From 0d3dd277aee0b22eae58145f661e482d25057fb8 Mon Sep 17 00:00:00 2001 From: Unknown Date: Sat, 3 Aug 2019 23:30:58 +0200 Subject: [PATCH 1/3] adjustment of MACRO documentation mild revision of MACRO description, including reference to mathematical equations in MESSAGEix documentation --- source/macro.rst | 10 +++++----- 1 file changed, 5 insertions(+), 5 deletions(-) diff --git a/source/macro.rst b/source/macro.rst index 1de8b38..9d438bb 100755 --- a/source/macro.rst +++ b/source/macro.rst @@ -1,11 +1,11 @@ .. _macro: Macro-economy (MACRO) ----- -The detailed energy supply model (MESSAGE) is soft-linked to an aggregated, single-sector macro-economic model (MACRO) which has been derived from the so-called Global 2100 or ETA-MACRO model (Manne and Richels, 1992 :cite:`manne_buying_1992`), a predecessor of the `MERGE `_ model. The reason for linking the two models is to consistently reflect the influence of energy supply costs, as calculated by MESSAGE, the mix of production factors considered in MACRO, and the effect of changes in energy prices on energy service demands. The combined MESSAGE-MACRO model (Messner and Schrattenholzer, 2000 :cite:`messner_messagemacro:_2000`) can generate a consistenteconomic response to changes in energy prices and estimate overall economic consequences (e.g., GDP or consumption loss) of energy or climate policies. +--------------------- +The detailed energy supply model (MESSAGE) is soft-linked to an aggregated, single-sector macro-economic model (MACRO) which has been derived from the so-called Global 2100 or ETA-MACRO model (Manne and Richels, 1992 :cite:`manne_buying_1992`), a predecessor of the `MERGE `_ model. The reason for linking the two models is to consistently reflect the influence of energy supply costs, as calculated by MESSAGE, the mix of production factors considered in MACRO, and the effect of changes in energy prices on energy service demands. The combined MESSAGE-MACRO model (Messner and Schrattenholzer, 2000 :cite:`messner_messagemacro:_2000`) can generate a consistent economic response to changes in energy prices and estimate overall economic consequences (e.g., changes in GDP or household consumption) of energy or climate policies. -MACRO is a macroeconomic model maximizing the intertemporal utility function of a single representative producer-consumer in each world region. The optimization result is a sequence of optimal savings, investment, and consumption decisions. The main variables of the model are the capital stock, available labor, and energy inputs, which together determine the total output of an economy according to a nested CES (constant elasticity of substitution) production function. Energy demand in the six commercial demand categories of MESSAGE (see :ref:`demand`) is determined within the MACRO model, and is consistent with energy supply from MESSAGE, which is an input to the model. The model’s most important driving input variables are the projected growth rates of total labor, i.e., the combined effect of labor force and labor productivity growth and the annual rates of reference energy intensity reduction. The latter is calibrated to the developments in a MESSAGE baseline scenario to ensure consistency between the two models. Labor supply growth is also referred to as reference or potential GDP growth. In the absence of price changes, energy demands grow at rates that are the approximate result of potential GDP growth rates, reduced by the rates of overall energy intensity reduction. Price changes of the six demand categories can alter this path significantly. +MACRO is a macroeconomic model maximizing the intertemporal utility function of a single representative producer-consumer in each world region. The optimization result is a sequence of optimal savings, investment, and consumption decisions. The main variables of the model are capital stock, available labor, and energy inputs, which together determine the total output of an economy according to a nested CES (constant elasticity of substitution) production function. End-use service demands in the (commercial) demand categories of MESSAGE (see :ref:`demand`) is determined within the MACRO model, and is consistent with energy supply from MESSAGE, which is an input to the MACRO. The model’s most important driving input variables are the projected growth rates of total labor, i.e., the combined effect of labor force and labor productivity growth, and the annual rates of reference energy intensity reduction, i.e. the so-called autonomous energy efficiecy improvement (AEEI) coefficients. The latter are calibrated to the developments in a MESSAGE baseline scenario to ensure consistency between the two models. Labor supply growth is also referred to as reference or potential GDP growth. In the absence of price changes, energy demands grow at rates that are the approximate result of potential GDP growth rates, reduced by the rates of overall energy intensity reduction. Price changes of the six demand categories, for example induced by energy or climate policies, can alter this path significantly. -MACRO's production function includes six commercial energy demand categories represented in MESSAGE. To optimize, MACRO requires cost information for each demand category. The exact definitions of these costs as a function over all positive quantities of energy cannot be given in closed form because each point of the function would be a result of a full MESSAGE run. However, the optimality conditions implicit in the formulation of MACRO only require the functional values and its derivatives at the optimal point to be consistent between the two sub-models. Since these requirements are therefore only local, most functions with this feature will simulate the combined energy-economic system in the neighborhood of the optimal point. The regional costs (energy use and imports) and benefits (energy exports) of providing energy in MACRO are approximated by a Taylor expansion to first order of the energy system costs as calculated by MESSAGE. From an initial MESSAGE model run, the total energy system cost (including costs/revenues from energy trade) and additional abatement costs (e.g., abatement costs from non-energy sources) as well as the shadow prices of the six commercial demand categories by region are passed to MACRO. In addition to the economic implications of energy trade, MACRO also includes the implications of GHG permit trade. +MACRO's production function includes six commercial energy demand categories represented in MESSAGE. To optimize, MACRO requires cost information for each demand category. The exact definitions of these costs as a function over all positive quantities of energy cannot be given in closed form because each point of the function would be a result of a full MESSAGE run. However, the optimality conditions implicit in the formulation of MACRO only require the functional values and its derivatives at the optimal point to be consistent between the two models. Since these requirements are therefore only local, most functions with this feature will simulate the combined energy-economic system in the neighborhood of the optimal point. The regional costs (of energy use and imports) and revenues (from energy exports) of providing energy in MACRO are approximated by a Taylor expansion to first order of the energy system costs as calculated by MESSAGE. From an initial MESSAGE model run, the total energy system cost (including costs/revenues from energy trade) and additional abatement costs (e.g., abatement costs from non-energy sources) as well as the shadow prices of the six commercial demand categories by region are passed to MACRO. In addition to the economic implications of energy trade, the data exchange from MESSAGE to MACRO may also includs the revenues or costs of trade in GHG permits. -For a more elaborate description of MACRO, including the system of equations and technical details of the implementation, please consult the :ref:`annex_macro`. \ No newline at end of file +For a more elaborate description of MACRO's system of equations please consult the `MACRO section `_ of the `MESSAGEix documentation `_. Details on the implementation of MACRO, its parameterization and the calibration procedure can be found in the :ref:`annex_macro`. \ No newline at end of file From e248cada4484019f735253da17714c27884b09af Mon Sep 17 00:00:00 2001 From: Unknown Date: Sat, 3 Aug 2019 23:33:07 +0200 Subject: [PATCH 2/3] adjustment of MACRO annex removed MACRO equations from annex and adjusted description of MACRO implementation to MESSAGEix --- source/annex/macro.rst | 189 +++-------------------------------------- 1 file changed, 13 insertions(+), 176 deletions(-) diff --git a/source/annex/macro.rst b/source/annex/macro.rst index c798bab..8d84519 100755 --- a/source/annex/macro.rst +++ b/source/annex/macro.rst @@ -1,183 +1,21 @@ .. _annex_macro: -Mathematical Formulation: MACRO -==== +Implementation: MACRO +===================== MACRO is based on the macro-economic module of the global energy-economy-climate model Global 2100 :cite:`manne_buying_1992`, a predecesor of the `MERGE `_ model. The original soft-linkage between MACRO and MESSAGE has been described in :cite:`messner_messagemacro:_2000`, but several adjustments have been made compared to this original implementation. The description below builds to a certain degree on these two publications, but deviates in some places as discussed in the following paragraphs. It is worthwhile mentioning that MACRO as used with MESSAGE has similar origins as the MACRO module of MARKAL-MACRO :cite:`loulou_markal-macro_2004` with the exception of being soft-linked rather than hard-linked to the energy systems part of the model. On the one hand, while the version of MACRO described in :cite:`messner_messagemacro:_2000` like the MACRO module of Global 2100 operated at the level of electric and non-electric energy demands in the production function, the present version of MACRO operates at the level of the six commercial useful energy demands represented in MESSAGE (:ref:`message`). This change was made in response to electrification becoming a tangible option for the transport sector with the introduction of electric cars over the past decade. Previsouly (and as described in :cite:`messner_messagemacro:_2000`), the electric useful energy demands in MESSAGE had been mapped to electric demand in MACRO and the thermal useful energy demands, non-energy feedstock and transport demands in MESSAGE had been mapped to non-electric demand in MACRO. -On the other hand, the interface between MACRO and MESSAGE that organizes the iterative information exchange between the two models has been re-implemented in the scripting language R which makes code maintenance and visualization of results (e.g., for visually checking demand convergence between MACRO and MESSAGE) easier compared tothe previous implementation in C. +On the other hand, as a result of switching the implementation of `MESSAGE to GAMS `_, the iterative information exchange between the two models is now handled within GAMS. This accelerates the iteration process considerably, because the solution of the previous iteration is kept in memory and can serve as a starting point for the next iteration. -Finally, the parameterization of MACRO has changed in a specific way. As mentioned, the model's most important input parameters are the projected growth rates of total labor, i.e., the combined effect of labor force and labor productivity growth (note that labor supply growth is also referred to as reference or potential GDP growth) and the annual rates of reference energy intensity improvements. In all recent applications of MACRO, including the SSPs, these are calibrated to be consistent with the developments in a MESSAGE scenario. In practice, this happens by running MACRO and then adjusting the potential GDP growth rates and the autonomous energy efficiency improvements (AEEIs) on a sectoral basis until MACRO does not produce an energy demand response and GDP feedback compared to the MESSAGE scenario that it is calibrated to. - -Notation declaration ----- - -The following short notation is used for the three indices, i.e. regions, years and sectors, in the mathematical description of the MACRO code. - -========== ================================================== -Index Description -========== ================================================== -:math:`r` region index (11 MESSAGE regions) -:math:`y` year (2005, 2010, 2020, ..., 2100) -:math:`s` sector (six commercial energy demands of MESSAGE) -========== ================================================== - -A listing of all parameters used in MACRO together with a decription can be found in the table below. - -=========================== ================================================================================================================================ -Parameter Description -=========================== ================================================================================================================================ -:math:`duration\_period_y` Number of years in time period :math:`y` (forward diff) -:math:`total\_cost_{r,y}` Total energy system costs in region :math:`r` and period :math:`y` from MESSAGE model run -:math:`enestart_{r,s,y}` Consumption level of six commercial energy services :math:`s` in region :math:`r` and period :math:`y` from MESSAGE model run -:math:`eneprice_{r,s,y}` Shadow prices of six commercial energy services :math:`s` in region :math:`r` and period :math:`y` from MESSAGE model run -:math:`\epsilon_r` Elasticity of substitution between capital-labor and total energy in region :math:`r` -:math:`\rho_r` :math:`\epsilon - 1 / \epsilon` where :math:`\epsilon` is the elasticity of subsitution in region :math:`r` -:math:`depr_r` Annual depreciation rate in region :math:`r` -:math:`\alpha_r` Capital value share parameter in region :math:`r` -:math:`a_r` Production function coefficient of capital and labor in region :math:`r` -:math:`b_{r,s}` Production function coefficients of the different energy sectors in region :math:`r`, sector :math:`s` and period :math:`y` -:math:`udf_{r,y}` Utility discount factor in period year in region :math:`r` and period :math:`y` -:math:`newlab_{r,y}` New vintage of labor force in region :math:`r` and period :math:`y` -:math:`grow_{r,y}` Annual growth rates of potential GDP in region :math:`r` and period :math:`y` -:math:`aeei_{r,s,y}` Autonomous energy efficiency improvement (AEEI) in region :math:`r`, sector :math:`s` and period :math:`y` -:math:`fin\_time_{r,y}` finite time horizon correction factor in utility function in region :math:`r` and period :math:`y` -=========================== ================================================================================================================================ - -The table below lists all variables in MACRO together with a definition and brief description. - -======================== ==================================================== ====================================================================================================== -Variable Definition Description -======================== ==================================================== ====================================================================================================== -:math:`K_{r,y}` :math:`{K}_{r, y}\geq 0 ~ \forall r, y` Capital stock in region :math:`r` and period :math:`y` -:math:`KN_{r,y}` :math:`{KN}_{r, y}\geq 0 ~ \forall r, y` New Capital vintage in region :math:`r` and period :math:`y` -:math:`Y_{r,y}` :math:`{Y}_{r, y}\geq 0 ~ \forall r, y` Total production in region :math:`r` and period :math:`y` -:math:`YN_{r,y}` :math:`{YN}_{r, y}\geq 0 ~ \forall r, y` New production vintage in region :math:`r` and period :math:`y` -:math:`C_{r,y}` :math:`{C}_{r, y}\geq 0 ~ \forall r, y` Consumption in region :math:`r` and period :math:`y` -:math:`I_{r,y}` :math:`{I}_{r, y}\geq 0 ~ \forall r, y` Investment in region :math:`r` and period :math:`y` -:math:`PHYSENE_{r,s,y}` :math:`{PHYSENE}_{r, s, y}\geq 0 ~ \forall r, s, y` Physical energy use in region :math:`r`, sector :math:`s` and period :math:`y` -:math:`PRODENE_{r,s,y}` :math:`{PRODENE}_{r, s, y}\geq 0 ~ \forall r, s, y` Value of energy in the production function in region :math:`r`, sector :math:`s` and period :math:`y` -:math:`NEWENE_{r,s,y}` :math:`{NEWENE}_{r, s, y}\geq 0 ~ \forall r, s, y` New energy in the production function in region :math:`r`, sector :math:`s` and period :math:`y` -:math:`EC_{r,y}` :math:`EC \in \left[-\infty..\infty\right]` Approximation of energy costs based on MESSAGE results -:math:`UTILITY` :math:`UTILITY \in \left[-\infty..\infty\right]` Utility function (discounted log of consumption) -======================== ==================================================== ====================================================================================================== - -Equations ----- - -Utility function -~~~~ -The utility function which is maximized sums up the discounted logarithm of consumption of a single representative producer-consumer over the entire time horizon -of the model. - -.. equation {UTILITY_FUNCTION} - -.. math:: {UTILITY} = \displaystyle \sum_{r} \left( \displaystyle \sum_{y | ( ( {ord}( y ) > 1 ) \wedge ( {ord}( y ) < | y | ) )} {udf}_{r, y} \cdot {log}( C_{r, y} ) \cdot \frac{{duration\_period}_{y} + {duration\_period}_{y-1}}{2} \right. \\ - \left. + \displaystyle \sum_{y | ( {ord}( y ) = | y | ) } {udf}_{r, y} \cdot {log} ( C_{r, y} ) \cdot \left( \frac{{duration\_period}_{y-1}}{2} + \frac{1}{{fin\_time}_{r, y}} \right) \right) - -The utility discount rate for period :math:`y` is set to :math:`DRATE_{r} - grow_{r,y}`, where :math:`DRATE_{r}` is the discount rate used in MESSAGE, typically set to 5%, -and :math:`grow` is the potential GDP growth rate. This choice ensures that in the steady state, the optimal growth rate is identical to the potential GDP growth rates :math:`grow`. -The values for the utility discount rates are chosen for descriptive rather than normative reasons. The term :math:`\frac{{duration\_period}_{y} + {duration\_period}_{y-1}}{2}` mutliples the -discounted logarithm of consumption with the period length. The final period is treated separately to include a correction factor :math:`\frac{1}{{fin\_time}_{r, y}}` reflecting -the finite time horizon of the model. - -Allocation of total production -~~~~ -The following equation specifies the allocation of total production among current consumption :math:`{C}_{r, y}`, investment into building up capital stock excluding -energy sectors :math:`{I}_{r, y}` and energy system costs :math:`{EC}_{r, y}` which are derived from a previous MESSAGE model run. As described in :cite:`manne_buying_1992`, the first-order -optimality conditions lead to the Ramsey rule for the optimal allocation of savings, investment and consumption over time. - -.. equation {CAPITAL_CONSTRAINT}_{r, y} - -.. math:: Y_{r, y} = C_{r, y} + I_{r, y} + {EC}_{r, y} \qquad \forall{ r, y} - -New capital stock -~~~~ -The accumulation of capital in the non-energy sectors is governed by new capital stock equation. Net capital formation :math:`{KN}_{r,y}` is derived from gross -investments :math:`{I}_{r,y}` minus depreciation of previsouly existing capital stock. - -.. equation {NEW_CAPITAL}_{r,y} - -.. math:: {KN}_{r,y} = \frac{1}{2} \cdot {duration\_period}_{y} \cdot \left( { \left( 1 - {depr}_r \right) }^{duration\_period_{y}} \cdot I_{r,y-1} + I_{r,y} \right) \qquad \forall{r, y > 1} - -Here, the initial boundary condition for the base year (:math:`y_0 = 2005`) implies for the investments that :math:`I_{r,y_0} = (grow_{r,y_0} + depr_{r}) \cdot kgdp \cdot GDP_{y_0}`. - -Production function -~~~~ -MACRO employs a nested CES (constant elasticity of substitution) production function with capital, labor and the six commercial energy services -represented in MESSAGE as inputs. - -.. equation {NEW_PRODUCTION}_{r, y} - -.. math:: {YN}_{r,y} = { \left( {a}_{r} \cdot {{KN}_{r, y}}^{ ( {\rho}_{r} \cdot {\alpha}_{r} ) } \cdot {{newlab}_{r, y}}^{ ( {\rho}_{r} \cdot ( 1 - {\alpha}_{r} ) ) } + \displaystyle \sum_{s} ( {b}_{r, s} \cdot {{NEWENE}_{r, s, y}}^{{\rho}_{r}} ) \right) }^{ \frac{1}{{\rho}_{r}} } \qquad \forall{ r, y > 1} - -Total production -~~~~ -Total production in the economy (excluding energy sectors) is the sum of production from all assets where assets that were already existing in the previous period :math:`y-1` -are depreciated with the depreciation rate :math:`depr_{r}`. - -.. equation {TOTAL_PRODUCTION}_{r, y} - -.. math:: Y_{r, y} = Y_{r, y-1} \cdot { \left( 1 - {depr}_r \right) }^{duration\_period_{y-1}} + {YN}_{r, y} \qquad \forall{ r, y > 1} - -Total capital stock -~~~~ -Equivalent to the total production equation above, the total capital stock, again excluding the energy sectors which are modeled in MESSAGE, is then simply a summation -of capital stock in the previous period :math:`y-1`, depreciated with the depreciation rate :math:`depr_{r}`, and the capital stock added in the current period :math:`y`. - -.. equation {TOTAL_CAPITAL}_{r, y} - -.. math:: K_{r, y} = K_{r, y-1} \cdot { \left( 1 - {depr}_r \right) }^{duration\_period_{y-1}} + {KN}_{r, y} \qquad \forall{ r, y > 1} - -New vintage of energy production -~~~~ -The new vintage of energy production of the six commerical energy demands :math:`s` derive from total production in period :math:`y` minus the total energy production in the previous -period :math:`y-1` after depreciation. - -.. equation {NEW_ENERGY}_{r, s, y} - -.. math:: {NEWENE}_{r, s, y} = {PRODENE}_{r, s, y} - {PRODENE}_{r, s, y-1} \cdot { \left( 1 - {depr}_r \right) }^{duration\_period_{y-1}} \qquad \forall{ r, s, y > 1} - -Physical energy -~~~~ -The relationship below establishes the link between physical energy :math:`{PHYSENE}_{r, s, y}` as accounted in MESSAGE for the six commerical energy demands :math:`s` and -energy in terms of monetary value :math:`{PRODENE}_{r, s, y}` as specified in the production function of MACRO. - -.. equation {ENERGY_SUPPLY}_{r, s, y} - -.. math:: {PHYSENE}_{r, s, y} \geq {PRODENE}_{r, s, y} \cdot {aeei\_factor}_{r, s, y} \qquad \forall{ r, s, y > 1} - -The cumulative effect of autonomous energy efficiency improvements (AEEI) is captured in :math:`{aeei\_factor}_{r,s,y} = {aeei\_factor}_{r, s, y-1} \cdot (1 - {aeei}_{r,s,y})^{duration\_period}_{y}` -with :math:`{aeei\_factor}_{r,s,y=1} = 1`. Therefore, choosing the :math:`{aeei}_{r,s,y}` coefficients appropriately offers the possibility to calibrate MACRO to a certain energy demand trajectory -from MESSAGE. - -Energy system costs -~~~~ -Energy system costs are based on a previous MESSAGE model run. The approximation of energy system costs in vicinity of the MESSAGE solution are approximated by a Taylor expansion with the -first order term using shadow prices :math:`eneprice_{s, y, r}` of the MESSAGE model's solution and a quadratic second-order term. - -.. equation {COST_ENERGY}_{r, y} - -.. math:: {EC}_{r, y} = {total\_cost}_{y, r} + \displaystyle \sum_{s} {eneprice}_{s, y, r} \cdot \left( {PHYSENE}_{r, s, y} - {enestart}_{s, y, r} \right) \\ - + \displaystyle \sum_{s} \frac{{eneprice}_{s, y, r}}{{enestart}_{s, y, r}} \cdot \left( {PHYSENE}_{r, s, y} - {enestart}_{s, y, r} \right)^2 \qquad \forall{ r, y > 1} - -Finite time horizon correction -~~~~ -Given the finite time horizon of MACRO, a terminal constraint needs to be applied to ensure that investments are chosen at an appropriate level, i.e. to replace depriciated capital and -provide net growth of capital stock beyond MACRO's time horizon :cite:`manne_buying_1992`. The goal is to avoid to the extend possible model artifacts resulting from this finite time horizon -cutoff. - -.. equation {TERMINAL_CONSTRAINT}_{r, y} - -.. math:: K_{r, y} \cdot \left( grow_{r, y} + depr_r \right) \leq I_{r, y} \qquad \forall{ r, y = last year} +Finally, the parameterization of MACRO has changed in a specific way. As mentioned, the model's most important input parameters are the projected growth rates of total labor, i.e., the combined effect of labor force and labor productivity growth (note that labor supply growth is also referred to as reference or potential GDP growth) and the annual rates of reference energy intensity reductions, i.e. the so-called autonomous energy efficiecy improvement (AEEI) coefficients. In all recent applications of MACRO, including the Shared Socio-economic Pathways (SSPs), these are calibrated to be consistent with the developments in a MESSAGE scenario. In practice, this happens by running MACRO and adjusting the potential GDP growth rates and the AEEI coefficients on a sectoral basis until MACRO does not produce an energy demand response and GDP feedback compared to the MESSAGE scenario that it is calibrated to. MACRO parameterization ----- +---------------------- Initial conditions -~~~~ +~~~~~~~~~~~~~~~~~~ Total capital :math:`K_{r, y=0}` in the base year is derived by multiplying base year GDP with the capital-to-GDP ratio :math:`kgdp`. .. math:: K_{y=0, r} = kgdp \cdot GDP_{r, y=0} @@ -200,7 +38,7 @@ setting the labor force index in the base year to 1 (numeraire) and solving for .. math:: a_r = Y_{y=0, r}^{\rho_r} - \sum_s b_{r,s} \cdot \frac{{{PHYSENE}_{r, s, y=0}}^{\rho_r}} {{K_{y=0, r}}^{\rho_r \cdot \alpha_r}} Macro-economic parameters -~~~~ +~~~~~~~~~~~~~~~~~~~~~~~~~ Given that MESSAGE includes (exogenous) energy efficiency improvements in end-use technologies as well as significant potential final-to-useful energy efficiency improvements via fuel switching (e.g., via electrification of thermal demands and transportation), for the elasticity of substitution between capital-labor and total energy demand :math:`\epsilon_r` in MACRO relatively low values in the range of 0.2 and 0.3 were chosen. The elasticities are region-dependent with developed regions :math:`r \in \{NAM, PAO, WEU\}` assumed to have higher elasticities of 0.3, economies in transition :math:`r \in \{EEU, FSU\}` intermediate values of 0.25 and developing regions :math:`r \in \{AFR, CPA, LAM, MEA, PAS, SAS\}` the lowest elasticities of 0.2. @@ -209,7 +47,7 @@ The capital value share parameter :math:`\alpha_r` can be interpreted as the opt with lower values between 0.24 and 0.28 assumed for developed regions and slightly higher values of 0.3 assumed for economies in transition and developing country regions. Calibration -~~~~ +~~~~~~~~~~~ Via a simple iterative algorithm, MACRO is typically calibrated to an exogenously specified set of regional GDP trajectories and useful energy demand projections from MESSAGE. To calibrate GDP, after each MACRO run the realized GDP from MACRO and the GDP to be calibrated to are compared and the potential GDP growth rate :math:`{GROW}_{y, r}` used in MACRO is then adjusted according to the following formula. @@ -234,25 +72,24 @@ are adjusted and in the second run the AEEI coefficients are adjusted. This cali :math:`{GROW\_corr}_{y, r}` and the AEEI coefficients :math:`{aeei}_{r, y, s}` all stay below :math:`10^{-5}`. Iterating between MESSAGE and MACRO ----- +----------------------------------- Exchanged parameters -~~~~ +~~~~~~~~~~~~~~~~~~~~ MESSAGE and MACRO exchange demand levels of the six commercial servcie demand categories represented in MESSAGE, their corresponding prices as well as total energy system costs including trade effects of energy commodities and carbon permits (if any explicit mititgation effort sharing regime is implemented). Convergence criterion -~~~~ +~~~~~~~~~~~~~~~~~~~~~ The iteration between MESSAGE and MACRO is either stopped after a fixed number of iterations - in case of which the user needs to manually check convergence between the models - or once the maximum of changes across all energy demand categories and regions (i.e. the convergence criterion) is less than a specified threshold. In both cases the convergence criterion is typically set to around 1%. Constraint on demand response -~~~~ +~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Demand responses from MACRO to MESSAGE can be large if the initial demands are far from the equlibrium demand levels of a specific scenario (e.g., when using demand from a non-climate policy scenario as the starting point for a stringent climate mitigation scenario that aims at limiting temperature change to 2 degrees C). To avoid oscillations of demands in subsequent MESSAGE-MACRO iterations, a constraint on the maximum permissible demand change between subquent iterations has been introduced which is usually set to 15%. In practical terms this means that the demand response is capped at -15% for each type of :ref:`demand` and for each of the 11 MESSAGE :ref:`spatial`. +20% for each type of :ref:`demand` and for each of the MESSAGE :ref:`spatial`. However, under specific conditions - typically under stringent climate policy - when price repsonses to small demand adjustments are large, an oscillating behavior between two sets of demand levels can still occur. In such situations, the constraint on the demand response is reduced further until the changes in demand are less than the convergence criterion mentioned above. - From 730b0bb9c6e93c2d05361256a87d536019abf315 Mon Sep 17 00:00:00 2001 From: Unknown Date: Sat, 3 Aug 2019 23:46:11 +0200 Subject: [PATCH 3/3] corrected links/references in MACRO documentation --- source/annex/macro.rst | 9 ++++----- source/bibs/main.bib | 2 +- source/macro.rst | 2 +- 3 files changed, 6 insertions(+), 7 deletions(-) diff --git a/source/annex/macro.rst b/source/annex/macro.rst index 8d84519..d031da0 100755 --- a/source/annex/macro.rst +++ b/source/annex/macro.rst @@ -3,11 +3,11 @@ Implementation: MACRO ===================== -MACRO is based on the macro-economic module of the global energy-economy-climate model Global 2100 :cite:`manne_buying_1992`, a predecesor of the `MERGE `_ model. The original soft-linkage between MACRO and MESSAGE has been described in :cite:`messner_messagemacro:_2000`, but several adjustments have been made compared to this original implementation. The description below builds to a certain degree on these two publications, but deviates in some places as discussed in the following paragraphs. It is worthwhile mentioning that MACRO as used with MESSAGE has similar origins as the MACRO module of MARKAL-MACRO :cite:`loulou_markal-macro_2004` with the exception of being soft-linked rather than hard-linked to the energy systems part of the model. +MACRO is based on the macro-economic module of the global energy-economy-climate model Global 2100 :cite:`manne_buying_1992`, a predecesor of the `MERGE `_ model. The original soft-linkage between MACRO and MESSAGE has been described in :cite:`messner_messagemacro:_2000`, but several adjustments have been made compared to this original implementation. The description below builds to a certain degree on these two publications, but deviates in some places as discussed in the following paragraphs. It is worthwhile mentioning that MACRO as used with MESSAGE has similar origins as the MACRO module of MARKAL-MACRO :cite:`loulou_markal-macro_2004` with the exception of being soft-linked rather than hard-linked to the energy systems part of the model. -On the one hand, while the version of MACRO described in :cite:`messner_messagemacro:_2000` like the MACRO module of Global 2100 operated at the level of electric and non-electric energy demands in the production function, the present version of MACRO operates at the level of the six commercial useful energy demands represented in MESSAGE (:ref:`message`). This change was made in response to electrification becoming a tangible option for the transport sector with the introduction of electric cars over the past decade. Previsouly (and as described in :cite:`messner_messagemacro:_2000`), the electric useful energy demands in MESSAGE had been mapped to electric demand in MACRO and the thermal useful energy demands, non-energy feedstock and transport demands in MESSAGE had been mapped to non-electric demand in MACRO. +On the one hand, while the version of MACRO described in :cite:`messner_messagemacro:_2000` like the MACRO module of Global 2100 operated at the level of electric and non-electric energy demands in the production function, the present version of MACRO operates at the level of the six commercial useful energy demands represented in MESSAGE (:ref:`demand`). This change was made in response to electrification becoming a tangible option for the transport sector with the introduction of electric cars over the past decade. Previsouly (and as described in :cite:`messner_messagemacro:_2000`), the electric useful energy demands in MESSAGE had been mapped to electric demand in MACRO and the thermal useful energy demands, non-energy feedstock and transport demands in MESSAGE had been mapped to non-electric demand in MACRO. -On the other hand, as a result of switching the implementation of `MESSAGE to GAMS `_, the iterative information exchange between the two models is now handled within GAMS. This accelerates the iteration process considerably, because the solution of the previous iteration is kept in memory and can serve as a starting point for the next iteration. +On the other hand, as a result of switching the implementation of `MESSAGE to GAMS `_, the iterative information exchange between the two models is now handled within GAMS. This accelerates the iteration process considerably, because the solution of the previous iteration is kept in memory and can serve as a starting point for the next iteration. Finally, the parameterization of MACRO has changed in a specific way. As mentioned, the model's most important input parameters are the projected growth rates of total labor, i.e., the combined effect of labor force and labor productivity growth (note that labor supply growth is also referred to as reference or potential GDP growth) and the annual rates of reference energy intensity reductions, i.e. the so-called autonomous energy efficiecy improvement (AEEI) coefficients. In all recent applications of MACRO, including the Shared Socio-economic Pathways (SSPs), these are calibrated to be consistent with the developments in a MESSAGE scenario. In practice, this happens by running MACRO and adjusting the potential GDP growth rates and the AEEI coefficients on a sectoral basis until MACRO does not produce an energy demand response and GDP feedback compared to the MESSAGE scenario that it is calibrated to. @@ -88,8 +88,7 @@ is typically set to around 1%. Constraint on demand response ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Demand responses from MACRO to MESSAGE can be large if the initial demands are far from the equlibrium demand levels of a specific scenario (e.g., when using demand from a non-climate policy scenario -as the starting point for a stringent climate mitigation scenario that aims at limiting temperature change to 2 degrees C). To avoid oscillations of demands in subsequent MESSAGE-MACRO iterations, a constraint -on the maximum permissible demand change between subquent iterations has been introduced which is usually set to 15%. In practical terms this means that the demand response is capped at +as the starting point for a stringent climate mitigation scenario that aims at limiting temperature change to 2 degrees C). To avoid oscillations of demands in subsequent MESSAGE-MACRO iterations, a constraint on the maximum permissible demand change between subquent iterations has been introduced which is usually set to 20%. In practical terms this means that the demand response is capped at 20% for each type of :ref:`demand` and for each of the MESSAGE :ref:`spatial`. However, under specific conditions - typically under stringent climate policy - when price repsonses to small demand adjustments are large, an oscillating behavior between two sets of demand levels can still occur. In such situations, the constraint on the demand response is reduced further until the changes in demand are less than the convergence criterion mentioned above. diff --git a/source/bibs/main.bib b/source/bibs/main.bib index 087db91..618b724 100755 --- a/source/bibs/main.bib +++ b/source/bibs/main.bib @@ -608,7 +608,7 @@ @book{loulou_markal-macro_2004 year = {2004}, type = {Manual}, month = {October}, - url = {http://www.iea-etsap.org/web/MrklDoc-II_MARKALMACRO.pdf}, + url = {https://www.iea-etsap.org/MrklDoc-II_MARKALMACRO.pdf}, } diff --git a/source/macro.rst b/source/macro.rst index 9d438bb..a1756fb 100755 --- a/source/macro.rst +++ b/source/macro.rst @@ -2,7 +2,7 @@ Macro-economy (MACRO) --------------------- -The detailed energy supply model (MESSAGE) is soft-linked to an aggregated, single-sector macro-economic model (MACRO) which has been derived from the so-called Global 2100 or ETA-MACRO model (Manne and Richels, 1992 :cite:`manne_buying_1992`), a predecessor of the `MERGE `_ model. The reason for linking the two models is to consistently reflect the influence of energy supply costs, as calculated by MESSAGE, the mix of production factors considered in MACRO, and the effect of changes in energy prices on energy service demands. The combined MESSAGE-MACRO model (Messner and Schrattenholzer, 2000 :cite:`messner_messagemacro:_2000`) can generate a consistent economic response to changes in energy prices and estimate overall economic consequences (e.g., changes in GDP or household consumption) of energy or climate policies. +The detailed energy supply model (MESSAGE) is soft-linked to an aggregated, single-sector macro-economic model (MACRO) which has been derived from the so-called Global 2100 or ETA-MACRO model (Manne and Richels, 1992 :cite:`manne_buying_1992`), a predecessor of the `MERGE `_ model. The reason for linking the two models is to consistently reflect the influence of energy supply costs, as calculated by MESSAGE, the mix of production factors considered in MACRO, and the effect of changes in energy prices on energy service demands. The combined MESSAGE-MACRO model (Messner and Schrattenholzer, 2000 :cite:`messner_messagemacro:_2000`) can generate a consistent economic response to changes in energy prices and estimate overall economic consequences (e.g., changes in GDP or household consumption) of energy or climate policies. MACRO is a macroeconomic model maximizing the intertemporal utility function of a single representative producer-consumer in each world region. The optimization result is a sequence of optimal savings, investment, and consumption decisions. The main variables of the model are capital stock, available labor, and energy inputs, which together determine the total output of an economy according to a nested CES (constant elasticity of substitution) production function. End-use service demands in the (commercial) demand categories of MESSAGE (see :ref:`demand`) is determined within the MACRO model, and is consistent with energy supply from MESSAGE, which is an input to the MACRO. The model’s most important driving input variables are the projected growth rates of total labor, i.e., the combined effect of labor force and labor productivity growth, and the annual rates of reference energy intensity reduction, i.e. the so-called autonomous energy efficiecy improvement (AEEI) coefficients. The latter are calibrated to the developments in a MESSAGE baseline scenario to ensure consistency between the two models. Labor supply growth is also referred to as reference or potential GDP growth. In the absence of price changes, energy demands grow at rates that are the approximate result of potential GDP growth rates, reduced by the rates of overall energy intensity reduction. Price changes of the six demand categories, for example induced by energy or climate policies, can alter this path significantly.