MARKAL-IO Linking an input-output model with MARKAL

This study also dicusses the value and application of this class of modelling approaches for the IMAGE model. An input-output (IO) model is concluded to be the most suitable for linking with MARKAL. Given exogenous developments on world trade, foreign prices, labour productivity and government spending, the IO model development calculates the output of the different sectors and the inputs these sectors require for their production.

The linkage between MARKAL and the IO model is established through two interfaces. The first interface transforms and re-allocates energy costs associated with MARKAL technologies to comply with the structure of the IO model. The second interface uses the results from the model to calculate the induced changes in useful energy demand level for MARKAL. This procedure is iteratively repeated until the model results of MARKAL and IO converge and a new optimal solution is found. Since this research focuses mainly on the methodological aspects of linking the models, the numerical results should only be considered as an illustration. Having linked the MARKAL model with an IO model it is now possible to analyze the economic impacts of changes in the energy system and vice-versa in some detail. Priority areas for further elaboration and development are identified.