Is economic crisis an opportunity for realizing the low-carbon transition? A simulation study on the interaction between economic cycle and energy regulation policy. (September 2022)

• Record Type: Journal Article
• Authors: Zhang, Qi; Wu, Xifeng; Chen, Yu
• Is Part Of: Energy policy. Volume 168(2022)
• Publication Date: 2022-09
• Subjects: Low-carbon transition -- Macroeconomic -- Economy–energy model -- Agent-based model -- Energy policy -- Market regulation; Energy policy -- Periodicals; Politique énergétique -- Périodiques; Electronic journals; 333.79
• DOI: 10.1016/j.enpol.2022.113114
• Languages: English
• ISSNs: 0301-4215

Abstract

Abstract: The COVID-19 and the resulting financial crisis have led researchers to focus on the impact of the exogenous shock on the economy and the effectiveness of energy policy for a low-carbon transition. However, measuring this impact sophistically is notoriously fraught with difficulties. In this research, we build a combined agent-based economy–energy model to capture the change in the effectiveness of energy policy in response to an economic crisis. Simulation results show that the government can achieve its low-carbon transition development target using the regulation in the energy market, such as the emissions trading scheme policy. However, this regulation in the energy market will negatively affect the economy, and this adverse effect becomes more severe with either higher energy consumption or a lower energy capacity. Nevertheless, introducing the policy with appropriate timing, typically in the recovery phase of an economic crisis, can effectively reduce the negative impact of government regulation. Finally, some policy implications are proposed for different situations of countries and to reduce the negative effects of energy regulation policy. Highlights: A coupled-agent-based model is proposed for economy-energy system. Phase-diagram-based analysis for evaluating the policy adjustment. The impact of energy regulation policy on the economy is assessed. The effect of the timing of policy implementation on policy outcomes.