Transition to Low-carbon Economy: Simulating Nonlinearities in the Electricity Market, Navarre Region-Spain

Coupled climate-economy systems are complex adaptive systems. While changes and out-of-equilibrium dynamics are in the essence of such systems, this dynamics can be of a very different nature. Specifically, it can take a form of either gradual marginal developments along a particular trend or exhibit abrupt nonmarginal shifts [1]. Nonlinearities, thresholds, and irreversibility are of particular importance when studying coupled climate-economy systems. Strong feedbacks between climate and economy are realized through energy: economy requires energy for literary every sector, for development in literary any sector, while emissions need to stabilize and be even reduced to avoid catastrophic climate change [2]. Possibilities of passing some thresholds that may drive these climate-energy-economy (CEE) systems in a completely different regime need to be explored. However, currently available models are not always suitable to study nonlinearities, paths involving critical thresholds and irreversibility [3]. To be able to formulate an appropriate energy policy for this complex adaptive CEE system, policymakers should ideally have decision support tools that are able to foresee changes in energy market over the coming decades to plan ahead accordingly. Many macro models, that assume rational representative agent with static behavior, are designed to study marginal changes only. So there is a need for models that are able to capture nonlinear changes and their emergence.