Industrial sector - GCAM

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Model Documentation - GCAM

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Model information
Model link
Institution Pacific Northwest National Laboratory, Joint Global Change Research Institute (PNNL, JGCRI), USA, http://www.globalchange.umd.edu.
Solution concept General equilibrium (closed economy)GCAM solves all energy, water, and land markets simultaneously
Solution method Recursive dynamic solution method
Anticipation GCAM is a dynamic recursive model, meaning that decision-makers do not know the future when making a decision today. After it solves each period, the model then uses the resulting state of the world, including the consequences of decisions made in that period - such as resource depletion, capital stock retirements and installations, and changes to the landscape - and then moves to the next time step and performs the same exercise. For long-lived investments, decision-makers may account for future profit streams, but those estimates would be based on current prices. For some parts of the model, economic agents use prior experience to form expectations based on multi-period experiences.

Industry

With the exception of cement and fertilizer, which are explicitly modeled in GCAM, the industrial sector is represented as a consumer of generic energy services and feedstocks. Within energy use there is cost-based competition between fuels, but with a low elasticity of substitution, as the specific uses of the energy are not specified. Cogeneration of electricity is tracked, and represented as a separate technology option for each fuel consumed by the industrial sector (other than electricity). Cogeneration technology options are characterized by higher capital costs, but are credited with the revenue from electricity sold; as such the deployment of cogeneration in any scenario will depend on future fuel and electricity prices. Output of aggregate industrial sectors is represented in generic terms. For more details, see the industry section.

Cement

GCAM includes a physical representation of the manufacture of cement, that tracks both the fuel- and limestone-derived emissions of CO2. Production volumes are indicated in Mt of cement; input-output coefficients of heat and electricity are indicated in GJ per kg of cement, and the input-output coefficient of limestone is unitless. The energy input-output coefficients are specific to each region, based on Worrell et al. (2001) and Tables 6.9 and 6.10 in IEA (2007). The limestone input-output coefficient is calculated to return the region’s cement-related emissions reported by CDIAC 2017. Each region’s calibrated fuel shares in this industry are from Table 6.6 in IEA 2007.

N Fertilizer

The representation of nitrogenous fertilizers (“N fertilizer”), indicated in Mt of fixed N in synthetic fertilizers, includes both the specific production technologies for transforming various feedstocks into N fertilizer, as well as the demands for the commodity in the agricultural sectors. Nitrogenous fertilizers manufactured for non-agricultural purposes are excluded from the commodity modeled in GCAM.