In a report written for the World Energy Council Turkey, we study Turkey’s energy transition along with its commitment to the Paris Agreement. Our study aims to quantify possible climate mitigation policies’ economic costs and impacts. We hope this would contribute to the debate on which policy and policy mix best fit Turkey’s needs while at the same time meeting its global responsibility. While the study indicates possible options for Turkish policymakers, its main contribution lies in its underlying model, making it possible to simulate many more options than the ones outlined in this document.

Thanks to our model, we can perform multiple simulations for the 2021-2050 period to analyze the effects of different policies on main economic aggregates such as GDP, employment, emissions, and demand for different energy types. We study the effect of various carbon taxes based on two separate tax policies: (1) taxes become effective in the next year, and (2) taxes become effective in five years. We then analyze the effects of a subsidy on renewable energy implemented with carbon taxes on all polluting energy types. Our model can also show the impact of exogenous shocks on the economy. In that context, we examine the economy’s behavior in response to changes in total factor productivity and changes in the international prices of oil and natural gas.

A detailed summary of the report is here.