Macroeconomic modelling under energy constraints: Global low carbon transition scenarios

• Published in: Energy policy 2020-02, Vol.137, p.111090, Article 111090
• Main Authors: Nieto, Jaime, Carpintero, Óscar, Miguel, Luis J., de Blas, Ignacio
• Format: Article
• Language: English
• Subjects: Carbon; Climate; Climate policy; Constraint modelling; Downsizing; Economic development; Economic growth; Economic impact; Economic models; Economic policy; Economics; Energy; Energy policy; Environmental policy; GDP; Green growth; Gross Domestic Product; Industrial policy; Integrated assessment models; Macroeconomics; Paris Agreement; Policies; Post-growth; Redistribution; Sustainability; Sustainability transitions; Sustainable development; System dynamics
• ISSN: 0301-4215; 1873-6777
• DOI: 10.1016/j.enpol.2019.111090

Integrated Assessment Models provide a framework to study sustainability transitions and their economic impacts. Models seldom consider energy constraints, taking supply availability for granted and thus suggesting a mere change in the energy mix from non-renewables to renewables. In order to address these limitations, a macro-economic module within a broader system dynamics model (MEDEAS) has been developed. The model has been run for the whole world from 1995 to 2050 under three different scenarios: Business as Usual (BAU), considering no further transition policies and keeping current trends; Green Growth (GG), undertaking the low-carbon transition according to the Paris Agreement set of policies and with high GDP growth standards; and Post-Growth (PG), testing the sustainability transition under a GDP non-growth/degrowth approach. The results reveal the conflict between economic growth, climate policy and the sustainability of resources. Whereas a BAU approach would not even be an option to achieve climate goals, a GG view would not only face the downsizing of economic output, but neither would it be able to achieve the 2 °C objective. The success of the PG approach in meeting emissions objectives suggests a redirection from economic growth policies to an industrial policy that incorporates efficiency and redistribution. •The Paris Agreement objectives would only be achieved through a Post-Growth strategy.•Green growth policies ineffective to reduce emissions and attain long-run GDP growth.•No policies scenario would find energy limits in an early stage and rise emissions.•Adding energy limits to macro-economic models shows limits to growth.•Indirect effects (inter-industry carriers) have a significant contribution in total energy demand.