An Assessment of Turkish Energy Sector Development under the Paris Agreement Goals using a CGE Model with Detailed Representation of Power Sector (original) (raw)
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Turkish energy sector development and the Paris Agreement goals: A CGE model assessment
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The power sector plays a crucial role towards decarbonization for many economies, especially in line with the net-zero targets to limit global warming to 1.5 ◦C. Technical constraints intrinsic to the sector, penetration of new technologies, investment and operational costs, and its connections with the rest of the economy make the power sector a complex system to analyze. Although there are numerous studies to integrate bottom-up power sector technology models with top-down macroeconomic models, this study is the first attempt to link the three separate and interrelated models within a single framework: an electricity market simulation model, a generation expansion planning model, and an applied general equilibrium model. The proposed framework is implemented to analyze a feasible decarbonization scenario for Türkiye, with a particular focus on the power sector. The results suggest that, given the existing capacity and potential for renewables, Türkiye can achieve a coal-phase out by early 2030s, alongside a trajectory towards a full-fledged fossil fuel phase-out in power generation. The results also indicate that while installed capacity and generation of coal-fired power plants are reduced, real GDP and electricity demand can be maintained and the carbon dioxide emissions from the power sector could be reduced by as much as 50% in 2030 compared to 2018 levels.
Journal of Policy Modeling, 2008
Research on climate change has intensified on a global scale as evidence on the costs of global warming continues to accumulate. Confronted with such evidence, the European Union set in late 2006 an ambitious target to reduce its greenhouse gas emissions, by 2020, to 20% below the level of 1990; and invited the rest of the developed economies and the developing world to take part with the Kyoto Protocol. Turkey is the only country that appears in the Annex-I list of the United Nations' Rio Summit and yet an official target for CO 2 emission reductions has still not been established. Thus, as part of its accession negotiations with the EU, Turkey will likely to face significant pressures to introduce its national plan on climate change along with specific emission targets and the associated abatement policies.
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In this study we aim at providing an analytical quest for Turkey to study the true social costs of the existing coal subsidization scheme and identifying viable alternative policy instruments and economic measures to complement its e¤orts of further greening and decarbonizing its economy. To this end we develop an applied general equilibrium model and utilize both macro and micro level data to assess the impact of the current arsenal of energy policy instruments (in particular coal subsidies) and public policy intervention mechanisms to accelerate technology adoption and achieve higher employment, energy security, and sustainable growth patterns. Spanning over 2015-2030, our analytical apparatus focuses exclusively on considering the …scal implications as well as the environmental repercussions of the CO2 and other gaseous emissions and the relevant market instruments of abatement. With the aid of a set of alternative policy scenarios against a "business as usual" path, we study the aggregate and sectorial performances of growth, employment, investment and capital accumulation, consumption/welfare and trade balance.
CO2, GDP and RET: An aggregate economic equilibrium analysis for Turkey
Energy Policy, 2008
There is a worldwide interest in renewable electricity technologies (RETs) due to growing concerns about global warming and climate change. As an EU candidate country whose energy demand increases exponentially, Turkey inevitably shares this common interest on RET. This study, using an aggregate economic equilibrium model, explores the economic costs of different policy measures to mitigate CO 2 emissions in Turkey. The model combines energy demands, capital requirements and labor inputs at a constant elasticity of substitution under an economy-wide nested production function. Growing energy demand, triggered by economic growth, is met by increased supply and initiates new capacity additions. Investment into RET is encouraged via the incorporation of (a) endogenous technological learning through which the RET cost declines as a function of cumulative capacity, and (b) a willingness to pay (WTP) function which imposes the WTP of consumers as a lower bound on RET installation. The WTP equation is obtained as a function of consumer income categories, based on data gathered from a pilot survey in which the contingent valuation methodology was employed. The impacts of various emission reduction scenarios on GDP growth and RET diffusion are explored. As expected, RET penetration is accelerated under faster technological learning and higher WTP conditions. It is found that stabilizing CO 2 emissions to year 2005 levels causes economic losses amounting to 17% and 23% of GDP in the years 2020 and 2030, respectively.
Potential effects of the EU's carbon border adjustment mechanism on the Turkish economy
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In December 2019, the EU announced the European Green Deal (EGD) to create a climateneutral continent by 2050. Accordingly, the EU Emission Trading System (ETS) will be revised to maintain economic growth against possible losses in competitiveness, leading to "carbon leakage." Carbon border adjustment (CBA) is one of the mechanisms proposed to tackle the carbon leakage problem. In this paper, we provide a first-order estimate of the potential impacts of a possible CBA across production sectors and build a dynamic, multisectoral applied general equilibrium (AGE) model to study the overall macroeconomic impact of the EGD on the Turkish economy. Then, we extend our analysis to document the potential benefits of a more active climate policy. The model is in the Walrasian tradition wherein aggregate supply and demand actions are simulated with the interplay of relative prices to bring equilibrium in the markets for goods, for labor, and for foreign exchange. Constructed around 24 production sectors, the model accommodates flexible, multi-level functional forms to link production activities with gaseous emissions, a government entity to maintain taxation, and public expenditures, as well as administration of environmental policy instruments, all within an open-economy macroeconomic environment. Our results suggest that the potential adverse impact of the CBA on the Turkish economy would range between 2.7 and 3.6% loss of the GDP by 2030 over the business-as-(un)usual base path. We also document that under an alternative scenario through which Turkey is modeled as an active agent in the international climate policy arena embedding decarbonization into her official macroeconomic policy agenda, she can achieve a superior pathway for national income and a reduced carbon burden. Keywords European green deal • Carbon border adjustment • Turkey • Input-output methodology • Applied general equilibrium This paper is based on research prepared for Turkish Industry and Business Association (TÜSİAD), and a previous version has been presented at the 27th Meetings of the Economic Research Forum (ERF), 14-15 June, 2021. The authors wish to acknowledge their indebtedness to Burcu Ünüvar, Ebru Voyvoda, Izzet Ari, and participants to the ERF Conference as well as to seminars at Kadir Has, Boğaziçi, and Marmara Universities for their valuable comments and suggestions on earlier versions of this study. All views are solely of the authors, and all usual caveats apply. Author names are in alphabetical order and do not necessarily imply authorship seniority.
Energy Economics, 2011
Electricity generation is a major contributor to carbon dioxide emissions, and abatement in this sector is a key determinant of economy-wide regulation costs. The complexity of an integrated representation of economic and electricity systems makes simplifying assumptions appealing, but there is no evidence in the literature on how important the pitfalls may be. The aim of this paper is to provide such evidence, drawing on numerical simulations from a suite of partial and general equilibrium models that share common technological features and are calibrated to the same benchmark data. We report two basic findings. First, general equilibrium intersectoral effects of an economy-wide carbon policy are large. It follows that assessing abatement potentials and price changes in the electricity sector with a partial equilibrium Marshallian demand can only provide a crude approximation of the complex demand-side interactions. Second, we provide evidence that widely used topdown representations of electricity technologies produce fuel substitution patterns that are inconsistent with bottom-up cost data. This supports the view that the parametrization of substitution possibilities with highly aggregated production functions is difficult to validate empirically. The overall picture that emerges is one of large quantitative and even qualitative differences, highlighting the role of key structural assumptions in the interpretation of climate policy projections.
Economic and environmental implications of Turkish accession to the European Union: A CGE analysis
Energy Policy, 2010
The purpose of this paper is to analyze the economic and environmental implications of possible Turkish accession to the European Union (EU). The paper focuses on the impacts of three main components of Turkey's possible EU membership: i) free movement of labor between EU and Turkey, ii) free movement of capital, iii) burden sharing of Turkey in terms of EU's environmental objectives in the horizon of 2020, i.e. 10 percent reduction of carbon emissions. Among these, particular focus is placed on the influence of the CO 2 emission reduction targets in both regions and its consequences on the carbon price in 2020. We estimate the resource allocation effects of EU climate change policies on both regions by taking into account the likely labor movement from Turkey to the EU and capital movement from EU to Turkey in reverse direction. The results show that the different emission targets for both regions bring about a change in comparative advantages and thus a change in interregional competitiveness, which in turn will result in welfare changes. In case of factor mobility, welfare effects of Turkish accession will be higher for Turkey but it will be lower for EU.