IGES International Workshop on IGES International Workshop on the Clean Development Mechanism the Clean Development Mechanism March 24-25, 2000 NIES, Tsukuba, Japan Basic Structure of IGES GHG Emission Model Basic Structure of IGES GHG Emission Model - Initial GHG Projection of Japan Initial GHG Projection of Japan - - - Tae Yong Jung Tae Yong Jung Institute for Global Environmental Strategies, Japan Institute for Global Environmental Strategies, Japan Choon- Choon -Geol Geol Moon Moon Hanyang University, Korea University, Korea Hanyang
Contents Contents � IGEM Structure (Brief) � IGEM Structure (Brief) � Initial Results of Japan ( � Initial Results of Japan (BaU BaU) ) � Future Research Plan � Future Research Plan IGES, Japan/Hanyang University, Korea 2
IGEM Structure (Brief) IGEM Structure (Brief) � Theory Review � Theory Review � Economic Theories : Macro Economics, � Economic Theories : Macro Economics, International Economics, Energy Economics, International Economics, Energy Economics, Environment Economics, Economic Development, Environment Economics, Economic Development, Computable General Equilibrium Computable General Equilibrium � Econometric (Statistic) Theories: Statistic Econometric (Statistic) Theories: Statistic � Inference, Estimation Methodologies & Inference, Estimation Methodologies & Techniques, Data Handling Techniques, Data Handling � Engineering/Technology: Assessment of Engineering/Technology: Assessment of � Technology Specifications, Cost Evaluation Technology Specifications, Cost Evaluation IGES, Japan/Hanyang University, Korea 3
IGEM Structure (Brief) IGEM Structure (Brief) � Characteristics � Characteristics � Country Country- -specific Hybrid Model specific Hybrid Model � � Three Countries : China, Japan, Korea Three Countries : China, Japan, Korea � � Open Macro Economic Model Open Macro Economic Model � � Econometric/CGE Model Econometric/CGE Model � � Energy/GHG Emission Model Energy/GHG Emission Model � � Link with Bottom Link with Bottom- -up Model (Hard Linkage) up Model (Hard Linkage) � � CDM Analysis Model CDM Analysis Model � � Project Project- -base Analysis base Analysis � � Bilateral Financial Flows Bilateral Financial Flows � IGES, Japan/Hanyang University, Korea 4
IGEM Structure (Brief) IGEM Structure (Brief) � Characteristics � Characteristics � Estimation Methods Estimation Methods � � Unit Root Test: Statistical Test for Non Unit Root Test: Statistical Test for Non- -Stationary Stationary � Variables Variables � Co Co- -integration Method : Most Advanced Statistic integration Method : Most Advanced Statistic � (Econometric) Inference to Estimate Long- -run run (Econometric) Inference to Estimate Long Relationships Relationships � Error Error- -Correction Method: To Estimate Short Correction Method: To Estimate Short- -run run � Variations (Equilibrium Condition) Variations (Equilibrium Condition) IGES, Japan/Hanyang University, Korea 5
IGEM Structure (Brief) IGEM Structure (Brief) � Characteristics � Characteristics � Estimation Methods Estimation Methods � � Kalman Kalman Filter Technique: The Application of Electric Filter Technique: The Application of Electric � Engineering Signal, Allowing Time- -varying varying Engineering Signal, Allowing Time Coefficient Estimation Coefficient Estimation � Autoregressive Autoregressive Distributed Lag Specification(ARDL): Distributed Lag Specification(ARDL): � ARDL(1,1) is specified. ARDL(1,1) is specified. � System Estimation Method: To Capture the Inter System Estimation Method: To Capture the Inter- -fuel fuel � Substitution in Energy Demand Equations Substitution in Energy Demand Equations IGES, Japan/Hanyang University, Korea 6
IGEM Structure (Brief) IGEM Structure (Brief) � Characteristics � Characteristics � CGE Methods CGE Methods � � Open/Dynamic/ Multi Open/Dynamic/ Multi- -Sector Model Sector Model � � Capital Accumulation with AEEI and International Capital Accumulation with AEEI and International � Financial Flows for CDM Analysis Financial Flows for CDM Analysis � Multi Multi- -tier KLEM Production Function with tier KLEM Production Function with � Armington Assumption Assumption Armington � Fuel Fuel- -substitution Elasticity from substitution Elasticity from Econometic Econometic � Estimation (Localization of Parameters) Estimation (Localization of Parameters) IGES, Japan/Hanyang University, Korea 7
IGEM Structure (Brief) IGEM Structure (Brief) � Characteristics � Characteristics � CGE Methods CGE Methods � � Five Blocks: Production, Private Consumption, Five Blocks: Production, Private Consumption, � Gov’ ’t t & Public, Investment, Foreign Sectors & Public, Investment, Foreign Sectors Gov � Production Sector: 9 Energy Production Sector: 9 Energy- -producing Sectors, producing Sectors, � Energy intensive Industries, Transport, Service Energy intensive Industries, Transport, Service � Consumption Sector: Stone & Consumption Sector: Stone & Geary Geary Utility Utility � Function (Max.) � � Linear Expenditure System Linear Expenditure System Function (Max.) � Gov Gov’ ’t t Sector: Income (Tax) Sector: Income (Tax) vs vs. Expenditure . Expenditure � � Net � Net Gov Gov’ ’t t Savings Savings IGES, Japan/Hanyang University, Korea 8
IGEM Structure (Brief) IGEM Structure (Brief) � 8 Modules � 8 Modules � Macro Economic Module Macro Economic Module � � Demand Side of an Economy Demand Side of an Economy � � Simple Simple Keynesian Keynesian Open Macro Economic Model Open Macro Economic Model � Example: Consumption Function Example: Consumption Function - Error Correction Model (Short Error Correction Model (Short- -run) run) - ( ) ( ) ∆ = δ ∆ + δ ∆ + β − + + + + m m C C y C a a y a r a W u − − − − − − ∆ t 1 t 1 2 t 1 t 1 0 1 t 1 2 t 1 3 t 1 C t , - Co Co- -Integration Model (Long Integration Model (Long- -run) run) - = + + + m C a a y a r a W t 0 1 t 2 t 3 t - Time Time- -varying Coefficient (If necessary) varying Coefficient (If necessary) - β , δ 1 δ 2 β , δ , δ 1 , 2 IGES, Japan/Hanyang University, Korea 9
IGEM Structure (Brief) IGEM Structure (Brief) � 8 Modules � 8 Modules � Bilateral Financial Module � Bilateral Financial Module � Linkage between Two Countries Linkage between Two Countries � � CDM Project: Financial Flow Analysis CDM Project: Financial Flow Analysis � � Computable General Equilibrium(CGE) Module � Computable General Equilibrium(CGE) Module � Input Input- -Output Tables of Each Country Output Tables of Each Country � � Energy Balance Table Energy Balance Table � � Social Account Matrix (SAM) Construction Social Account Matrix (SAM) Construction � � Sector Classification: Flexible Sector Classification: Flexible � � Localization of Parameters for Calibration: Based on Localization of Parameters for Calibration: Based on � Estimation, if possible. Estimation, if possible. IGES, Japan/Hanyang University, Korea 10
IGEM Structure (Brief) IGEM Structure (Brief) � 8 Modules � 8 Modules � Energy Demand Module � Energy Demand Module � Each End Each End- -use Final Energy Demand use Final Energy Demand � � Sector Classification: Flexible (Data Availability) Sector Classification: Flexible (Data Availability) � � Econometric Estimation Econometric Estimation � � GHG emissions are deriving. GHG emissions are deriving. � � Energy Supply Module � Energy Supply Module � Energy supply is assumed to meet demand. Energy supply is assumed to meet demand. � (Equilibrium Assumption) (Equilibrium Assumption) � Transformation Sector: Engineering Approach to Transformation Sector: Engineering Approach to � Figure out Primary Energy Demand Figure out Primary Energy Demand IGES, Japan/Hanyang University, Korea 11
IGEM Structure (Brief) IGEM Structure (Brief) � 8 Modules � 8 Modules � Linkage Module Linkage Module � � Technical Assessment of CDM Project: Bottom Technical Assessment of CDM Project: Bottom- -up up � approach is preferable. approach is preferable. � Hard Linkage with Bottom Hard Linkage with Bottom- -up Model: AIM (maybe) up Model: AIM (maybe) � � Advantage of Hard Linkage: IGEM can be tangible Advantage of Hard Linkage: IGEM can be tangible � model. (Soft linkage makes the model large.) model. (Soft linkage makes the model large.) � Still, the soft linkage of top Still, the soft linkage of top- -down and bottom down and bottom- -up up � models is the most challenging work. models is the most challenging work. IGES, Japan/Hanyang University, Korea 12
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