A dynamic general equilibrium model of energy consumption and carbon dioxide emissions in transitional economies with application to the Russian Federation

International efforts to mitigate global warming by reducing anthropogenic CO₂ emissions must take into account shifting patterns of energy use and industrial output in the transitional economies of Central and Eastern Europe and the Former Soviet Union. For many of these countries, and particularly the slow reformers, it is unclear how improvements in energy efficiency and a resurgence in economic growth will interact over the medium to long term, and what potential exists for emissions reduction over this time frame. In this research, general equilibrium modeling techniques are expanded by developing a dynamic and inter-temporally consistent environmental-economic model that: (i) integrates structural change, technological progress, and CO₂ emission reduction policies; and (ii) incorporates the unique features of economic transition.; While the modeling approach has general applicability to transitional economies, it is applied to Russia, the largest contributor to regional CO ₂ output. Policy simulations examine the welfare cost and emissions impact of technological change, the speed of economic reform, and alternative carbon emission reduction policies, including emissions standards, carbon taxation, and technology transfer from the rest of the world. Although the number of simulations has been constrained by resource limitations, the results confirm that Russia can stabilize its emissions at 1990 levels at zero or negative cost over the medium term. Over the longer run, mitigation costs are projected to rise and could be significant depending on the pace of economic reforms and the residual technology gap between best-practice and domestically available energy technologies.