Assessment of the Effectiveness of Global Climate Policies Using Coupled Bottom-up and Top-down Models

In order to assess the cooperation between industrialized and developing countries in the design of a comprehensive worldwide climate policy to limit the global long-term temperature increase to 2°C, we developed an iterative procedure linking the global technology-rich optimization energy model TIAM-WORLD and the global general equilibrium model GEMINI-E3. The coupling methodology combines the precise representation of technology choices and their impact on climate change, with a coherent representation of the welfare gains or losses associated with the techno-economic and energy choices, especially in terms of trade effects. The assessment of alternative global, partially cooperative agreements is used to illustrate the interest of such a coupling approach; it appears that an important added value of such a coupling relates to the evaluation of the trade effects of climate policies on energy-intensive products. Furthermore, in order to achieve safe levels of climate change, drastic technology breakthroughs and rigorous implementations are required as soon as possible, especially in large emitting countries, and in all sectors of the economy— focussing only on emission reductions in the power sector is not sufficient. Moreover, some risks of delocalization of gas extraction activities exist in the case of partial agreements, but they result in a limited carbon leakage thanks to the reduction of oil extraction in all cases.