Hybrid modeling of industrial energy consumption and greenhouse gas emissions with an application to Canada Rose Murphy, Nic Rivers, Mark Jaccard ⁎ School of Resource and Environmental Management, Simon Fraser University, Vancouver, British Columbia, Canada V5A 1S6 Received 1 June 2006; received in revised form 9 January 2007; accepted 9 January 2007 Available online 6 March 2007 Abstract In this paper, we explore the implications for Canada's industrial sector of an economy-wide, compulsory greenhouse gas reduction policy, such as a tax or emissions cap and tradable permits system. The model used in the analysis is CIMS, a hybrid energy-economy model that combines characteristics of the contrasting top-down and bottom-up approaches in order to generate useful information for policy makers. CIMS is technologically explicit, behaviorally realistic, and has the ability to model equilibrium feedbacks. However, each of these strengths is linked to challenges when it comes to forecasting the impact of greenhouse gas policy. We explore the strengths and weaknesses of CIMS, and provide results from simulating the response of the Canadian industrial sector to GHG charges implemented throughout the economy, starting in the year 2006 and extending to the year 2030. © 2007 Elsevier B.V. All rights reserved. JEL classification: H30; O33; Q48 Keywords: Greenhouse gas; Hybrid modeling; Industry 1. Introduction There are a variety of reasons for modeling industrial energy consumption, among them a series of environmental and security externalities that make this category of consumption a potential target for public policy intervention. The focus of this paper is on the modeling of industrial energy consumption in order to forecast greenhouse gas (GHG) emissions caused by Energy Economics 29 (2007) 826 – 846 www.elsevier.com/locate/eneco ⁎ Corresponding author. Tel.: +1 604 291 4219; fax: +1 604 291 5473. E-mail address: jaccard@sfu.ca (M. Jaccard). 0140-9883/$ - see front matter © 2007 Elsevier B.V. All rights reserved. doi:10.1016/j.eneco.2007.01.006