Getting to Know GMMET: The Global Macroeconomic Model for the Energy Transition

Abstract

This paper presents GMMET, the Global Macroeconomic Model for the Energy Transition, and provides documentation of the model structure, data sources and model properties. GMMET is a large-scale, dynamic, non-linear, microfounded multicountry model whose purpose is to analyze the short- and medium-term macroeconomic impact of curbing greenhouse gas (GHG) emissions. The model provides a detailed description of GHG-emitting activities (related to both fossil fuel and non-fossil-fuel processes) and their interaction with the rest of the economy. To better capture real world obstacles of the energy transition, GMMET features a granular modelling of electricity generation (capturing the intermittency of renewables), transportation (capturing network externalities between charging stations and electric vehicle adoption), and fossil fuel mining (replicating estimated supply elasticities at various time horizons). The model also features a rich set of policy tools for the energy transition, including taxation of GHG emissions, various subsidies, and regulations.

Keywords: Climate mitigation policy, policy coordination, GHG price, fossil gas price, GHG-emitting activity, sectors in the United States, greenhouse gas, Non-renewable resources, Electricity, Greenhouse gas emissions, Inflation, Fuel prices, Global

JEL Classification: E37, E62, F42, Q42, Q43, Q30, L94, Q54, Q41, E31