A Research on the treads of multi-nation and multi -section carbon emissions and energy uses under the drive of the progress of technology
Zheng Wang*, Gaoxiang Gu
（Institute of Policy and Management, Chinese Academy of Sciences ）
Abstract The progress of process technologywhich is caused by the improvement of the productive technologies can reduce the demands of the intermediate inputs in the productive process, and then reduce the energy demands and the carbon emissions. Thus, to improve the level of process technologies is an important way for the decrease of global carbon emission.In this paper, based on Jin (2012)’s model, a general equilibrium model of multi-nation and multi-sectioneconomy was built. Coupled with the climate system of RICE model, a climate-economy integrated assessment modelbeen built with the interactions between the economic system and the climate system. Based on this model, the carbon emissions and the energy demands of different countries and sections were been studied. The simulated outcomes show that the progress of process technologycan bring on early peaks of energy demands and carbon emissions. Under the three different scenarios, China will reach its carbon emission peakat the year of 2034, 2030, and 2022 respectively. In the more bold scenario 3, the accumulated carbon emission in China can reduce to 93GtC, accomplishing the abatement targetof 100GtC. Besides, along with the progress of the process technologies, the developing countries like China and India have greater potential to reduce emissions.In all walks of life, energy industry has the greatest potential, and service industry follows.
Keywords:the progress of process technology; general equilibrium; carbon emission peak; energy demand
1. Introduction
Global climate change and climate protection are hot issues in recent years, but also the most challenging issues (Gardiner, Hartzell-Nichols 2012),which have been widely andintensively discussedin the world. Recognized cause of global climate change is the heavy use of fossil fuels and the emission of greenhouse gases like carbon dioxide, which caused by the rise of earth’s temperature (IPCC Climate Change 2007) since industrialization. Since 1750, global concentration of carbon dioxide, methane and nitrous oxide hassignificantly increased, far more thanthat before industrialization. Among them, carbon dioxide is the major greenhouse gases. Therefore, the control and reduction of global CO2 emissionsplay a significant role in the future development of human society
The progress of energy-saving technology is significant for reducing the emission of carbon dioxidede Groot et.al, 2001).The use of energy -saving technologies can reduce energy consumption of per unit of GDP, which is an important way to reduce the emission of industrial greenhouse gases.Although there has always been a view that the decline in the energy intensity caused by technological innovation in the process of production will lead to a decline in energy prices , Consequently causingexcessive energy consumption (Herring, Roy 2009), but from macro and long-term perspectiveimproved production process will reduce the production and other intermediate process of energy, which plays an important role in the decline of energy use, the decrease of CO2 emission and the protection of climate.
Narrow energy -saving technologies can reduceenergy use in the process of production, and broad energy -saving technologies should include all technologies that can reduce intermediate inputs, namely process technology or technology, because all the production of intermediate inputs also consumes energy.Reducing investment in intermediate products will reduce the use of energy. This paper considers the energy -saving technology in the broad sense.
Research on the relationship between technological progress and the decline in energy intensity is a hot issue in recent years in research field . Popp (2001)thought that technological innovations play an important role in reducing energy consumption, especially from long-term perspective, playing a more important role than factor substitution, especially from the perspective of the long-term , with more significant than the factor substitution effect . Fisher-Vanden et.al (2004) found that R & D investment , the change of industrial structureand energy prices are are important driving factors of the decline of energy intensity in China. Gallagher et.al (2004) considered the world's energy technology innovation is the key to maintaining economic prosperity and ensuring that the global climate is not destroyedbecause of the use of fossil fuels. the world's energy technology innovation is to maintain economic prosperity and ensure that the global climate is not critical because of the use of fossil fuels have been destroyed . Feng et al ( 2008 ) suggests thatthe increase of proportion of technological progress and the tertiary industry in GDP can significantly reduce China 's energy intensity , while in the long term,the reduction ofenergy intensity ultimately has to rely on technological progress. Sagar, van der Zwaana (2006)studied the impact on energy economy of the rate of diffusion of technological innovation and technological innovation based on R & D and the model of learning by doing. de Groot et.al (2001)took the Netherlands as an example to study improved choice of environmental policy and their impact on energy intensity in different environmental policies and sectors. Sue Wing (2008)analyzed the power source of America’s decline of energy intensity in the past fifty years through the method of measure, the results showed that the change of industrial structure and the improvement of energy use efficiency are major power source.he results showed that the change of industrial structure and the improvement of energy use efficiency are major power source, and alternative energy caused by the price has only short-term effects . The above work mainlytook statistical methods, measurement and data analysis –based method or a partial microscopic scale study,The study was limited to a particular country , and there is no study on the impact of the progress of energy technology on global climate change and economic development.
This paper argues thatthe research on global decline in the energy intensity, national economic development and the impact of carbon emissions research should be carried out against the background of global climate change, to reflect the feedback effects of climate change and the economy, to improvethe accuracy and realityof the study, which formed the integrated problems of global economic development and climate change. For this type of problem, the international community is more popular to use integrated assessment models, especiallytaking the DICE model by Nordhaus (1992)and the RICE model by Nordhaus, Yang (1996) as the representativealso including the FOUND model by a Link, Tol (2004 ), and MERGE modelby Manne, Richel (1996,1999) etc. However, the economic systems of these models have some shortcomin, the main problem is that these models or economic system are too simple, without considering the general equilibrium of global economy; decline in exogenous energy intensity is defined without considering endogenous technological progress.
Among them, the economic mechanisms of RICE and DICE model is too simple, without considering the equilibrium of the market, and its mode of technological progress does not obtain endogenesis. Meanwhile, RICE model does not consider the economic ties between countries,but regard their economic growth as mutually independent events. In addition, the region dividingof RICE modelis relatively simple. MERGE model also lacks economic ties between countries and economies are divided only to the national level. Divisions for economic development and changes of industrial structure of various departments lack 111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111more detailed studies. Although FOUND model divides economy into departmental level, and considers the inter-regional economic ties, but it does not consider the feedback effects of climate change on economic development.
Improving the work of the RICE model, Popp (2004)Improved the DICE mode by adding a model of endogenous technological progress, but the world will be reduced to a country in economic level, without considering the differences between countries different Therefore, he failed to study that countries of different development levels in face of carbon emissions decline problems would encounter different economic and industrial issues.MRICES model by Wang , Zhang, et al (2012) and Zhang (2012)takes into account economic ties and endogenous technological progress mode between countries. but its economic ties based on GDP overflow forms of expression cannot accurately describe the economic relations between countries underglobal economic integration. Besides the economic system of its models onlycountries underdescribe the impact of changes of industrial structure on energy intensity.
In response to these deficiencies in the work,based on Jin’s (2012) model, we use a general equilibrium approach to build a general equilibrium model ofbiochemical technical level inmany nations and sectors, describing the interaction of economy between the nation and production departments.On this basis, the paper will based on Jin’s (2012) model, we use a general equilibrium approach to build a general equilibrium model ofbiochemical technical level inmany nations and sectors, describing the interaction of economy between the nation and production departments making the interaction between economic models and climate models to build a dynamic and integrated assessment of climate change, based on economic interaction model of general equilibrium in many nations and sectors,By changing the rate of the progress of technological process, we will research the economic development rate, energy consumption and changes of CO2 emissions in different countries and various sectors under different energy intensity and rates, and compare the potential of reducing CO2 emissions between different nations and sectors.
2 modeling and data
In this paper, the model includes multi-national multi-sectoral economic model based on general equilibrium theory, a climate model and a carbon accounting module. In the model, the world is divided into a number of countries,which are represented by jjJ111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111jjJ, while the production departments are represented by i in this paperThe precondition of the hypothesis is that capital and goods can flow freely between nations; there is no trade barriers; there does not exist labor mobilitybetween the nations; country's internal labor can move freely.
2.1 Economic Module
In this paper,we describe production behavior of various departments in two nested layers, namely the department's total output value is made up ofadded values and intermediate inputs, and added valuesare composed of labor and fixed capital.Based on the constitution form of total outputs defined by Leontief’s production function definition andconstitution form of added values defined by Cobb-Douglas’s production function definition, this paper follows Jin’s (2012) assumption in the production process: the same department has a unique output elasticity; the same country has a unique production technology; production technology is fully applied to labor, to form an effective workforce.
（1）
（2）
In the formula (1),represents added value in t phase ini department of j country;represents the initial increase through the combination of its labor and capital;means the number of products that i department actually put in k department in the process of production; means the middle coefficient of demandsin various departments.In formula (2), represents the fixed capital in t phase ini department of j country;means the number of labor; means technological level of labors;means the output elasticity of departments.
Wage rate equals themarginal output of workers.Because workers in this country have full mobility, the wage rate in various departments is the same in the country under equilibrium conditions.
（3）
InFormula (3), meansthe price of productsi,Because of theabsence of trade barriers between countries, the price of one product in a phase is unified.According to Abel (2003), and Jin (2012), the capital in this paper are accumulated and updated in Cobb-Douglas form:
（4）
Where, Formula (4), indicates the number of investment obtained byi department of jcountry in t phase. including domestic investment and foreign investment, is the output elasticity of capital production , ais its total factor productivity. In formula (3), tocalculatethe partial derivativesof, the marginal product can invest, which is the inverse of the price of capital.
（5）
The total GDP of the countries in each period consists of two parts, namely,he added value of products production and capital increase in value production.
（6）
Formula (6), means added value of products production, means capital increase in value production.
The conditions of the clearing of product market is that production plus consumption equals the sum of intermediate inputs and investmentAssuming is the global output ofi department in t phase , clearing conditions of the productiis as follows:
（7）
According to Jin (2012),clearing equation of price in each production departments is expressed as
（8）
clearing equation of every country’s labor can be expressed as:
（9）
2.2Capital flowsModule
Employing wage and price equations in a condition of general equilibrium, you can get the total wage of full market is:
（10）
Full market total wages as fixed share of total output,the ratio of the number of full-market investment to the total output in each phase is:
（11）
In Formula (11), represents country j's savings rate. This article assumes that capital flows consist of two parts, so that the pursuits of economic scale and rate of capital return are fulfilled, the ratio of obtained investment to total investment of several countries in the various departmentsherein is :
（12）
In Formula (12), the and represents ratio of investment when pursuing economic scale and ratio of investment respectively;are weighting coefficients of. Expression and Jin (2012) consistent pattern of international capital flows, the basic idea is designed to ensure that the unit is equal to the return on investment in all sectors of the countries obtained:
（13）
Form from (13) point of view, is a kind of added value of the investment division of capital allocation model.is theration of investment in many countries and departments based on capital attractiveness.Different from ,, from the microscopicpoint of view,takesa bottom-upperspective to reflecttheprofit-drivenprocess of capital flows, namely the high rate ofreturn on capitalflowsdepartment.Herewe refer totheCaniëls (2000)andCaniëls, Verspagen’s (2001)Knowledgespilloverstrength modelto representthe strength ofinter-regionalknowledge spillovers.Since this paper studies inter-regional capital flows, we use capital stock, total wages and marginal product of capital intensity as factors to influence capital attraction, and we employ inter-regional travel to replace the knowledge gap in knowledge spillovers model.Wang, Ge, et al (2007) has been attractive regional capital intensity decay is exponential decay
（14）
（15）
In (15), isthe attractivenessof thecapitalintensity ofsectorx in the statey, means that the value ofthe ratio ofthe two countriesto increasethe attractiveness ofthe impacton the capitalcoefficient, represented by thestate sectorsavings.In Formula (21), demonstrates the attractivenessof thecapitalintensity ofdepartment x in the country y for department i in country j. means influence coefficient of the ratio of added value in two countrieson capital attractiveness. represents thesavings of department x in country y.
As the real international capital flow exist some obstacles, and different countries employ different policies on capital investment, international capitalinvestmentcannot flow freely.In this paper,we introduceinvestmentweightingto correctthe behavior ofinternational capitalinvestmentand overcome theerrorscaused bythe simulation.Themeaning of isreflectedinterference with internationalgeopoliticalfactors oncapital flowscaused.Thus, theultimate ration of investment of different countriescan be expressed as:
（16）
In Formula (16), indicates normalized parameters. The significance of Formula (16) lies in re-normalization of investment ration in different countries and departments after t adding the correction factor, to make sure . the actual number of investments in various sectors States obtained as follows:
（17）
2.3TechnologyProgressModule
In this paper, the advancement of technology embodies two aspects, namely, the increase of levels of process technology, and the decrease of coefficient of intermediate demands.The formerreflectsthe improvement of productive capability, while the latter reflects the decrease in intermediate inputs in the process of production ,namely the progress of process technology. For theproduction technology level, Based on Arrow (1962), Romer ‘s (1986) hypothesis, we set up a biochemical approach, concerning that level of process technology is related with capital accumulation of the department, and the following is its expression:
（18）
In the course of the progress of process technology, for coefficient of intermediate demands , in accordance with Lorentz, Savona’s (2008) work, we take the method of random cycle shock, randomly shocking the coefficient of intermediate demands of different countries and departments for several times in each phase and simulating the decrease in intermediate products of production departments.
（19）
（20）
In Formula (19), n means that the nth iteration,, which means intermediate demand coefficient at t that after thenth iteration of the national department jof products is subject to a random number distribution. This produces a new set of intermediate demand factor. When the cost of production per unit in this new set of intermediate demand coefficient is less than the cost of production per unit before, this new set of intermediate demand coefficient is accepted; otherwise maintainthe original intermediate demand factor is maintained.
（21）
After the Ncirculate times, was given to the needs of the middle coefficient:
（22）
2.4Carbon Accountingand ClimateFeedback
In thismodel,theenergyused in the process of productionof various departments is suppliedby theenergy department, thereforethe amountof energycan be calculatedaccording to intermediate demandcoefficient for energy department andthe total output ofthe various departments.
（23）