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  • Macro-economy - MESSAGE

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MACRO’s production function includes six energy demand categories as discussed above. To optimize, MACRO requires cost information for each demand category. The exact definitions of these costs as a function over all positive quantities of energy cannot be given in closed form - - as formulae-because each point of the function would be a result of a full MESSAGE run. However, the optimality conditions implicit in the formulation of MACRO only require the functional values and its derivatives at the optimal point to be consistent between the two submodels. Since these requirements are therefore only local, most functions with this feature will simulate the combined energy-economic system in the neighborhood of the optimal point. The costs (energy use and imports) and benefits (energy exports) of providing energy in MACRO are approximated by a Taylor expansion to first order of the energy system in MESSAGE.