Long-term scenarios: incorporating the energy transition
This paper describes the latest update of the OECD’s long-term scenarios, which are
done every 2-3 years to quantify some of the most important long-term macroeconomic
trends and policy challenges facing the global economy. For the first time, this update
incorporates the effect of the low-carbon energy transition. The study first presents
a baseline projection that acts as a business-as-usual scenario against which the
economic effects of the transition can be gauged. Next, it outlines extensions to
the OECD global long-term model (LTM) to consider energy use and associated CO2 emissions
and describes an alternative stylised scenario in which OECD and non-OECD G20 countries
successfully transition to low-carbon energy in a way broadly consistent with a net-zero
target for greenhouse gas emissions by 2050. These extensions rely on a variety of
sources, but most crucially on simulations of CO2 mitigation costs with the OECD’s
ENV-Linkages model. Finally, the model’s extensions are used to explore some fiscal
implications of the energy transition, in particular how the negative economic effects
of carbon mitigation could be alleviated by fiscal or other structural reforms.
Published on December 14, 2023
In series:OECD Economic Policy Papersview more titles