TA3 - Integrated Assessment of Energy and Climate Policies

Hydrogen is increasingly considered a key option for decarbonizing hard-to-abate sectors, yet most transition analyses are conducted at national or global scales, with limited attention to metropolitan energy systems where climate policies are implemented. This paper examines how hydrogen can contribute to urban decarbonization under multi-level climate governance. We extend the Energy-Technology-Environmental Model (ETEM) to integrate full hydrogen supply chains and apply a structured downscaling approach to translate national and provincial data to the metropolitan scale. The framework is applied to the Montréal Metropolitan Community, a member of the C40 Cities network, to evaluate hydrogen deployment under different decarbonization scenarios. Results show that hydrogen plays a complementary and sector-specific role in the metropolitan transition, with the strongest uptake in industry and hard-to-electrify transport. As climate constraints tighten, hydrogen production shifts toward electrolysis and CCS-enabled pathways. The proposed modeling framework provides a transferable approach for assessing hydrogen integration in metropolitan energy systems and other C40 cities.

Climate change adaptation is widely recognized as an essential complement to mitigation, yet most integrated assessment models still represent adaptation under idealized assumptions and pay limited attention to the conditions under which it becomes constrained or ineffective. This study uses the AD-MERGE 2.0 integrated assessment model to examine how adaptation limits influence climate outcomes, economic damages, and the balance between mitigation and adaptation across world regions. Building on AD-MERGE 2.0 framework that distinguishes reactive and proactive adaptation, we explore a set of scenarios that introduce both soft and hard adaptation limits, including constraints on adaptation expenditures, reduced effectiveness, delayed implementation, limits on the rate of scaling up investments, and threshold-like failure under severe climate conditions.

Canada has committed to ambitious greenhouse gas (GHG) reduction targets, including achieving net-zero emissions by 2050. Energy system models are essential tools for assessing the feasibility and costs of pathways to meet these objectives. This presentation first introduces recent developments in the global integrated assessment model AD-MERGE, including a new regional disaggregation of Canada into Western and Eastern regions. This refinement improves the representation of regional differences in resources, infrastructure, and energy systems, and provides new insights into their implications for decarbonization strategies and policy design.

The second part of the presentation focuses on the role of uncertainty in climate policy analysis. As climate impacts intensify, adaptation is increasingly considered alongside mitigation. However, both are subject to significant uncertainties related to technology, resources, climate response, damages, and adaptation effectiveness. This ongoing work aims to integrate multiple sources of uncertainty within the AD-MERGE framework to better assess their combined implications for the optimal balance between mitigation and adaptation.

This paper builds an economic geography model with two regions and polluting firms. Pollution lowers residents’ welfare and affects location choices. Environmental policy increases production costs, forcing less productive firms to exit. The paper studies how this reshapes the location of the most productive firms and overall welfare outcomes.