Linking Top-Down and Bottom-Up Models for Climate Policy Analysis: The Case of China

54 Pages Posted: 6 Aug 2019

See all articles by Govinda R. Timilsina

Govinda R. Timilsina

World Bank - Development Research Group (DECRG)

Jun Pang

Renmin University of China - School of Business

Xi Yang

China University of Petroleum, Beijng

Date Written: June 20, 2019

Abstract

Top-down economic models, such as computable general equilibrium models, are the common tools to assess the economic impacts of climate change policies. However, these models are incapable of representing the detailed technological characteristics of the sources of greenhouse gas emissions. The economic impacts measured by the top-down economic models are likely to be overestimated. This study attempts to quantify the overestimation by measuring the economic impacts linking the top-down model with a bottom-up engineering model for the energy sector. The study uses meeting China's pledges under the Paris Agreement for testing this hypothesis. The study shows that the economic impacts measured by the stand-alone top-down model are almost three times as high as those resulting from the model after linking it with the bottom-up model. However, the findings are sensitive to the assumptions and existing or planned policies on energy technologies considered in the bottom-up model.

Keywords: Energy and Environment, Energy Demand, Energy and Mining, Energy Policies & Economics, Transport Services, Oil Refining & Gas Industry, Climate Change Mitigation and Green House Gases

Suggested Citation

Timilsina, Govinda R. and Pang, Jun and Yang, Xi, Linking Top-Down and Bottom-Up Models for Climate Policy Analysis: The Case of China (June 20, 2019). World Bank Policy Research Working Paper No. 8905. Available at SSRN: https://ssrn.com/abstract=3430516

Govinda R. Timilsina (Contact Author)

World Bank - Development Research Group (DECRG) ( email )

1818 H Street NW
MSN3-311
Washington, DC 20433
United States

Jun Pang

Renmin University of China - School of Business ( email )

Beijing, 100872
China

Xi Yang

China University of Petroleum, Beijng ( email )

18 Fuxue Road
Beijing, 102249
China

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