to Professor Hayden," Journal of Economic Issues, Taylor & Francis Journals, vol. 43(4), pages 1043-1061.
    19. Palmer, J. & Sorda, G. & Madlener, R., 2015. "Modeling the diffusion of residential photovoltaic systems in Italy: An agent-based simulation," Technological Forecasting and Social Change, Elsevier, vol. 99(C), pages 106-131.
    20. Francesco Lamperti & Antoine Mandel & Mauro Napoletano & Alessandro Sapio & Andrea Roventini & Tomas Balint & Igor Khorenzhenko, 2019. "Towards agent-based integrated assessment models: examples, challenges, and future developments," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01905993, HAL.
    21. J. Doyne Farmer & Duncan Foley, 2009. "The economy needs agent-based modelling," Nature, Nature, vol. 460(7256), pages 685-686, August.
    22. Armon Rezai & Sigrid Stagl, 2016. "Ecological Macreconomics: Introduction and Review," Ecological Economics Papers ieep9, Institute of Ecological Economics.
    23. John Reilly & Sergey Paltsev & Ken Strzepek & Noelle Selin & Yongxia Cai & Kyung-Min Nam & Erwan Monier & Stephanie Dutkiewicz & Jeffery Scott & Mort Webster & Andrei Sokolov, 2013. "Valuing climate impacts in integrated assessment models: the MIT IGSM," Climatic Change, Springer, vol. 117(3), pages 561-573, April.
    24. Alan P. Kirman, 1992. "Whom or What Does the Representative Individual Represent?," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 117-136, Spring.
    25. J. Farmer & Cameron Hepburn & Penny Mealy & Alexander Teytelboym, 2015. "A Third Wave in the Economics of Climate Change," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(2), pages 329-357, October.
    26. Bo Xianyu, 2010. "Social Preference, Incomplete Information, and the Evolution of Ultimatum Game in the Small World Networks: An Agent-Based Approach," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 13(2), pages 1-7.
    27. Magnus Moglia & Aneta Podkalicka & James McGregor, 2018. "An Agent-Based Model of Residential Energy Efficiency Adoption," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 21(3), pages 1-3.
    28. Hardt, Lukas & O'Neill, Daniel W., 2017. "Ecological Macroeconomic Models: Assessing Current Developments," Ecological Economics, Elsevier, vol. 134(C), pages 198-211.
    29. Chen, Huadong & Wang, Can & Cai, Wenjia & Wang, Jianhui, 2018. "Simulating the impact of investment preference on low-carbon transition in power sector," Applied Energy, Elsevier, vol. 217(C), pages 440-455.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ge, Yihan & Yuan, Rong, 2024. "Exploring decoupling relationship between ICT investments and energy consumption in China's provinces: Factors and policy implications," Energy, Elsevier, vol. 286(C).
    2. Zhao, Congyu & Dong, Kangyin & Wang, Kun & Dong, Xiucheng, 2023. "Can low-carbon energy technology lead to energy resource carrying capacity improvement? The case of China," Energy Economics, Elsevier, vol. 127(PA).
    3. Yang, Senmiao & Wang, Jianda & Dong, Kangyin & Dong, Xiucheng & Wang, Kun & Fu, Xiaowen, 2024. "Is artificial intelligence technology innovation a recipe for low-carbon energy transition? A global perspective," Energy, Elsevier, vol. 300(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lamperti, F. & Dosi, G. & Napoletano, M. & Roventini, A. & Sapio, A., 2018. "Faraway, So Close: Coupled Climate and Economic Dynamics in an Agent-based Integrated Assessment Model," Ecological Economics, Elsevier, vol. 150(C), pages 315-339.
    2. Naqvi, Asjad & Stockhammer, Engelbert, 2018. "Directed Technological Change in a Post-Keynesian Ecological Macromodel," Ecological Economics, Elsevier, vol. 154(C), pages 168-188.
    3. Juana Castro & Stefan Drews & Filippos Exadaktylos & Joël Foramitti & Franziska Klein & Théo Konc & Ivan Savin & Jeroen van den Bergh, 2020. "A review of agent‐based modeling of climate‐energy policy," Wiley Interdisciplinary Reviews: Climate Change, John Wiley & Sons, vol. 11(4), July.
    4. Ciarli, Tommaso & Savona, Maria, 2019. "Modelling the Evolution of Economic Structure and Climate Change: A Review," Ecological Economics, Elsevier, vol. 158(C), pages 51-64.
    5. Francesco Lamperti & Andrea Roventini, 2022. "Beyond climate economics orthodoxy: impacts and policies in the agent-based integrated-assessment DSK model," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 19(3), pages 357-380, December.
    6. Lamperti, Francesco & Bosetti, Valentina & Roventini, Andrea & Tavoni, Massimo & Treibich, Tania, 2021. "Three green financial policies to address climate risks," Journal of Financial Stability, Elsevier, vol. 54(C).
    7. Rising, James A. & Taylor, Charlotte & Ives, Matthew C. & Ward, Robert E.t., 2022. "Challenges and innovations in the economic evaluation of the risks of climate change," LSE Research Online Documents on Economics 114941, London School of Economics and Political Science, LSE Library.
    8. Rising, James A. & Taylor, Charlotte & Ives, Matthew C. & Ward, Robert E.T., 2022. "Challenges and innovations in the economic evaluation of the risks of climate change," Ecological Economics, Elsevier, vol. 197(C).
    9. Balint, T. & Lamperti, F. & Mandel, A. & Napoletano, M. & Roventini, A. & Sapio, A., 2017. "Complexity and the Economics of Climate Change: A Survey and a Look Forward," Ecological Economics, Elsevier, vol. 138(C), pages 252-265.
    10. Monasterolo, Irene & Raberto, Marco, 2018. "The EIRIN Flow-of-funds Behavioural Model of Green Fiscal Policies and Green Sovereign Bonds," Ecological Economics, Elsevier, vol. 144(C), pages 228-243.
    11. Lamperti, F. & Dosi, G. & Napoletano, M. & Roventini, A. & Sapio, A., 2020. "Climate change and green transitions in an agent-based integrated assessment model," Technological Forecasting and Social Change, Elsevier, vol. 153(C).
    12. Auke Hoekstra & Maarten Steinbuch & Geert Verbong, 2017. "Creating Agent-Based Energy Transition Management Models That Can Uncover Profitable Pathways to Climate Change Mitigation," Complexity, Hindawi, vol. 2017, pages 1-23, December.
    13. Kalkuhl, Matthias & Wenz, Leonie, 2020. "The impact of climate conditions on economic production. Evidence from a global panel of regions," Journal of Environmental Economics and Management, Elsevier, vol. 103(C).
    14. Nieto, Jaime & Carpintero, Óscar & Miguel, Luis J. & de Blas, Ignacio, 2020. "Macroeconomic modelling under energy constraints: Global low carbon transition scenarios," Energy Policy, Elsevier, vol. 137(C).
    15. J. Farmer & Cameron Hepburn & Penny Mealy & Alexander Teytelboym, 2015. "A Third Wave in the Economics of Climate Change," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(2), pages 329-357, October.
    16. Bazzana, Davide & Rizzati, Massimiliano & Ciola, Emanuele & Turco, Enrico & Vergalli, Sergio, 2024. "Warming the MATRIX: Uncertainty and heterogeneity in climate change impacts and policy targets in the Euro Area," Energy Economics, Elsevier, vol. 134(C).
    17. Hafner, Sarah & Anger-Kraavi, Annela & Monasterolo, Irene & Jones, Aled, 2020. "Emergence of New Economics Energy Transition Models: A Review," Ecological Economics, Elsevier, vol. 177(C).
    18. Hjort, Ingrid, 2016. "Potential Climate Risks in Financial Markets: A Literature Overview," Memorandum 01/2016, Oslo University, Department of Economics.
    19. Tommaso Ciarli & Karolina Safarzynska, 2020. "Sustainability and Industrial Challenge: The Hindering Role of Complexity," SPRU Working Paper Series 2020-18, SPRU - Science Policy Research Unit, University of Sussex Business School.
    20. Stolbova, Veronika & Monasterolo, Irene & Battiston, Stefano, 2018. "A Financial Macro-Network Approach to Climate Policy Evaluation," Ecological Economics, Elsevier, vol. 149(C), pages 239-253.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:168:y:2022:i:c:s0301421522003391. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.