Quantifying the Socio-Economic Impacts of Decarbonization Policy using Integrated Assessment Modeling

Abstract

With net-zero emission goals by 2050 becoming the standard in climate policy initiatives at regional, national, and international scales, policymakers and business leaders are left with the questions of how to implement change. Achieving these emission goals requires quantitative tools for understanding how potential policies impact net emissions and existing economic and industrial systems. Computable general equilibrium (CGE) models are often used as a tool for analyzing the response of an economy to policy, technology, or other shocks, but CGE models are not capable of techno-economic modeling of the renewable energy and carbon dioxide removal technologies that will need to be deployed to achieve warming limits. Integrated models, in contrast, such as the Global Change Analysis Model (GCAM) are able to simulate emerging technologies but lack the resolution and regional fidelity of CGE models. In this study CGE and GCAM are soft linked to analyze the effect of implementing high, low, and zero carbon taxes on the electricity generation technologies and labor demand for these technologies by 2060. We find that the implementation of a carbon tax results in significant growth in labor and investment in the electricity sector, with a large proportion of this growth in the wind and solar industries.