The Renewable Power Generation Module (RPGM): An extension to the GWS model family to endogenize technological change in the renewable power generation sector

The BMBF project 'The impact of the German policy mix on technological and structural change in renewable power generation technologies' analyzes the impact of a renewable energy policy mix on technological change, welfare (economic development, employment), trade and structural change using a global macro-economic input-output model. The analysis requires several steps: 1. Identifying the effect of the policy mix on innovation and technological change. 2. Quantifying the effect of technological change on the model parameters and variables. 3. Analyzing the resulting effect on the economy. In this paper a renewable power generation (RPG) module for the INFORUM type econometric input-output models (see Eurostat, 2008) such as GINFORS (Lutz & Wiebe, 2012) or PANTA RHEI (Lehr et al., 2012) is developed. The RPG technologies that we have selected for further analysis are wind (on- and off-shore) and solar PV

Economic impacts of renewable power generation technologies and the role of endogenous technological change

This paper brings together the debate on economic impacts of renewable energy (RE) deployment and the discussion on modelling endogenous technological change on the global markets for the different renewable power generation technologies. Economic impacts of RE deployment are still mostly discussed on national level, where different effects have been identified. Recent research for Germany shows positive effects on the macro level and different distributional impacts. High investment in solar photovoltaics (PV) from 2010 to 2012 and induced increases in the RE surcharge are the main drivers. At the same time, cost reductions for wind and solar PV take place on global markets, with global learning curves explaining the cost reductions very well. This calls for better including the international dimension into the modelling. The complex feedback loops between global cost curves and national policies, which react to global learning with some time lags, are not yet integrated into quite complex economic models. These models have to capture different RE technologies, different industries, either delivering the RE technologies or strongly depending on electricity prices, which are influenced by national support policies and macroeconomic development. As a first step to better understand the role of international markets, assumptions on RE exports based on global scenarios can be used. Results show the importance of global markets at least for the German RE industries. If the international dimension is taken into account, mainly positive economic impacts of further RE deployment can be observed

Review of macroeconomic approaches to modelling Wellbeing, Inclusion, and Sustainability

In response to the urgent global challenges of climate change and rising inequality, the need to re-evaluate our traditional economic models and adopt new approaches focused on sustainability, wellbeing, and inclusion has become evident. The current economic paradigms, based on equilibrium thinking and GDP-centric measurements, have proven inadequate in addressing the intricate interplay between economic, social, and environmental dimensions. As we embark on a transformative journey towards a sustainable and equitable future, it is crucial to adopt diverse modelling approaches to provide policymakers and stakeholders with informed decision-making tools. This report delves into the analysis of five different macroeconomic model types (general equilibrium models, macro-econometric & input-output models, stockflow-consistent models, integrated assessment models, and system dynamics models), evaluating their respective strengths and weaknesses to propose an integrated framework that encompasses the multifaceted nature of our world. A key recommendation is to improve existing models by enhancing their dynamics and feedback loops between dimensions and systems, thus better reflecting the interactions and effects of different social and economic policies. Striking a balance between complexity and transparency is essential, ensuring that models remain flexible and capable of linking with models with greater detail but narrower focus. The report emphasizes the incorporation of WISE accounts (detailed data on Wellbeing, Inclusion, Sustainability, and Economy that will be collected and harmonized during the project) into macroeconomic models as an opportunity to overcome the challenge of data availability, which poses a significant obstacle in modelling endeavours. Robust and reliable data sources are crucial to the success of any model and require continual improvement in data collection processes. To broaden our understanding of the dynamics of WISE dimensions and the potential impacts of policies, integrating alternative perspectives, such as heterodox economics, can offer valuable insights. Co-creating quantitative analysis with stakeholders enhances ownership and uptake of the models and may help with bridging the gap between research and policy implementation. Furthermore, an integrated modelling framework that accounts for the non-linear interactions between human and earth systems is necessary to properly assess policies tackling 21st century challenges in the context of WISE dimensions. This integrated model should draw upon the data of WISE accounts and synergize elements of Input-Output models, System-Dynamics, and Stock-Flow consistent models to provide a structured tool for policymakers and researchers in shaping a sustainable and inclusive future

Input-Output Modelling in the MENA Region - A case study for Morocco

Science-based policy analysis becomes increasingly important in the globalised world. Complex economic and social structures need to be thoroughly analysed and direct and indirect effects of policy measures should be identified and, if possible, quantified. Economic policy modelling has a long tradition (Almon, 1991) and economic models have over the past decades become more detailed regarding the economic structure and more extensive regarding the non-economic aspects represented in these models. There exist detailed structural economic models for most OECD countries. For newly emerging economies and developing countries only few such models exist. A global database and model environment is provided by the GTAP project, which is frequently used to develop computable general equilibrium (CGE) models. These models use a unique database, which often is not compatible to datasets of national statistic offices. Still, there are countries for which no such structural economic models exist. The macro-economic PRESIMO model for Morocco for example does not include the industry structure of the Moroccan economy. However, analyses at the industry level are important when analysing the development of for example labour markets or energy demand. The economic opportunities from international projects such as DESERTEC (Concentrating Solar Power in the Saharan Region) could be evaluated identifying sectors, which benefit the most. Using the example of Morocco this paper outlines the prerequisites for developing structural economic models and shows application possibilities of these models for simulating the effects of policy measures

TINFORGE: Trade for the INterindustry FORecasting GErmany Model. Version 1.0

INFORGE (Interindustry Forecasting Germany) ist ein seit Anfang der 90er Jahre fortlaufend aktualisiertes und weiterentwickeltes makroökonometrisches Modell, das basierend auf den amtlichen Volkswirtschaftlichen Gesamtrechnungen (VGR) des Statistischen Bundesamtes (StBA) die wirtschaftliche Entwicklung Deutschlands abbildet. Das Modell ist vollständig dokumentiert (z.B. Meyer et al. 1999, Distelkamp et al. 2003, Ahlert et al. 2009) und wird in vielen Projekten verschiedener Auftraggeber (z.B. Deutscher Sparkassen- und Giroverband, Bundesministerium für Wirtschaft und Energie, Bundesagentur für Arbeit) eingesetzt. INFORGE bildet die komplexen ökonomischen Strukturen zwischen den Branchen und Marktteilnehmern ab und erlaubt somit eine detaillierte Beschreibung der Entwicklung des Wirtschaftswachstums nach Branchen und der Beschäftigung in Deutschland. Für nationale Modelle ist die Exportnachfrage für gewöhnlich eine exogen vorgegebene Größe. Da der Außenbeitrag für Deutschland – im Jahr 2012 lag er bei fast 160 Mrd. € – signifikant an Bedeutung gewonnen hat, sind damit auch die Anforderungen an INFORGE gewachsen, eine möglichst detaillierte Abbildung des Außenhandels zu integrieren. Entscheidend ist dabei die Dynamik des Welthandels insgesamt, aber auch nach Handelspartnern möglichst genau zu erfassen sowie den Weltmarktanteil Deutschlands an dieser Entwicklung abzubilden

Green change: renewable energies, policy mix and innovation

A far-reaching transformation to green, CO2–free solutions is needed to achieve the ambitious climate policy target of limiting the global temperature rise to not more than 2°C. With this in mind, the GRETCHEN project explored the impacts of the policy mix on innovation in renewable power generation technologies in Germany at three levels: the micro level, focusing on the perspective of individual companies, the meso level, examining industry structures and the innovation system, and the macro level, modelling macroeconomic effects and CO2 emissions. The impact of the policy mix was analysed at these three levels for the following aspects: political targets to expand power generation from renewable energy sources, technology push, demand pull and systemic instruments as well as their interaction within the instrument mix, and the consistency and credibility of the policy mix and the coherence of political processes. The policy mix needed for a green transformation of the energy system can be considered holistically and valuated with regard to its innovation impact based on the policy mix concept developed in the GRETCHEN project. The corresponding findings are synthesized in this report on the results of the GRETCHEN project concerning the influence of the policy mix on technological and structural change in renewable power generation technologies in Germany

Policies and Consumption-Based Carbon Emissions from a Top-Down and a Bottom-Up Perspective

Abstract Two major approaches for calculating consumption-based carbon emissions can be distinguished: top-down approaches, in the form of multi-regional input-output (MRIO) models, and bottom-up approaches, in the form of life cycle assessment (LCA). Both approaches have pros and cons and are very data-intensive. Several MRIO databases have been developed and published over the past years. These databases, which have been refined and validated, will be used for policy analysis. As LCA is usually only applied to very specific products and product groups, analysis is limited and many products have not yet been looked at. This paper makes use of both a top-down and bottomup approach to calculate the impacts of different policy measures on the development of consumption-based carbon emissions in the EU28 and on emissions elsewhere in the world. The policy examples used are the EU's CO2 in Cars Regulations and the South African renewable energy initiative. The results from the top-down approach are then compared with those from the bottomup approach. Both bottom-up and top-down approaches use the same underlying assumptions regarding the impacts, but due to the very different nature of the methodologies, differences in the results are observed, though sign and scope of the results are the same for the two cases. Part of the deviations can be explained by differences in methodology and scenario design due to these differences. It can be concluded that bottom-up and top-down approaches can and need to be applied to different policies and are generally complementary

Future changes in consumption: The income effect on greenhouse gas emissions

The scale and patterns of household consumption are important determinants of environmental impacts. Whilst affluence has been shown to have a strong correlation with environmental impact, they do not necessarily grow at the same rate. Given the apparent contradiction between the sustainable development goals of economic growth and environmental protection, it is important to understand the effect of rising affluence and concurrent changing consumption patterns on future environmental impacts. Here we develop an econometric demand model based on the data available from a global multiregional input-output dataset. We model future household consumption following scenarios of population and GDP growth for 49 individual regions. The greenhouse gas (GHG) emissions resulting from the future household demand is then explored both with and without consideration of the change in expenditure over time on different consumption categories. Compared to a baseline scenario where final demand grows in line with the 2011 average consumption pattern up until 2030, we find that changing consumer preferences with increasing affluence has a small negative effect on global cumulative GHG emissions. The differences are more profound on both a regional and a product level. For the demand model scenario, we find the largest decrease in GHG emissions for the BRICS and other developing countries, while emissions in North America and the EU remain unchanged. Decreased spending and resulting emissions on food are cancelled out by increased spending and emissions on transportation. Despite relatively small global differences between the scenarios, the regional and sectoral wedges indicate that there is a large untapped potential in environmental policies and lifestyle changes that can complement the technological transition towards a low-emitting society