Work Package Leader - Jean Charles Hourcade, CIRED
Work on energy, primary resources and environmental challenges must help to clarify another three major issues over the coming decades: a) the progressive exhaustion of cheap world oil and gas resources and their concentration on a limited number of countries; b) the mitigation of climate change; c) the rise of concerns about the environmental safety of large scale alternatives to fossil fuels (nuclear, biofuels).
The responses to these intertwined issues depend critically upon the articulation between the negotiation of formal regulatory regimes (Kyoto framework, WTO) and the policies conducted at the regional and national levels. What makes numerical foresight necessary to disentangle the many facets of these issues is that the energy/environment interface depends, beyond the energy sector, upon a) dynamics in sectors such as transportation, urban infrastructures, agriculture and land-use, energy-intensive industry; b) the global dynamics of the world economy, including industrial competition, trade flows and capital markets, with, at this latter stage, a critical role of the magnitude and sharing of the oil rents. This world package builds on the capacity of the Imaclim model to couple explicit description of the technological dynamics in energy, transport, agriculture and industry with a general equilibrium framework of the world economy allowing for possible transitory disequilibrium due to the inertia of technical systems, imperfect foresight and market (and regulatory) failures. In parallel with the modelling exercises developed in WP1 it will provide an ensemble of scenarios to better understand under which conditions, i.e. technical assumptions and prospects about the future of international negotiations, national systems of innovations can adjust to these new constraints and help European Economy to develop a robust economic strategy faced with this uncertain and quickly changing system. To do so, it will focus on a) how various configurations of domestic EU policies (innovation policies, fiscal reforms, EU-ETS and sector specific policies) under various hypothesis about future climate regimes will change the distribution of oil and gas rents and how these changes will impact of the European economy b) the various uncertainties and their implication for the diffusion of technical change.