Economics and Finance
Energy and Environmental Economics
The E3 (E3 is short for Economy, Energy, and Environment) Modelling Unit of the Applied Research Group of the Department of Economic and Finance is working on the following main topics:
A. E3 Modelling
The main product so far is the MERCI model - the Model for Evaluating Regional Climate change Impacts of GHG reduction policies – developed at IHS Vienna. MERCI is a hybrid dynamic top-down bottom-up computable general equilibrium (CGE) model with focus on environmental and energy policy assessment. The hybrid structure allows for a detailed depiction of a sub-sector of the economy (currently implemented: electricity sector) in technological disaggregation in conjunction with a multi-sectoral economy in general equilibrium. This hybrid structure allows for a comprehensive cost-benefit analysis of energy and environmental policies in a general equilibrium framework.
Typical questions that can cast as scenarios in MERCI are for example: How much does a large-scale shift to renewable energy cost for Austria? What are the economic costs of a widespread introduction of electromobility? What tax instruments are best suited for financing investments into renewable energy provision? What is the efficiency of public subsidies, and how can these subsidies best be financed?
Extensions of the model currently in progress involve a depiction of mobility behaviour and a module for a more comprehensive assessment of public finances in CGE models.
A further model in use at IHS is LEAP (Long-range Energy Alternatives Planning), which is a comprehensive integrated scenario-based energy-environment modeling tool that can be used to track energy consumption, production, and resource extraction in all sectors of an economy. LEAP is currently maintained by the Stockholm Environment Institute and has over 5.000 users in 169 countries.
Its scenarios account for how energy is consumed, converted and produced in a given energy system under a range of alternative assumptions on population, economic development, technology, price and so on. LEAP is primarily an accounting system, but users can also build econometric and simulation-based models. The user can mix and match these methodologies as required in a given analysis. For example, a user might create top-down projections of energy demand in one sector based on a few macroeconomic indicators (price, GDP), while creating a detailed bottom-up forecast based on an end-use analysis in other sectors. LEAP supports both final and useful energy demand analyses as well as detailed stock-turnover modelling for transportation and other analyses. On the supply side, LEAP supports a range of simulation methods for modelling both capacity expansion and plant dispatch. LEAP includes a built-in Technology and Environmental Database (TED) containing data on the costs, performance and emission factors for over 1.000 energy technologies. LEAP can be used to calculate the emissions profiles and also to create scenarios of non-energy sector emissions and sinks (e.g. from cement production, land-use change, solid waste, etc.).
B. Current Studies and further Research Activities
On-going activity includes a project co-funded by the European Commission in the framework of ERA-NET Transport electromobility+ call with the acronym DEFINE – Development of an Evaluation Framework for the INtroduction of Electromobility - with several partners from Austria, Germany and Poland under the coordination of IHS.
In the DEFINE project, MERCI will be extended to feature a framework in which a widespread introduction of electromobility can be analysed jointly with the provision of electricity from renewable energy sources and mobility behaviour of economic agents.
Another noteworthy current international project is “Knowledge transfer and research needs for preparing mitigation/ adaptation (M/A) policy portfolios (PROMITHEAS-4)”. The objective is to create effective national M/A policy portfolios in cooperation with participants for the 12 beneficiary countries that will (1) reflect social, economic and environmental needs and priorities as well as, (2) incorporate the international climate policy obligations due to the post-2012 climate change agreement. As Lead Beneficiary Participant, IHS selected the proper model, develops the methodological design (which includes scenario assumptions, model variables, implementation of national circumstances and targets, sectoral requirements, technological issues, analysis of outcomes) and provides extensive expertise on the LEAP-model.
C. Recent Studies and Projects
Miess, M., Schmelzer, S. and Schnabl, A. (2011). Evaluierung der regionalen Beschäftigungs und Wachstumsoffensive 2005/2006 (Evaluation of the Regional Employment and Growth Offensive 2005/2006). Studie im Auftrag des Bundesministeriums für Wirtschaft, Familie und Jugend (Study commissioned by the Austrian Ministry of Economy, Family and Youth).
Balabanov, T., Friedl, B., Miess, M., and Schmelzer, S. (2010). Mehr und qualitätsvollere Green Jobs (Green Jobs for a Sustainable, Low-carbon Austrian Economy). Studie im Auftrag des Bundesministeriums für Arbeit, Soziales und Konsumentenschutz (Study commissioned by the Austrian Ministry for Labour, Social Affairs and Consumer Protection).
Balabanov, T., Miess, M., and Schmelzer, S. (2008 -2010). Austrian Hybrid Dynamic Model E3. Model Development Project as part of the ModSim Program. FFG Project Number 819311.
Bliem, M., B. Friedl, T. Balabanov, I. Zielinska (2011): Energie [R]evolution 2050. Der Weg zu einer sauberen Energie-Zukunft für Österreich. IHS Vienna, 2011.
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