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Bridging the gap using energy services: Demonstrating a novel framework for soft linking top-down and bottom-up models

Andersen, Kristoffer S., Termansen, Lars B., Gargiulo, Maurizio, Ó Gallachóirc, Brian P.
Energy 2019 v.169 pp. 277-293
carbon, carbon sequestration, climate, coal, concrete, energy, issues and policy, macroeconomics, models
Giving policy advice related to climate mitigation requires insights that take both sectoral and technology effects (and their interactions) into account. This paper develops a novel soft-linking method for bridging the gap between sectoral top-down and technology rich bottom-up models. A unique feature of the approach is the explicit modelling of energy service demand in the top-down model, which creates a direct correspondence to the energy service production in the bottom-up model. This correspondence allows us, unlike previous work, to capture the macroeconomic impact of energy system investment flows. The paper illustrates the full-scale application of the method in the Danish IntERACT model, considering the unilateral introduction of coal carbon capture and storage in the Danish concrete sector. The policy leads to a reduction in the Danish concrete production, and in turn, a carbon leakage effect of 88%. Results also underscores the importance of accounting for the macroeconomic impact of energy system investment flows, as this is the source of approximately half of the policy-induced reduction in macroeconomic activity.