Paving the Way for NDC Implementation: Analyzing Policy Options and Modeling Carbon Pricing. Chile Case Study. Jacques Clerc.

Transcription

1 Paving the Way for NDC Implementation: Analyzing Policy Options and Modeling Carbon Pricing Chile Case Study Jacques Clerc 7 December 2015

2 2 Index An overview of today s agenda Context Chile s NDC Chilean policies The carbon tax Modelling Requirements Impacts to be captured Methodology Hybrid approach Questions/Answers Final Discussion P2BIZ and CGE Chile Main features of the modules

3 Context: Chile s indc Committed to in Paris, December 2015 (COP21) Reduce GHG emissions intensity (tco 2 e per unit of GDP in million CLP$ 2011) by 30% by 2030 from 2007 level Target raised to 35-45% conditional on availability of international support applies to all sectors of the economy except LULUCF (separate absolute targets) 3

4 Context: What does this targets mean? 4

5 Energy and mitigation policies Implemented/approved measures: - Non-Conventional Renewable Energy (NCRE) Law - Action Plan for Energy Efficiency 2020 (APEE20) - National Sustainable Construction Strategy - Tax on sale of lightweight vehicles - Carbon tax (USD 5/tCO2 on power gen) - Net billing law The energy sector relies on current policies to meet its targets: - Energía 2050: energy roadmap (. e.g. 70% renewables by 2050) - Draft Energy Efficiency Law 5

6 6 The Chilean Carbon Tax (1) Chilean carbon tax will be implemented in US$/MWh - Designed not to alter marginal costs Different studies have concluded its current level and design do not contribute to mitigation. - It does not modify dispatch in the short term - It does not modify LCOE estimates in the long term

7 The Chilean Carbon Tax (2) 7 USD/MWh Amount directly paid by the power station Amount paid by all generators pro-rata according to energy withdrawals mc Thermal plant A Thermal plant B (marginal plant) Thermal plant C Carbon tax Variable cost

8 Policy-oriented modelling 8 Energy 2050 implementation plan: - Targets associated to instruments - Energy Efficiency law (decoupling mechanisms, auditing, standards) - Energy generation (auction mechanisms, transmission law, flexibility, ancillary services) Identify other complementary cost effective instruments: carbon pricing? Policy recommendations after 2030: carbon pricing?

9 9 Methodology: hybrid approach (1) Modelling Strategy Bottom-up Prospectiva E2BIZ Very detailed technologica characterization CGE Model Robust economic foundations

10 Methodology: hybrid approach Weak integration strategy: the hardest modelling challenge Base case calibration: Sector activity levels, energy consumption and emissions. Bottom-up results go into CGE: (capital costs and productivity gains: energy efficiency) Iterations: CGE results (changes in activity levels go back into bottom-up) model to assess changes in consumption and emissions. 10

11 11 Overview of P-E2BIZ model Characteristics Bottom-up - Final demand modelling with transformation sectors - Consumption driven by relevant factors (copper, population) - End-use and useful energy analysis Long-Term (2050) - Designed to address longterm policy impact evaluation NEB consistency -Sectorial and regional division, such as the NEB -Main s input data for modelling comes from NEB Expert based -Modelling includes market and trend analysis -Expert opinion on future market/ technological conditions NEB: National Energy Balance

12 P-E2BIZ model Main s modules and methodology 12 HOUSEHOLDS PUBLIC BUILDINGS COMMERCIAL Driver: Households Useful energy analysis Focus on heating TRANSPORT Drivers: passenger or freight demand Econometric and transport analysis INDUSTRY AND MINING Drivers: Production levels or economic activity Useful Energy Analysis: thermal, motor and electricity specific uses. POWER SECTOR Optimal Dispatch and Expansion Grid Interconnection modelling Load duration and generation curves CO2 tax modelling

13 13 Overview of Chile CGE model Top-down Modelling of agents that maximize welfare: firms, households, government. Quintiles of income Dynamic recursive -Growth determined by savings -Sector growth determined endogenously according to sector profits Consistency with national accounts 2014 SAM Closure rules -Unemployment (mínimum wage) - Balanced current account

14 14 Any Question??? The Leader of the All business and personal presentation template ever WHAT WHY WHERE WHEN WHO HOW

15 Key results: GHG emissions intensity

16 Key results: absolute GHG emissions -16% -22% -31%

17 TWh Key results: Base case generation Solar Wind Geothermal Biomass Biogas Hydro Natural gas Oil Coal

18 Key results: Base case GHG forecast Emissions growth : Power generation: 4% Transport: 45% Industry & Mining: 21% CPR: 79%

19 Key results: GHG abated below base case NDC 30% NDC 45% Total abated: 17.3 MtCO 2 e Total abated: 34.0 MtCO 2 e

20 Key results: GHG abated in 2030 NDC 30% NDC 45% Power generation 51% Industry, 9% Mining, 5% Power generation 55% Industry, 7% Mining, 3% Transport 29% Transport 26% CPR, 6% CPR, 10% Total abated: 17.3 MtCO 2 e Total abated: 34.0 MtCO 2 e

21 Key results: Total Primary Energy Supply 2,357 2,068 1,932-12% -18%

22 22 Energy to Business Energy and Environment experts Huérfanos 1294 Oficina 61 Santiago, Chile