Technological change probably accounts for the most fundamental changes in societies over the past century and can reasonably be expected to contribute changes as large over the coming century. But its extent and character are impossible to predict. For example, it is not known whether the aggregate effect of technological change will be to increase the emissions intensity of human consumption, thereby exacerbating human contributions to climate change, or to reduce emissions intensity and hence mitigate climate change. Moreover, while it seems clear that technological change is really endogenous--policies and choices can affect its rate and character--the details of these relationships are not known.
Several approaches have been taken in integrated assessment studies to represent technological change. Those assessments that project detailed technologies from engineering data in effect make technological change external; one can (indeed must) make detailed assumptions of what technical options will be available for, say, steel-making over the coming century: when they are available, how much they cost, and what they emit. Equivalent but more compact representations of technological change are available to those studies that project emissions using input-output models--external trends can be specified in either input-output or aggregate emission coefficients. In models using aggregate production functions that distinguish energy as an input, technological change that increases energy efficiency can be represented by a coefficient that increases the effective contribution of energy to output, the Autonomous Energy Efficiency Increase (AEEI) of some controversy. When using either the approach of varying input-output coefficients or an AEEI, rates of variation can either be specified judgmentally or estimated econometrically from historical data.
A further aspect of representing technological change that is important for integrated assessment is the backstop technology. A backstop technology becomes available at a specified future date and provides essentially any quantity of energy at a constant, high marginal cost. Energy-economic models typically include either or both a fossil and non-fossil backstop technology (e.g., solar electric or nuclear fusion, and synthetic oil). In long-term model projections, the backstop technology often comes to provide much of the world's energy by the middle of the next century. Consequently, the details of its specification--cost, emissions, and date available--have important effects on outcomes in an integrated model.
The next section is Population Growth.
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