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Economic Modeling Overview
RGGI Cost Benefit Analysis Subgroup
Dwayne Breger
MA Division of Energy Resources
Cost-Benefit Analysis Subgroup
Scope/Objectives
Analysis of the state and regional economic
impacts of the CO2 cap-and-trade program
and policy options.
Evaluate co-benefits of air pollution emission
changes that result from CO2 program.
Evaluate impact of CO2 program on energy
efficiency and renewable energy sectors.
Economic Model Selection
• SWG has selected REMI Policy Insight as modeling tool
• NESCAUM will serve as Modeling Agent for RGGI
• MA DOER will provide modeling services to NESCAUM
• REMI will prepare a 12-state/region 53-sector model with
input/output for each state and full region
• REMI Modeling Plan integrated with IPM Modeling
– I/O data linkage
– Policy Simulations follow IPM scenarios
Basic Economic Blocks
in REMI Structure
Output
Population &
Labor Supply
Labor & Capital Demand
Wages, Prices, & Profits
Market
Shares
Sample Output from REMI
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Personal Income
Gross State Product
Employment, by sectors
Imports/Exports – between RGGI states, and
between RGGI region and outside
• Demographic changes
• Industry sector consumption/production
• Health Expenditures
Integration of
Energy and Economic Modeling
Existing Power Plants
Transmission Constraints
Demand Projections
Fuel Price Projections
New Plant Costs
Electricity Prices
Fuel Use
Air Emissions
New Plant Location
& Investment
Air Quality Analysis
Economic Model
Energy Model
REMI Policy Insight
IPM* Model
* Integrated Planning Model,
ICF Consulting, Inc.
Gross State Products
Personal Income
Employment
Industry Sector Prod/Cons
Health Costs
REMI Input Interface w/ IPM
Key Energy Sector Outputs
Electric Energy Prices
wholesale (IPM) to retail (REMI)
New Capacity Construction / Investment
Fuel Consumption
REMI Modeling
Key Scenarios
Scenarios follow IPM Model Scenarios
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Benchmark and Reference Scenarios
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CO2 Cap Level
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Policy, Structure, Flexibility Scenarios
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Model Rule Scenarios
Benchmark/Reference Scenarios
• Establish REMI Benchmark Scenario
(economic projections w/o policies)
– Compare/Calibrate REMI Results w/ IPM
Energy/capacity growth ↔ economic growth
Wholesale energy prices ↔ retail energy prices
• Establish Reference Policy Scenarios
– Use output from IPM Reference Policy Scenarios
Policy Scenarios
• Economic projections with outputs from
IPM Scenarios (compare economic
impacts relative to reference scenario)
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Cap Size
Flexibility Mechanisms
Model Rule
Allocation Strategies
Schedule for REMI Scenarios
Task/Scenario
Develop IPM / REMI Interface
Benchmark and Reference Scenarios
IPM Results
REMI Modeling
CO2 Cap Level Scenarios
IPM Results
REMI Modeling
Policy Structure, and Flexibility Scenarios
IPM Results
REMI Modeling
Model Rule Scenarios
IPM Results
REMI Modeling
2004
Jun Jul
Aug
Sep
Oct
Nov
Dec
2005
Jan Feb
Mar
Apr