Development of a multi regional, multi sector economy-energy model for the assessments of climate change policy

The purpose of this study is to assess climate change policies with a newly developed model which is capable of dealing with the changes in the energy systems and the industrial structure up to the middle of this century. Most of the assessments based on multi-sector economic models have mainly focused on the near future around 2020 while existing energy system models mainly address the long term up to 2100 and beyond. In addition, most of the economic models have mainly discussed country level while global climate policy models have the world disaggregated into 10-15 regions. In the past studies, intensive discussion was not made on globalization, industrial structure changes etc., which are important in the global environmental context. It is necessary to incorporate the industry structure changes for multi-regions to assess the longer term and global issue of carbon emission reduction potentials. The GTAP (Global Trade Analysis Project) model, which has a comprehensive and consistent world economic database, is a quantitative system that has been widely used for the economic analysis on the international trade and impacts across various sectors. In this study, we integrated the static GTAP model and an energy technology assessment model, extending it to a dynamic model to assess the dynamics of the technologies and economy under climate policy. We formulated the model as an optimization model to evaluate the technology and policy options while the original GTAP model is a general equilibrium model without an objective function. The model described in this study has 18 economic sectors and 8 energy sectors, dividing the world into 18 regions. Carbon emission reduction strategies are evaluated for the multi-regions and multi-sectors up to the mid-century with the new model.