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All sourcesNASA NTRSDOE OSTI
DOE OSTI2020

Land Use in Computable General Equilibrium Models

Constant Elasticity of Transformation (CET) functions are widely used to allocate land across uses in Computable General Equilibrium (CGE) models. These models fail to maintain area of land in balance. Several ways have been used or offered to fix this problem. This paper first examines the extent to which the CET approach may generate imbalances in area of land and identifies determinants of such imbalances. It then evaluates the merits, properties, and welfare impacts of the available approaches that restore area of land in balance. We show that heterogeneity in land prices (land rents) is the main source of imbalance in area of land, not the curvature of the CET function. Furthermore, we show that the available approaches that restore area of land in balance either introduce ad hoc adjustments in land allocation or undermine the conventional welfare assessments of the CET results and ignore the opportunity costs of land transformation. The CGE models which applied stochastic productivity distribution functions to allocate land among uses maintain area of land in balance, but they suffer from important limitations and ignore costs of land transformation.

Taheripour, Farzad↗
DOE OSTI2024

Toward Enhancing Wastewater Treatment with Resource Recovery in Integrated Assessment and Computable General Equilibrium Models

Sustainable water management is essential to increasing water availability and decreasing water pollution. The wastewater sector is expanding globally and beginning to incorporate technologies that recover nutrients from wastewater. Nutrient recovery increases energy consumption but may reduce the demand for nutrients from virgin sources. We estimate the increase in annual global energy consumption (1,100 million GJ) and greenhouse gas emissions (84 million t CO2e) for wastewater treatment in the year 2030 compared to today’s levels to meet sustainable development goals. To capture these trends, integrated assessment and computable general equilibrium models that address the energy-water nexus must evolve. We reviewed 16 of these models to assess how well they capture wastewater treatment plant energy consumption and GHG emissions. Only three models include biogas production from the wastewater organic content. Four explicitly represent energy demand for wastewater treatment, and eight include explicit representation of wastewater treatment plant greenhouse gas emissions. Of those eight models, six models quantify methane emissions from treatment, five include representation of emissions of nitrous oxide, and two include representation of emissions of carbon dioxide. Our review concludes with proposals to improve these models to better capture the energy-water nexus associated with the evolving wastewater treatment sector.

42 ENGINEERING↗
DOE OSTI2020

Scalable Linked Dynamic Equilibrium (SLiDE)

SLiDE (Scalable Linked Dynamic Equilibrium) replicates the blueNOTE (National Open source Tools for general Equilibrium analysis) datastream from the Wisconsin National Data Consortium. From there, it produces a recursive dynamic computable general equilibrium model of the US states and eventually the global/national economies. The datastream operations have been set up to allow for scalability of both regions and sectors represented. The model has the capability to flexibly define functional forms similar to other general equilibrium model construction software.

Hughes, Caroline↗
DOE OSTI2019

Solving Stochastic Dynamic Programming Problems: A Mixed Complementarity Approach

We detail a mixed complementarity problem (MCP) formulation of continuous state dynamic programming problems (DP-MCP). We write the solution to projection methods in value function iteration (VFI) as a joint set of optimality conditions that characterize maximization of the Bellman equation; and approximation of the value function. The MCP approach replaces the iterative component of projection based VFI with a one-shot solution to a square system of complementary conditions. We provide three numerical examples to illustrate our approach.

97 MATHEMATICS AND COMPUTING↗
DOE OSTI2021

Dynamic Linking of Upstream Energy and Freight Demands for Bio and Fossil Energy Pathways in the Global Change Analysis Model

Comprehensive study of the environmental impacts associated with demand for an energy resource or carrier in any one sector requires a full consideration of the direct and indirect impacts on the rest of the regional and global energy system. It is important to consider the energy that is consumed in producing primary energy resources and energy consumed in transporting these energy resources internationally and domestically in order to produce a complete picture of these impacts. Biofuels are especially complex since they have feedbacks not just to the energy system but also to regional and global crop markets. Different modeling and analysis strategies have been applied to consider these impacts, which occur “upstream” of final energy consumption, with some success. Traditional life cycle models allow for rich technological detail in linking upstream impacts of energy demand with downstream final consumption; however, they cannot by themselves represent dynamic economic feedbacks across multiple sectors and regions over time. Computable general equilibrium (CGE) modeling does account for economic feedback among all sectors and regions; however, CGE modeling does not lend itself to physical representation of technological detail. Partial equilibrium (PE) modeling is a heterogeneous category describing economic models that focus on a subset of the economy, and they differ in coverage and ease in incorporating more sectors and economic links. In this study, we present a strategy for dynamically including the direct and indirect impacts of energy demand with physical and technology detail by explicitly adding these upstream energy and transportation links to GCAM, a PE model of global energy, land use, and emissions. We incorporate the following inter-sectoral linkages: energy inputs to crop production, energy inputs to fossil resource production, and freight transport requirements of energy and agricultural commodities. We assess the implications of explicitly including these links by measuring the global impacts of increased corn ethanol demand in the United States with and without these links included. Although the net global impact of the upstream links on energy and emissions are relatively modest in the scenarios we studied, the inclusion of these links illustrates interesting trade-offs in energy and transportation demand among fossil fuel and agriculture sectors. These sectoral interactions suggest that this level of modeling detail could be important in evaluating future analytical questions.

Sampedro Martinez de Estivariz, Jon↗
DOE OSTI2020

Co-benefits of subnationally differentiated carbon pricing policies in China: Alleviation of heavy PM 2.5 pollution and improvement in environmental equity

Carbon policies differentiated according to regional disparities have been recognized and recommended. However, the air quality co-benefits of differentiated policies remain unclear. Here we combine a multi-regional dynamic computable general equilibrium (CGE) model and an extend response surface model (ERSM) to investigate the impact of nationally uniform and subnationally differentiated carbon pricing policies on fine particulate matter (PM 2.5 ) concentrations in China. All policies examined lead to the same accumulated national CO 2 emissions (2020–2050), with the 2030 emissions attaining China's national abatement target. We find that, when subnational policies differentiated according to provincial PM 2.5 concentrations are implemented, the higher-than-average carbon price over more polluted provinces results in twice as much reduction in CO 2 and air pollutant emissions in 2050 as the national policy. As a result, the subnational policies cause larger PM 2.5 concentration reductions in these provinces (9%–18%) than the national policy (7%–11%). Also, the subnational policies eliminate high PM 2.5 exposure of over 45 μg/m 3 which 12% people suffer from under the national policy. Overall, the subnational policies substantially reduce regional disparity in PM 2.5 pollution and hence improve environmental equity. The results suggest that subnationally differentiated carbon policies are a promising instrument to mitigate severe pollution and promote environmental equity.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗
DOE OSTI2025

Policy support and technology development trajectory for renewable natural gas in the U.S.

Renewable natural gas (RNG) is a clean alternative to fossil natural gas, which can be used as transportation fuel, among other applications. This study projects the development trajectory of RNG and evaluates its impacts on the future U.S. transportation market using a hybrid computable general equilibrium model. This analysis considers various factors and uncertainties affecting RNG production, such as technology development, market conditions, competition with other advanced biofuels, and national and state policies. In 2050, RNG production will grow to 2.7 billion gallons (10 billion liters), mostly from swine manure, under current policy provisions. This will lead to a reduction in greenhouse gas (GHG) emissions by 58.56 million metric tonne of CO 2e in 2050. Analysis of different technology cases finds RNG from animal manure to be predominant, while RNG from corn stover and cellulosic ethanol are less competitive. Furthermore, a high mandatory target of 1 billion gallons will drive RNG production higher by 8–18 %, while an extended 2 nd -generation biofuel production tax credit will mostly increase cellulosic ethanol production. The model also finds RNG production being affected by uncertainties in market conditions, such as GDP growth, fossil fuel prices, and oil and gas supply.

Biomethane↗
DOE OSTI2021

Estimating induced land use change emissions for sustainable aviation biofuel pathways

Sustainable aviation fuels (SAFs) are expected to play an essential role in achieving the aviation industries’ goal of carbon-neutral growth. However, producing biomass-based SAFs may induce changes in global land use and the associated carbon stock. The induced land use change (ILUC) emissions, as a part of the full life-cycle emissions for SAF pathways, will affect whether and to what extent SAFs reduce emissions compared with petroleum-based jet fuels. Here, we estimate the ILUC emission intensity for seventeen SAF pathways considered by the International Civil Aviation Organization (ICAO), covering five ASTM-certified technologies, nine biomass-based feedstocks, and four geographical regions. We introduce the SAF pathways into a well-established computable general equilibrium (CGE) model, GTAP-BIO, and its coupled emission accounting model, AEZ-EF, to study economy-wide implications of SAF production and estimate ILUC emissions intensity for each pathway. The estimated SAF ILUC emission intensities, using a 25-year amortization period, range from -58.5 g CO 2 e MJ -1 for the USA miscanthus alcohol (isobutanol)-to-jet (ATJ) pathway to 34.6 g CO 2 e MJ -1 for the Malaysia & Indonesia palm oil Hydrotreated Esters of Fatty Acids (HEFA) pathway. Notably, the vegetable oil pathways tend to have higher ILUC emission intensities due to their linkage to palm expansion and peatland oxidation in Southeast Asia. The cellulosic pathways studied provide negative ILUC emissions, mainly driven by the high carbon sequestrations in crop biomass and soil. Using the core life-cycle emissions established by ICAO, we show that fifteen of the assessed pathways have a lower full life-cycle emission intensity than petroleum-based jet fuels (89 g CO 2 e MJ -1 ), offering promising options to reduce aviation emissions.

09 BIOMASS FUELS↗
DOE OSTI2022

A review of water valuation metrics: Supporting sustainable water use in manufacturing

In the manufacturing sector, water has been often considered too cheap to conserve. Such thinking relies on water valuations that limit the value of water to the price paid. Using such simple methods, the share of water cost to total manufacturing cost is significantly small, <3%. As a result, conserving water and enabling technology uptake is difficult to justify economically and slow to advance, hindering progress toward sustainable water use. However, the value of water to a manufacturer is far greater than the price paid. Valuations such as the true cost of water consider the additional in-plant treatment and energy costs and have been gaining greater traction in the manufacturing sector. However, true cost alone still undervalues water by not accounting for economic and social costs related to scarcity and environmental externalities. This paper makes the case and presents a framework for valuing manufacturing water beyond the price paid and the true cost. The proposed fuller valuation of manufacturing water takes into account the internal and opportunity costs associated with the realization of water risks. The paper follows with a review of a wide range of water valuation metrics, both at the specific industry level and regional/economy-wide level. The use of various valuation metrics incorporating the relationship between the change in value with change in water use, such as marginal value of water, shadow price, and elasticity at the specific industry level, has been limited in the U.S. manufacturing sector. Further, a limited number of studies exist on data-intensive subjective evaluation techniques such as computable general equilibrium modeling and input-output modeling for regional water valuation. After reviewing water value metrics, several recent case studies from manufacturers from the literature are presented to illustrate both the promise and challenges of a fuller valuation of water as proposed here. Some large multinational corporations have moved toward assessing the value of water via supply chain sustainability initiatives, environmental profit and loss accounting, estimating risk-adjusted values of water, hydro-economic modeling, natural capital asset valuation, and developing value chain indices. This paper provides policymakers and technology developers a framework for monetizing water value beyond its true cost and current metrics. If adopted, such fuller water valuations can help make the business case for the development and deployment of cost-effective water-conserving technologies, thereby improving the sustainability of the manufacturing sector with respect to water.

54 ENVIRONMENTAL SCIENCES↗
DOE OSTI2023

Regional Economic Impacts of the Los Angeles 100% Renewable Energy Transition

To help mitigate greenhouse gas (GHGs) generation from burning fossil fuels, many state and local governments are requiring utilities to dramatically increase the share of electricity generated from renewable sources. The City of Los Angeles has set a target of 100% renewable energy by 2045 and has formulated a plan that considers nine potential alternative scenarios that differ by technology, location, and timing. Each scenario has a unique set of local investments, operating and maintenance (O&M) costs, and concomitant rate structures. In this study we develop and apply a computable general equilibrium (CGE) model built specifically for LA to estimate and compare the economic impacts for each of the scenarios over time relative to a reference case. We find differences in economic impacts across scenarios, depending on the level and timing of investment and O&M expenditures, as well as differences in the relative rate changes across scenarios. Results show that employment and economic output are positively correlated with greater capital and O&M spending, while higher electricity rates can dampen economic activity. Several scenarios generate positive economic impacts relative to the reference case, showing that the transition need not have harmful economic impacts, and all scenarios generate a number of other positive co-benefits, such as reduced damage to health from the reduction of ordinary air pollutants. The net employment impacts from 2026 to 2045 across the scenarios range from a low of 3,600 job-year losses annually to 4,700 job-year gains, both around only 0.1% of the baseline average annual employment in the city over that period. The analysis also indicates that lower-income households are relatively more affected than others by the scenarios. Overall, even in the most negatively impactful case, the economic output and employment effects are quite small when taken in the context of the overall size of the regional economy and the large reduction in GHGs.

economic impact modeling↗
DOE OSTI2024

Tax Credits for Clean Electricity: The Distributional Impacts of Supply-Push Policies in the Power Sector

We evaluate distributional and efficiency consequences of the bulk power clean electricity tax credits authorized by the 2022 Inflation Reduction Act. To do so, we link detailed electricity capacity expansion, computable general equilibrium, microsimulation, and air pollution models to estimate economic welfare and health incidence across demographic groups. We evaluate trade-offs between policy efficiency and income progressivity by comparing the tax credits to cap-and-trade policies. The tax credits encourage increased clean electricity investment, resulting in a reallocation of capital from elsewhere in the economy, higher prices for capital and other goods, lower power prices, and lower emissions. The tax credits yield progressive outcomes for economic welfare at the expense of efficiency while all modeled policies demonstrate progressivity in health impacts. The health benefits, absent climate benefits, exceed total policy costs and provide greater benefits for low-income and historically marginalized households given coincidence of household locations and emissions exposure intensity.

distributional impacts↗
DOE OSTI2021

A Hybrid Approach to Estimating the Economic Value of Enhanced Power System Resilience

The costs that power interruptions impose on customers and society have emerged as essential considerations for decision making about power system reliability and resilience. There is well-established literature on the direct costs of localized and relatively short-duration power interruptions. However, far less is known about the costs of widespread and long-duration (WLD) power interruptions, especially the indirect costs and related economy-wide impacts of these events. As a result, utility planning activities generally incorporate these costs incompletely or not at all. This report proposes a new approach to estimating WLD power interruption costs to support utility resilience planning studies. Specifically, the paper describes a hybrid method that integrates: (1) empirical surveys of region- and sector-specific inherent and adaptive customer behaviors during and after power interruptions, and (2) computable general equilibrium (CGE) modeling, which estimates the direct and indirect impacts of WLD power interruptions. The report provides both a rationale for the proposed hybrid approach and a roadmap outlining how it could be implemented.

24 POWER TRANSMISSION AND DISTRIBUTION↗
DOE OSTI2023

Tax Credits for Clean Electricity: The Distributional Impacts of Supply-Push Policies in the Power Sector

We evaluate distributional and efficiency consequences of the bulk power clean electricity tax credits authorized by the 2022 Inflation Reduction Act. To do so, we link detailed electricity capacity expansion, computable general equilibrium, data-rich microsimulation, and air pollution models to estimate the policy incidence in terms of economic welfare and health impacts across a wide range of demographic groups. We evaluate the tradeoff between policy efficiency and income progressivity by comparing the tax credits to cap-and-trade policies that vary revenue recycling approaches. Under the scenarios analyzed the bulk power tax credits lead to increased clean electricity technology deployment resulting in a reallocation of capital from elsewhere in the economy, higher prices for capital and other goods, lower power prices, and lower emissions. The tax credits yield progressive outcomes for both economic welfare and health impacts. The health benefits exceed total policy costs and provide greater benefits for low-income and historically-marginalized households given the coincidence of household and emission source locations.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗
DOE OSTI2019

Impacts of U.S. Carbon Tariffs on China’s Foreign Trade and Social Welfare

A recursive multisector dynamic computable general equilibrium (DCGE) model simulates the economic impacts of carbon tariffs, as proposed by the USA, ranging from $\$40/t to $\$60/t CO 2 . We examine a carbon tax and export subsidy as response policies to the U.S. carbon tariff, respectively. The dynamic model shows the possible impacts of these policies on China’s economic structure, carbon emissions, and social welfare from 2020 to 2030. Simulations show that a carbon tariff changes the structure of China’s exports and promotes trade diversion from the USA to other countries and regions. A domestic carbon tax and subsidy policy can dampen the adverse impacts of carbon tariffs on trade. A carbon tax shows an effective impact on increasing clean energy use, decreasing the carbon intensity of output, and reducing carbon emissions. A subsidy on exports to the USA reduces the adverse impact of a carbon tariff on China’s social welfare in the short term.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗
DOE OSTI2024

Biofuels Induced Land Use Change Emissions: The Role of Implemented Land Use Emission Factors

Biofuels’ induced land-use change (ILUC) emissions have been widely studied over the past 15 years. Many studies have addressed uncertainties associated with these estimates. These studies have broadly examined uncertainties associated with the choice of economic models, their assumptions and parameters, and a few bio-physical variables. However, uncertainties in land-use emission factors that represent the soil and vegetation carbon contents of various land types across the world and are used to estimate carbon fluxes due to land conversions are mostly overlooked. This paper calls attention to this important omission. It highlights some important sources of uncertainty in land-use emissions factors, explores the range in these factors from established data sources, and compares the influence of their variability on ILUC emissions for several sustainable aviation fuel (SAF) pathways. The estimated land-use changes for each pathway are taken from a well-known computable general equilibrium model, GTAP-BIO. Two well-known carbon calculator models (CCLUB and AEZ-EF) that represent two different sets of emissions factors are used to convert the GTAP-BIO estimated land-use changes to ILUC emissions. The results show that the calculated ILUC emissions obtained from these carbon calculators for each examined SAF pathway are largely different, even for the same amortization time horizon. For example, the ILUC emissions values obtained from the AEZ-EF and CCLUB models for producing jet fuel from corn ethanol for a 25-year amortization period are 24.9 gCO 2 e/MJ and 15.96 gCO 2 e/MJ, respectively. This represents a 60% difference between the results of these two carbon calculators for the same set of land-use changes. The results show larger differences for other pathways as well.

09 BIOMASS FUELS↗
DOE OSTI2022

A Co-Simulation Framework to Study Future Energy-Economy Interactions

Energy-economy interactions are often studied using top-down integrated assessment or economy models that have broad scope but lack the resolution and process detail to consider complex emerging trends across the energy sector. This presentation describes an approach to maintain both detail and scope by linking NREL's highly resolved models of the electricity, transportation, and buildings sectors with a MIT's USREP computable general equilibrium model of the U.S. economy. We will discuss strategies for linking across disparate models along with preliminary results describing the economy-wide impacts of future energy technology innovation.

ENERGY PLANNING, POLICY, AND ECONOMY↗
NASA NTRS1959

A General Method for Automatic Computation of Equilibrium Compositions and Theoretical Rocket Performance of Propellants

A general computer program for chemical equilibrium and rocket performance calculations was written for the IBM 650 computer with 2000 words of drum storage, 60 words of high-speed core storage, indexing registers, and floating point attachments. The program is capable of carrying out combustion and isentropic expansion calculations on a chemical system that may include as many as 10 different chemical elements, 30 reaction products, and 25 pressure ratios. In addition to the equilibrium composition, temperature, and pressure, the program calculates specific impulse, specific impulse in vacuum, characteristic velocity, thrust coefficient, area ratio, molecular weight, Mach number, specific heat, isentropic exponent, enthalpy, entropy, and several thermodynamic first derivatives.

Gordon, Sanford↗
DOE OSTI2023

Calibrating Constant Elasticity of Substitution Technologies to Bottom-up Cost Estimates

We propose a method for calibrating an industry-level technology to engineering (bottom-up) estimates with a particular focus on abatement opportunities. As a demonstration, substitution elasticities across inputs are adjusted in the nested cost function for the electricity sector to best fit a target marginal abatement cost (MAC) curve derived from engineering assessments of available technologies. Elasticities are optimized over an entire relevant range of the MAC, whereas current techniques use local point estimates under little or no abatement. In the context of fitting to a given MAC we evaluate alternative nesting structures and find that, while complexity in nesting improves the fit, even relatively simple nesting structures can reasonably approximate the target MAC. In our example, focused on the electricity sector, we find standard elasticities adopted in top-down models moderately overstate abatement costs relative to the engineering targets. In our preferred specification the most important adjustment is to escalate the substitution elasticity between energy and value-added inputs. This is consistent with an argument that the current set of point estimates fail to properly account for new capital-based technologies. These conclusions, however, are sensitive to our assumption about output-intensity abatement and consumer price responsiveness, both of which are not delineated in engineering estimates.

abatement cost↗