Desire of policy makers Energy transfer For the first time, economic modeling capability has surpassed, a Argument for new keynote paper.

Renewable energy from wind farms.Renewable energy from wind farms.

Renewable energy from wind farms. Photo credit: Karstenworth/Insplash

In a featured comment post for Energy of natureThe researchers – including those from the Institute for New Economic Thinking and the University of Oxford’s Oxford Smith School – outline the challenges facing policymakers working with traditional economic modeling in the public and industrial sectors.

The paper calls for a shift from narrow cost-benefit analysis and modeling based on economic equilibrium to models that capture the dynamics of transitions and realistically present policy considerations. These capabilities are needed to match the policies that governments are actually designing and implementing now, such as the ETS in China, the offshore wind auction in the UK, and the Deflation Act in the US.

Lead author Dr. Pat Barbrook JohnsonA senior research associate at the Institute for New Economic Thinking and Smith School for Enterprise and the Environment at Oxford, said global policy discourse has changed, with different demands on economic modellers.

‘We are working with partners in China, India, Brazil, the UK and Europe to explore what kind of modeling support they need to understand the energy transition.

‘What they tell us is that they really need models that allow them to understand the details of policies, what their effects might be and how the energy transition might unfold. We’ve been developing these capabilities for a few years, and this group of new models is now maturing.

‘But, we must recognize that there is a need for a new type of modeling that has not been established and used in many places, so we need to do more to learn and expand on the already promising work. Required. In this paper, we explore what we need to do, things like investing in new teams, working with partners in more countries, and collecting more detailed economic data to match the specifications of the models, Dr. Barbrook said. Johnson said.

INET Oxford Complexity Economics Program Director and Smith School Bailey Gifford Professor of Complex Systems Science Oxford Martin School, Doyne FarmerHe said there was a danger that traditional economic modelers were left behind by the energy transition.

‘Traditional economics has failed us so far, mostly by giving bad advice. We are trying to remedy this by developing a whole new set of models based on different principles that do a better job of explaining the empirical facts and that can better guide us during the transition.

‘This paper offers a kind of manifesto of what can be done, including talking about the successes we’ve had in the EEIST project, where we’ve given examples of models that we think stand out from the rest. are working better.

‘Among other things we have shown that the energy transition is going to happen much faster than people realize because the costs of renewable energy are going to be lower than fossil fuels on a purely economic basis. We need new economic modeling to support this. We still need some government support for technologies like green hydrogen that are needed for storage,’ said Professor Farmer.

Source: University of Oxford