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EMF OP 52: Modeling Energy Markets and Climate Change Policy

This article will discuss variouseconomic models of energy supply and demand that have been used forglobal climate change policy analysis. Although these models are quitediverse in their structure and focus, all systems determinemarket-clearing equilibrium prices that balance production andconsumption levels for different fuel types. This comparison focuses onthe energy supply and demand adjustments that significantly influencethe costs of various strategies for limiting carbon emissions, althoughthe models also incorporate reduced-form representation of the climaticeffects that determine the benefits of abatement.