Climate and Energy Economics Project

About the Climate and Energy Economics Project

To respond to the need for objective and timely climate policy analysis, the Economic Studies program at Brookings has developed the Climate and Energy Economics Project. Our purpose is to develop and promote environmentally sound, economically efficient approaches to reducing human-induced risks to the earth’s climate. We focus on the economics of potential domestic cap-and-trade approaches and how U.S. commitments might play into a global agreement. The Climate and Energy Economics Project (CEEP) is led by co-directors Warwick McKibbin and Pete Wilcoxen, and also includes Adele Morris, policy director for CEEP. Contributors also include Economic Studies Co-Director Ted Gayer.

Our modeling capacity, anchored by the G-Cubed model of the world economy, is highly suited to analyzing the global economic effects of climate and other policies in major economies. In particular, the model can illustrate how those effects are driven by the major design elements of a U.S. cap-and-trade system for controlling greenhouse gas emissions. For example, we can analyze different levels of stringency, linkages with fiscal policy, potential cost containment strategies, the competitive implications for U.S. industry, and the economics of potential post-Kyoto global climate agreements. Our model reports estimated economic effects of climate policy such as revenue streams for auctioned allowances, fuel prices, and economic growth worldwide, but unlike many other modelers we can also analyze employment, international financial flows, equity markets, trade, inflation, currency values, and other important macroeconomic variables.

In addition to the modeling work with G-Cubed, we also conduct other theoretical and empirical analyses of climate and energy policy, including work on the potential architecture of climate agreements and the efficiency and distributional implications of domestic climate and energy policies.