Browsing by Author "Hakala, Outi"

Modelling the economic effects of sustainability transition – CGE analysis of the energy transition in Finland The sustainable development framework has influenced many policies and research activities since the beginning of 1980s. Despite the long-term efforts, we have not yet achieved the ecological, economic and social sustainability. Therefore, the need for sustainability transition is more often discussed. These transitions are studied from various aspects. For example, the power relations and actions that create path dependencies are studied in order to support the transition process. Computable general equilibrium (CGE) modelling is an economic method. The purpose of CGE modelling is to gain better understanding about economic structures as well as assess the economic effects that are caused by for example changes in policies or investments. Lately, the energy transitions aiming at combatting climate change have been analyzed with CGE modelling. In Finland, the social welfare has reached high levels in many aspects. Nevertheless, our consumption and production patterns are not ecologically sustainable which encourages us to for example reduce the carbon emissions. As the role of energy sector is crucial from the emission reduction point of view, the focus of this thesis is on the energy transition as a part of Finland’s sustainability transition. The aim of this thesis is to study how the simulated aspects of energy transition affect macroeconomic indicators and further carbon emissions. The study is conducted with a CGE model that is based on the standard model created by Lofgren, Harris & Robinson (2002). A major part of the materials needed in the modelling is provided by Statistics Finland. The simulated shocks include a change in energy production system as the share of renewable energy increases, an increase in emission allowance price, an increase in the productivity of wind and solar energy systems as well as a change in transportation as the share of electric cars increases. The results indicate that an energy transition aiming at reducing carbon emissions is possible to implement in such a way that the changes in macroeconomic indicators are reasonable, but the transition would affect – as is expected – the relations between economic activities.