Capturing Natural Resource Dynamics in Top-Down Energy‑Economic Equilibrium Models
Top-down energy-economic modeling approaches often use deliberately simple techniques to represent heterogeneous resource inputs to production. We show that for some policies, such as feed-in tariffs (FIT) for renewable electricity, detailed representation of renewable resource grades is required to...
| Main Authors: | , , |
|---|---|
| Format: | Technical Report |
| Language: | en_US |
| Published: |
MIT Joint Program on the Science and Policy of Global Change
2016
|
| Online Access: | http://hdl.handle.net/1721.1/102607 |
| _version_ | 1811097334339076096 |
|---|---|
| author | Zhang, D. Karplus, V. Rausch, S. |
| author_facet | Zhang, D. Karplus, V. Rausch, S. |
| author_sort | Zhang, D. |
| collection | MIT |
| description | Top-down energy-economic modeling approaches often use deliberately simple techniques to represent heterogeneous resource inputs to production. We show that for some policies, such as feed-in tariffs (FIT) for renewable electricity, detailed representation of renewable resource grades is required to describe the technology more precisely and identify cost-effective policy designs. We extend a hybrid approach for modeling heterogeneity in the quality of natural resource inputs required for renewable energy production in a stylized computable general equilibrium (CGE) framework. Importantly, this approach resolves nearflat or near-vertical sections of the resource supply curve that translate into key features of the marginal cost of wind resource supply, allowing for more realistic policy simulation. In a second step, we represent the shape of a resource supply curve based on more detailed data. We show that for the case of onshore wind development in China, a differentiated FIT design that can only be modeled with the hybrid approach requires less than half of the subsidy budget needed for a uniform FIT design and proves to be more cost-effective. |
| first_indexed | 2024-09-23T16:57:59Z |
| format | Technical Report |
| id | mit-1721.1/102607 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T16:57:59Z |
| publishDate | 2016 |
| publisher | MIT Joint Program on the Science and Policy of Global Change |
| record_format | dspace |
| spelling | mit-1721.1/1026072019-04-11T00:29:39Z Capturing Natural Resource Dynamics in Top-Down Energy‑Economic Equilibrium Models Zhang, D. Karplus, V. Rausch, S. Top-down energy-economic modeling approaches often use deliberately simple techniques to represent heterogeneous resource inputs to production. We show that for some policies, such as feed-in tariffs (FIT) for renewable electricity, detailed representation of renewable resource grades is required to describe the technology more precisely and identify cost-effective policy designs. We extend a hybrid approach for modeling heterogeneity in the quality of natural resource inputs required for renewable energy production in a stylized computable general equilibrium (CGE) framework. Importantly, this approach resolves nearflat or near-vertical sections of the resource supply curve that translate into key features of the marginal cost of wind resource supply, allowing for more realistic policy simulation. In a second step, we represent the shape of a resource supply curve based on more detailed data. We show that for the case of onshore wind development in China, a differentiated FIT design that can only be modeled with the hybrid approach requires less than half of the subsidy budget needed for a uniform FIT design and proves to be more cost-effective. This work was supported by Eni S.p.A., ICF International, the French Development Agency (AFD), and Shell, founding sponsors of the MIT-Tsinghua China Energy and Climate Project. We are further thankful for support provided by the MIT Joint Program on the Science and Policy of Global Change through a consortium of industrial sponsors and U.S. federal grants. In particular, this work was supported by the DOE Integrated Assessment Grant (DE-FG02-94ER61937). 2016-05-23T15:03:11Z 2016-05-23T15:03:11Z 2015-10 Technical Report Working Paper http://hdl.handle.net/1721.1/102607 Report 284 en_US MIT Joint Program Report Series;284 application/pdf MIT Joint Program on the Science and Policy of Global Change |
| spellingShingle | Zhang, D. Karplus, V. Rausch, S. Capturing Natural Resource Dynamics in Top-Down Energy‑Economic Equilibrium Models |
| title | Capturing Natural Resource Dynamics in Top-Down Energy‑Economic Equilibrium Models |
| title_full | Capturing Natural Resource Dynamics in Top-Down Energy‑Economic Equilibrium Models |
| title_fullStr | Capturing Natural Resource Dynamics in Top-Down Energy‑Economic Equilibrium Models |
| title_full_unstemmed | Capturing Natural Resource Dynamics in Top-Down Energy‑Economic Equilibrium Models |
| title_short | Capturing Natural Resource Dynamics in Top-Down Energy‑Economic Equilibrium Models |
| title_sort | capturing natural resource dynamics in top down energy economic equilibrium models |
| url | http://hdl.handle.net/1721.1/102607 |
| work_keys_str_mv | AT zhangd capturingnaturalresourcedynamicsintopdownenergyeconomicequilibriummodels AT karplusv capturingnaturalresourcedynamicsintopdownenergyeconomicequilibriummodels AT rauschs capturingnaturalresourcedynamicsintopdownenergyeconomicequilibriummodels |