Macroeconomic Analysis 2016-12-05T20:44:08+00:00

Macroeconomic Analysis

We use the General Equilibrium Energy Model (GEEM) to simulate how all sectors of the economy may evolve under different economic conditions. This tool allows us to provide insight into how energy and climate policies affect a number of variables, such as:

  • Economic activity (e.g., gross domestic product)
  • Energy consumption
  • Greenhouse gas emissions
  • Trade of goods and services between regions
  • The competitiveness of different sectors

Characterizing household and firm behavior

Each sector is characterized by what it produces (e.g. electricity) and the inputs required in production (i.e., capital, labour, energy and materials). Commodities that are produced can then be sold to other producers (as intermediate inputs), to households (the final consumers of goods produced in the economy), or to other regions and the rest of the world as exports. Commodities can also be imported from other regions or the rest of the world.

e use the General Equilibrium Energy Model (GEEM) to simulate how all sectors of the economy may evolve under different economic conditions.

Balancing markets for all commodities

As the model steps through time, it ensures that markets clear for all commodities and factors by adjusting prices. For example, growth in pulp and paper production may increase demand for electricity in a single region, which must be generated provincially or imported. The price for electricity increases or decreases until supply matches demand.

Altering the structure of the economy

GEEM explicitly accounts for how policies or different economic conditions alter the structure and growth of the economy. For example, a policy such as a carbon tax may increase the cost of producing energy-intensive goods and services. As a result, energy-intensive sectors such as paper manufacturing may experience a loss of competitiveness. Lower output of paper will reduce the inputs required by that sector, such as electricity and pulp. As a result, capital and labour are reallocated throughout the economy resulting in growth in other sectors or regions.

Related Projects

Client: BC Climate Action Secretariat
Completion Date: 2016
In 2015, British Columbia began work on a new Climate Leadership Plan to help the province achieve its greenhouse gas reduction targets. We were contracted to provide an independent assessment of BC’s existing policies (including the provincial carbon tax), as well as assess how new policies would affect greenhouse gas emissions and the development of the provincial economy. As part of this project, we worked closely with the Climate Leadership Team, a group of experts tasked with providing advice and recommendations on how to update BC’s Climate Action Plan. To conduct this analysis, we employed our CIMS, GEEM and IESD models.

Client: Ontario Ministry of the Environment and Climate Change
Completion Date: 2016
In 2015, Ontario announced its intention to join the cap and trade system under the Western Climate Initiative to help meet its greenhouse gas reduction targets. Partnering with EnviroEconomics, we helped the Ontario Ministry of Environment and Climate Change understand how the provincial economy could evolve in order to meet greenhouse gas targets under its Climate Change Action Plan. In particular, we explored how alternate design options for cap and trade may impact provincial economic and emissions outcomes.

Client: Clean Energy Canada
Completion Date: 2015
Clean Energy Canada retained us to model the job and economic implications of meeting BC’s 2020 and 2050 climate targets. Our analysis demonstrates that the provincial economy can keep growing while emissions fall by 80% from 2007 levels, if there is early and ongoing commitment to strong carbon abatement policies. To conduct the analysis, we used the CIMS technology simulation model and the GEEM computable general equilibrium model.

Client: Canada’s Ecofiscal Commission
Completion Date: 2015
Canada’s Ecofiscal Commission was formed to identify practical fiscal solutions that spark the innovation required for increased economic and environmental prosperity. In the context of climate mitigation, ecofiscal policies have two objectives. First, they would place a price on carbon in order to reduce greenhouse gas emissions. Second, they would use the revenue from carbon pricing to achieve other objectives such as stimulating economic activity or addressing concerns about industrial competitiveness. We were engaged by the Commission to determine how carbon pricing can be best designed to achieve both environmental and economic objectives.

Our goal at Navius is to inform your decisions about energy and the environment.
Our goal at Navius is to inform your decisions about energy and the environment.
Our goal at Navius is to inform your decisions about energy and the environment.
Our goal at Navius is to inform your decisions about energy and the environment.