Modelling the Energy Transition: Towards an Application of Agent Based Modelling to Integrated Assessment Modelling

Abstract

To attain a better understanding of the energy transition we have applied Agent Based Modelling (ABM) to Integrated Assessment Modelling (IAM) in an abstract model with which we developed a proof of concept model of society’s response to a changing climate and energy system. Although there is no doubt that large scale neoclassical IAMs have provided key insights for business decisions and policy makers, we argue that there is a need for an approach that focuses on the role of heterogeneous agents. With our abstract ABM based on agents with heterogeneously spread discount rates we were able to give a new perspective on appropriate discount rates in the discussion between mitigation and adaption to climate change. We concluded that applying ABM to IAM yields good prospects to the further development of the implementation of society’s response to a changing environment and we propose future additions of the model to include adaptive behaviour.