An Integrated Modeling Framework (IMF) for Energy-Economy-Environment Modeling

Abstract

Addressing environmental concerns alongside economic development and energy transitions is a challenge for all countries and effective policy making requires approaches that can balance all these concerns. In this chapter, combining a range of modeling methodologies is proposed as a way of addressing these questions in an integrated manner. The choice of models to be used would depend on the specific characteristics of the system and region being studied. One possible combination of models is discussed in this chapter, taking off from the modeling methods discussed in previous chapters, for the specific case of India. The integrated modeling framework (IMF) proposed combines three modeling approaches—(i) index decomposition to estimate impacts of structural changes in the economy, (ii) constrained optimization to estimate least-cost fuel options for the power sector, (iii) input-output analysis to estimate economic impacts. The model results indicate that the mode of investment for climate change mitigation is a significant determinant of the impact on economic growth, incomes, and income distribution in India. In some scenarios, higher investments in green energy negatively affect low-income households significantly more as compared to other households. The chapter also discusses how the IMF can be used to determine the reasons for and therefore alleviate the negative impacts.