This article provides the theoretical foundations of the production function used in the ThreeME model. By defining the Variable Output Elasticities Cobb-Douglas function, it shows that a large class of production functions can be written as a Cobb-Douglas function with non-constant output elasticity. This approach has a practical application for CGE modeling since it allows for a tractable generalization of the CES function to the case where the elasticity of substitution between each pair of inputs is not necessarily the same.
By providing an essay on the state of the art in applied environmental macroeconomics, this article puts the ThreeME model into perspective with the existing literature. It compares the theoretical and empirical foundations, advantages and drawbacks of the two main classes of models: Integrated assessment models (IAM) and Computable General Equilibrium (CGE) models.
Landa Rivera G., Malliet P., Saussay A. & Reynès F.
Job creation and economic impact of renewable energy in the Netherlands
This article evaluates the economic impact of a shift towards renewable electricity mix in the Netherlands using the ThreeME model. We find that transition to renewable energy may have a positive impact on the Dutch economy, creating almost 50 000 new jobs by 2030 and adding almost 1% of gross domestic product. The study also proposes an approach to decompose direct, indirect and price effects.
Energy transition, a lever for economic development and local employment [in French]
This study evaluates the economic impact of an energy positive scenario in the Occitania region using the ThreeME model. It presents the approach used to rescale the national version of ThreeME at the level of Occitania. It shows that energy transition has positive economic impacts and is an opportunity to create jobs at the local level.
Assessing low carbon and resilient growth in Indonesia: an application of the ThreeME model
This report evaluates the economic impact of investment plan scenarios in power generation capacities in Indonesia using the ThreeME model. The RUPTL scenario, largely based on investments in coal power plants until 2020, shows a clear reorientation toward the development of Renewable Energy Sources (RES) after this date. The second scenario is based on the Deep Decarbonisation Pathways Project (DDPP) and is more ambitious in terms of development of RES. DDPP scenario has a slightly more positive economic effect compared to the RUPTL scenario. These results advocate for considering the deep decarbonisation of the electricity mix.
Dynamic and long term properties of the ThreeME model: simulation of standard shocks [in French]
This paper provides an analysis of the dynamic and long-term properties of the ThreeME model. Several scenarios are simulated (an increase in oil prices, a reduction in payroll taxes for employers, an increase in VAT, an increase in public investments and the introduction of a carbon tax) under several hypotheses: a Wage Setting curve versus a Phillips curve, a standard utility function for the consumer versus a hybrid version including a bottom-up representation of housing and private vehicle stocks. The results are also compared with those of the French Treasury's MESANGE model.
Callonnec G., Landa G., Malliet P., Reynès F. and Saussay A.
Electricity mix 100% renewable, an macroeconomic evaluation [in French]
This study evaluates the economic impact of various energy transition scenarios using the ThreeME model. Several hypotheses regarding the penetration of renewable energy in the electricity production mix and the cost of renewable technologies are investigated. In all cases, it appears that the positive economic effects of energy transition are higher than the negative ones.
Callonnec G., Cals G., Nauleau M., Reynès F., Landa G. and Malliet P.
Towards a low carbon growth in Mexico: is a double dividend possible? A dynamic general equilibrium assessment
This article simulates the environmental and economic impacts of proposed and expected energy policies using the Mexican version of ThreeME. ThreeME estimates the carbon tax required to meet emissions reduction targets within the Mexican “Climate Change Law”. With no compensation, the taxation policy would reduce CO2 emissions by more than 75% by 2050 with respect to the Business as Usual (BAU), but at high economic costs. Under full redistribution of carbon tax revenues, a double dividend arises: the policy appears beneficial both in terms of GDP and CO2 emissions reduction.
Landa G., Reynès F., Islas I., Bellocq F., Grazi F.