Actors behaving badly: Exploring the modelling of non-optimal behaviour in energy transitions

Abstract

There are real political and social barriers to climate mitigation that arise from multi-actor dynamics and micro-economic decisions. Exploratory analysis that captures key uncertainties in the energy system, including behaviour, is crucial for policy design aimed at achieving ambitious greenhouse gas (GHG) mitigation targets. This paper explores the case for developing policy assessments that include non-optimal behaviour in energy systems modelling. A stochastic system dynamic model of the energy system that features multiple actors with differentiated behaviours is used to investigate energy transition pathways that deviate from strict economic rationality. The results illustrate the risks of basing GHG reduction strategies on analysis that overlooks key insights into decision making from fields such as behavioural economics and political science