Jim Turnure Principal, Energy Group

Sidebar: Top-Down vs. Bottom-Up Models

• Baseline estimation of technological change using computer simulation modeling has been an important element of research into the costs of policy responses to climate change. Some key references include Weyant et al (1990) and the IPCC Technical Assessment of 1995. These sources consider the ‘top-down’ vs. ‘bottom-up’’ debate explicitly.
• ‘Top-down’ models are associated with macroeconomics and share the characteristics of growth theory approaches as discussed earlier in this presentation. ‘Bottom-up’ modeling draws on optimization techniques largely drawn from operations research, placing most of the literature outside the research developed in this study.
• Optimization modeling is often used for electric power systems, because of the interconnected nature of the transmission grid, prevalence of centralized dispatch for generation, relatively small number of decision agents, and high quality of data.
• Integration of both approaches may be appropriate for thorough and consistent R&D benefit assessment, but is resource-intensive for individual programs.