MESSAGE-MACRO: linking an energy supply model with a macroeconomic module and solving it iteratively

MESSAGE-MACRO is the result of linking a macroeconomic model with a detaile d energy supply model. The purpose of the linkage is to consistently reflec t the influence of energy supply costs as calculated by the energy supply m odel in the optimal mix of production factors included in the macroeconomic model. In this article, we describe an automated link of two independently running models. The advantages of this setup over a single, fully integrat ed model are twofold: First, it is more flexible, leaving the constituent m odels intact for independent runs, thus making further model development an easier task. Second, the decomposed model solution benefits numerically fr om having the most non-linearities concentrated in the smaller of the two m odules. The emphasis of the paper is on methodology, but we also include an example demonstrating the feedback mechanisms of MESSAGE-MACRO by applying it to two global economic-energy-environment scenarios. The two scenarios are a reference scenario and a scenario that limits the global atmospheric carbon concentration to 550 ppmv. The scenarios are compared in terms of GD P, energy supply and demand, and energy prices. (C) 2000 Elsevier Science L td. All rights reserved.