UCL Energy Institute


Hybrid modelling of long-term carbon reduction scenarios for the UK


1 January 2008

This paper summarizes the development of a new hybrid MARKAL-Macro (M-M) energy system model for the UK. This hybrid model maintains the technological and sectoral detail of a bottom-up optimisation approach with aggregated energy demand endogeneity and GDP impacts from a single sector neoclassical growth model. The UK M-M model was developed for underpinning analysis of the UK's groundbreaking mandatory long-term -60% carbon dioxide (CO2) emissions reduction target. Hybrid modelling illustrates that long-term UK CO2 emission reductions are feasible. However, there are endemic uncertainties, notably a trade-off between behavioural and technological decarbonisation options with resultant energy system impacts in the requirements for zero-carbon electricity. UK M-M model sensitivity runs further illustrate the range of energy system interactions including the deployment of the UK's limited CO2 storage capacity, alternate timing of power vs. transport sectoral reductions, the relative ease of switching between electricity generation portfolios, and substitution opportunities between natural gas and coal. The macro-economic cost impacts range from 0.3% to 1.5% reduction in UK GDP by 2050, with higher cost estimates strongly influenced by pessimistic assessments of future low-carbon technologies. However cost impacts from the UK M-M! model are likely to be in the lower range for stringent CO2 reduction pathways as the simplicity of the reduced form macro-linkage omits competitiveness and transitional impacts on the UK economy. (c) 2008 Elsevier B.V. All rights reserved.

Hybrid modelling of long-term carbon reduction scenarios for the UK. ENERGY ECONOMICS, 30 (6) 2947 - 2963. 10.1016/j.eneco.2008.04.009

Strachan, N; Kannan, R; (2008)