Development of the Climate Policy Analysis Model
Friday, 25 June, 2021

Considering the significance of a green post-COVID recovery, alongside the importance of maintaining an ecological diverse economy, ISET Policy Institute has spent almost two years developing its Climate Policy Analysis Model. The model, funded by the Swedish International Cooperation Agency (Sida), helps to highlight the climate change adaptation and mitigation agendas, which are ultimately vital for Georgia’s overall economic development and growth.

ISET’s director, Tamar Sulukhia, hosted our latest event highlighting the role of the Climate Policy Analysis Model to the policy community and all interested participants. The speakers, including government representatives Maia Tskhvaradze and Ketevan Chapidze, revealed that Georgia has actively participated in climate change policy since 1994. Moreover, under the current targets of the 2030 Agenda, Georgia is actively attempting to reduce its greenhouse gas emission by 35% in comparison to the 1990s, with a further seven core objectives.

Lead economist Norberto Pignatti showed exactly how the model will help inform policy debate and decisions by analyzing greenhouse gas emissions from a sectoral and economic perspective. Using a computable general equilibrium model, representing the economy based on various aggregated factors, calibrated with physical energy flows, energy-related emissions, and economic data, the model can compare different policy frameworks and identify optimal solutions. Thus, by assessing possible alternative policy approaches and examining national targets against the status quo, the model can help discern the most appropriate, cost-effective ways of reducing greenhouse gas emissions at the lowest possible welfare cost. The model will also identify in which sectors it is possible to achieve these targets, while also pinpointing the industries with the lowest costs to society, as well as any changes in consumption, in GDP, and in sectoral value-added to see which industries are most affected under various policy options.

As ever, ISET is proud to have created another tool that benefits local economics, one which will promote policy debate, improve policymaking, and help estimate the impacts of alternative strategies towards improving the climate and reducing greenhouse gas emissions.