Cooperative energy-saving and carbon-reducing game models in China: from the perspective of electricity generation and utilization

Transcription

1 Cooperative energy-saving and carbon-reducing game models in China: from the perspective of electricity generation and utilization Lijun Zeng PH.D. Shanghai Jiaotong University Shandong University of Science and Technology

2 Outline Introduction Materials and Methods Results and Discussion 4 Conclusions 6

3 1 Introduction China pledges to peak CO 2 emissions by around 2030 and strive to achieve it as soon as possible, and by 2030, reduce CO 2 per unit of GDP by 60-65% over the 2005 level.

4 1 Introduction The special energy structure of China 4.50% 22.60% 25.40% 5.90% 41.60% Coal Oil Natural gas Electricity Heat 2.85% 0.42% 0.01% 2.38% hydropower 75.43% 18.92% thermal Power nuclear power wind power Energy end-use structure in China(2012) Electricity structure in China(2014)

5 1 Introduction The current mode of energy saving and carbon reducing Central government General goal goal goal goal goal Priovince 1 Priovince 2 Priovince i Priovince n Unsatisfactory measures e.g. mandatory power rationing Cannot motivate each province entirely Undesirable consequences e.g. wind and solar curtailment

6 Reduction goal of energy consumption per unit of GDP ( the Twelfth Five-year) the whole country 16% Tianjin, Shanghai, Jiangsu, Zhejiang and Guangdong 18% Beijing, Heibei, Liaoning, and Shandong 17% Shanxi, Jilin, and Heilongjiang 16% Shanxi, Guangxi, Guizhou, and Gansu 15% Hainan, Xizang, Qinghai, and Xinjiang 10%

7 1 Introduction Cooperative electricity-saving model (CESM) Cooperative carbon-reducing model (CCRM) Priovince 1 Reallocate quota Central government General goal goal Priovince 2 Priovince i Priovince n Motivate each province entirely Reallocate benefit

8 2 Materials and Methods Cooperative electricity-saving model (CESM): an optimal model of electricity-utilization benefit a model to allocate the benefit of cooperation Cooperative carbon-reducing model (CCRM): an optimal model of carbon reduction a model to allocate the benefit of cooperation Table 2-1 summarizes the variables and parameters and their definitions that will be used in CESM and CCRM.

9 2.1.1 The optimal model of electricityutilization benefits The electricity-utilization benefits of a province in a cooperation union is composed of two parts: the actual benefits from utilization of electricity and the transferred benefits between provinces in the union G i (E ui ) =π i (E ui ) - sh i i=1,2, n (2-1) π i (E ui ) =ω i (E ui ) - Γ i (E ui ) i=1,2, n (2-2) Sh i is the benefits from utilizing the electricity transferred n within a union and satisfy: 0 i sh 1 i The function of total electricity-utilization benefits for the whole union is n n (2-3) G i 1 G i i 1 [ ( E i ui ) Γ i ( E ui )]

10 2.1.1 The optimal model of electricityutilization benefits to build the function of the total electricity-utilization benefits in the union, we need to build the function of the annual gross benefits from utilization of electricity ω i (E ui ) and the function of the annual cost of electricity consumption Γ i (E ui ) in province i. Cobb-Douglas production function is used to deduce the contribution level of electricity utilization to GDP in each province: (2-4) fit the function between the annual gross benefits and the annual electricity consumption in province i to build ω i (E ui )

11 2.1.1 The optimal model of electricity-utilization benefits The sum of annual electricity consumption of all the provinces should be less than or equal to the target set by the central government. We obtain the constraints: n n E (2-8) ui q i 1 i 1 ui Any province should conduct electricity saving by ensuring the basic socioeconomic activities run normally. (2-9) the amount of electricity consumption in any province should not exceed the capacity of the power facility system: (2-10)

12 2.1.1 The optimal model of electricityutilization benefits the optimal electricity-utilization benefits model for cooperative electricity-saving union, aimed to maximize the electricity-utilization benefits by optimizing the amount of electricity consumption of each province in the union. s.t.

13 2.1.2 Cooperative electricity-saving benefit allocation model In the optimal model, the cooperative electricity-saving union meets the national electricity-saving target through cooperative efforts and creates optimal total benefit from electricity utilization. The allocation of this benefit greatly affects implementation of CESM.

14 2.1.2 Cooperative electricity-saving benefit allocation model

15 2.2 Cooperative carbon-reducing model (CCRM) The optimal model of carbon reduction This paper defines the amount of CO 2 emitted by producing a unit of electricity power with an electricitygeneration method as the carbon intensity of this electricity-generation method, and the average amount of CO 2 emitted by producing a unit of electricity power in a province as the integrated carbon intensity of electricity generation in this province. Therefore, the annual CO 2 emission by electricity generation in a province is not determined by the annual electricity generation but also determined by the integrated carbon intensity of electricity generation in this province.

16 2.2.1 The optimal model of carbon reduction So we build the function of annual CO 2 emission by electricity generation in a province as follows: (2-16) Here is the annual electricity generation in province i, and b i is the integrated carbon intensity of electricity generation in province i. is determined by the capacity structure of electricity production in province i and the carbon intensity of each electricity-generation method, which can be described as: (2-17)

17 2.2.1 The optimal model of carbon reduction a ik is the capacity proportion of electricity generation method k in province i and satisfies the following two constraints: (2-18) (2-19) Consequently, the function of the quantity of CO 2 emitted by electricity generation in the whole union can be built as follow: (2-20)

18 Some constraints to the optimal model of carbon reduction Each province has its own electricity generation capacity range. When all electricity generation facilities in the province work at their full capacity, the maximum quantity of electricity generation for this province can be achieved. This annual electricity generation upper limit is represented as M i. On the other hand, the electricity generation facilities will always produce at least some electricity power to satisfy the requisite social and economic activities in this province. This electricity generation lower limit is represented as. the annual electricity generation range for a province is: (2-21)

19 Some constraints to the optimal model of carbon reduction The sum of annual CO 2 emission by electricity generation of all the provinces in the union should be less than or equal to the target set by the central government. Therefore, we obtain the constraints: (2-22) To meet the demands of socioeconomic development, the total annual electricity generation in the union should not be less than the sum of the annual quota of the electricity generation of all the provinces in the union: (2-23)

20 2.2.1 The optimal model of carbon reduction the optimal cooperative carbon-reducing model for the whole union, aimed to minimize the carbon emission by optimizing the amount of electricity generation of each province in the union. s.t.

21 2.2.2 Cooperative carbon-reducing benefit allocation model In the optimal model, the cooperative carbonreducing union meets the national carbon-reducing target through cooperative efforts and minimizes the carbon emission by electricity generation, which will create carbon-reducing benefit by selling the available emission right. The allocation of this benefit greatly affects implementation of CCRM.

22 2.2.2 Cooperative carbon-reducing benefit allocation model

23 2.2.2 Cooperative carbon-reducing benefit allocation model here S is the number of elements (cooperating provinces) in subset S, H S is the weighed factor, and is the cooperation benefit that does not include province i.

24 3 Result and Discussion Based on the economic development and natural resources endowments, this paper selects Shanghai, Sichuan, Shanxi, and Gansu as case study samples for cooperative energysaving and carbon-reducing models. Shanghai is located in East China. While Shanghai is one of the most advanced provincial regions in economic development, it is scarce in natural resources. Sichuan is located in Southwest, is rich in natural resources especially in water power resource, and is a major economic province with abundant natural resources.

25 3 Result and Discussion Shanxi is located in North China. As one of the most important coal bases in China, Shanxi provides a large proportion of thermal power to the whole country. Shanxi is an economic less developed province with abundant energy resources. Gansu is located in Northwest. Besides coal, fossil oil, and natural gas, Gansu is rich in renewable energy such as solar energy and wind energy. In general, Gansu is an economic backward province with abundant energy resources.

26 3.1 Case Study of cooperative electricitysaving model SH-SC-SX-GS optimal model of electricityutilization benefit SH-SC-SX-GS cooperative electricity-saving benefit allocation model

27 3.1.1 SH-SC-SX-GS optimal model of electricityutilization benefit (1) Construction of function of the cost of electricity consumption for sample provinces (2) Construction of function of the annual gross benefits from utilization of electricity for sample provinces (3) Construction and solution of SH-SC-SX-GS optimal model of electricity-utilization benefit

28 (1) Construction of function of the cost of electricity consumption for sample provinces Firstly, we obtained the electricity price and quantities of electricity consumption of each kind of consumption terminal in each sample province through China Energy Statistical Yearbook, and calculated the annual total revenue of power enterprises in each sample province. Secondly, we obtained the cost to revenue ratio of power enterprises in each sample province, and calculated the annual net cost of electricity consumption from 2001 to 2014 for each sample province.

29 (1) Construction of function of the cost of electricity consumption for sample provinces Finally, we use the data of annual net cost of electricity consumption and annual quantity of electricity consumption from year of 2001 to 2014, and take E ui as independent variable and Г i as dependent variable, and fitted the function of cost of electricity consumption for sample provinces:

30 (2) Construction of function of the annual gross benefits from utilization of electricity for sample provinces Firstly, we obtained the data of GDP, labor, fixed capital stocks, and annual electricity consumption in SH, SC, SX, and GS from 2001 to 2014, and applied multiple linear regression analysis to get the electricity output elastic coefficient for these provinces: for SH it is 0.381, SC 0.199, SX 0.330, and GS Secondly, according to data of the electricity output elastic coefficient and GDP in these provinces from 2001 to 2014, we calculated the annual gross benefits from utilization of electricity, then found that the exponential function fit best. So we got the function of the annual gross benefits from utilization of electricity for the sample province:

31 (2) Construction of function of the annual gross benefits from utilization of electricity for sample provinces

32 (3) Construction and solution of SH-SC-SX-GS optimal model of electricity-utilization benefit This paper used the relevant data of 2014 to calculate the optimal solution. According to energy-saving target set by the central government and the data of GDP and electricity consumption, we calculated the annual quotas of the maximum electricity consumption for SH, SC, SX, and GS. According to China s situation, λ li and λ ui are estimated as 0.85 and 1.2, respectively. So the lower limit and upper limit of the electricity consumption were gotten.

33 (3) Construction and solution of SH-SC-SX-GS optimal model of electricity-utilization benefit Based on the above analysis, we establish the optimal model of electricity-utilization benefits for SH-SC-SX-GS union as follows:

34 (3) Construction and solution of SH-SC-SX-GS optimal model of electricity-utilization benefit Table 3-3 the amount of electricity consumption and the electricity-utilization benefit under two models Electricity consumption (10 8 kwh) NCESM electricityutilization benefit (10 8 CNY) Electricity consumption (10 8 kwh) CESM electricityutilization benefit (10 8 CNY) SH SC SX GS Total %

35 3.1.2 SH-SC-SX-GS cooperative electricity-saving benefit allocation model Because the cooperative electricity-saving union consists of four provinces, there are 12 possible combinations for the cooperation. To obtain Shanghai's reward from cooperation, we firstly calculated the values of v(s) for all the combinations that involved Shanghai (Table 3-4), and then calculated the corresponding cooperation benefits if Shanghai does not participate, v(s\{sh}). In the final step, based on the benefit allocation strategy in Eqs. (2-14) and (2-15), we obtained Shanghai's reward from the cooperation benefits:

36 3.1.2 Shanghai-Sichuan-Shanxi-Gansu cooperative electricity-saving benefit allocation model Table 3-4 Calculation of the benefit allocation under CESM for Shanghai in 2014

37 3.1.2 Shanghai-Sichuan-Shanxi-Gansu cooperative electricity-saving benefit allocation model Table 3-6 summarizes the money transferred among the four provinces in 2014 based on their cooperation. Shanghai would need to pay CNY to SC, SX, and GS altogether. SC, SX, and GS would get CNY , CNY , and CNY from SH respectively. They are the financial compensations deserved by these provinces to compensate for transferring shares of the electricity to SH. Without these transferred electricity, SH couldn t create so much benefit from utilization of electricity.

38 3.1.2 Shanghai-Sichuan-Shanxi-Gansu cooperative electricity-saving benefit allocation model Table 3-6 Allocation of benefits from cooperative Electricity saving SH SC SX GS Total B1: Benefits from utilization of electricity under NCESM B2: Cooperation benefit allocation based on the Shapley value method B3: Actural benefit from utilization of electricity under the CESM (before benefit allocation) B4: Monetary payment to other provinces: B4=B3- B B5: Added benefit from electricity under CESM: B5=B2-B

39 3.2 Case Study of cooperative carbonreducing model SH-SC-SX-GS optimal model of carbon reduction SH-SC-SX-GS cooperative carbon-reducing benefit allocation model

40 3.2.1 SH-SC-SX-GS optimal model of carbon reduction To determine the capacity structure of electricity production in SH, SC, SX, and GS in 2014, we first obtained the data of installed capacity of all kinds of electricity-generation method in these provinces from China electricity power statistical yearbook 2015, then we calculated the available time for each kinds of electricity-generation method in each province, finally we get the capacity proportion of each method and the capacity structure.

41 3.2.1 SH-SC-SX-GS optimal model of carbon reduction According to data from National Energy Administration, we obtained the standard coal consumption rate or power supply in 2014 in China so that we calculated the carbon intensity of thermal power generation method as gCO 2 /kwh. We denote that the carbon intensity of hydroelectric generation, solar power generation, and wind power generation as 0. With these data, we constructed the function of annual CO 2 emission by electricity generation in SH, SC, SX, and GS:

42 3.2.1 SH-SC-SX-GS optimal model of carbon reduction Table 3-7 function of annual CO 2 emission by electricity generation

43 3.2.1 SH-SC-SX-GS optimal model of carbon reduction According to carbon-reducing target set by the central government and the data of GDP and electricity generation, we calculated the annual quotas of the maximum CO2 emission by generation and quantity of electricity generation for SH, SC, SX, and GS. According to China s situation, is estimated as 0.3. So the lower limit and upper limit of the electricity generation were gotten. SH SC SX GS Upper limit of electricity generation lower limit of electricity generation

44 3.2.1 SH-SC-SX-GS optimal model of carbon reduction we established the optimal carbon-reducing model for SH-SC-SX- GS cooperative carbon-reducing union as follows:

45 3.2.1 SH-SC-SX-GS optimal model of carbon reduction We applied Lingo 16.0 to solve the model, got the optimal amount of electricity generation and carbon emission by generation for each province in the union in On this basis, this paper applied CNY70.2/tCO 2, the average price of carbon emission permit in Shenzhen Carbon Exchange in 2014, and calculated the cooperative carbon-reducing benefit. The amount of electricity generation and the carbon-reducing benefit in these provinces under NCCRM and CCRM are as follows:

46 3.2.1 SH-SC-SX-GS optimal model of carbon reduction Table 3-9 两种降碳模式下各省份产电量与碳排放数据 amount of electricity generation (10 8 kwh) NCCRM carbon emission by generation (10 8 kg) amount of electricity generation (10 8 kwh) CCRM carbon emission by generation (10 8 kg) carbonreducing benefit (10 8 CNY) SH SC SX GS Total

47 3.2.2 SH-SC-SX-GS cooperative carbon-reducing benefit allocation model Because the cooperative carbon-reducing union consists of four provinces, there are 12 possible combinations for the cooperation. To obtain Shanghai's reward from the carbonreducing cooperation, we firstly calculated the values of for all the combinations that involved Shanghai (Table 3-10), and then calculated the corresponding cooperation benefits if Shanghai does not participate. In the final step, based on the benefit allocation strategy in Eqs. (30) and (31), we obtained Shanghai's reward from the cooperation benefits:

48 3.2.2 SH-SC-SX-GS cooperative carbon-reducing benefit allocation model Table 3-10 Calculation of the benefit allocation under CCRM for Shanghai in 2014

49 3.2.2 SH-SC-SX-GS cooperative carbon-reducing benefit allocation model Table 3-11 summarizes the money transferred among the four provinces in 2014 based on their carbon-reducing cooperation. Shanghai would need to pay CNY and SX need pay CNY to SC and GS respectively. SC and GS would get CNY and CNY from SH and SX respectively. They are the financial compensations deserved by these provinces to compensate for generating more electricity with lower carbon emission. SH and SX would emit more CO 2 by generate these electricity.

50 3.2.2 SH-SC-SX-GS cooperative carbon-reducing benefit allocation model Table 3-11 Allocation of benefits from cooperative Carbon reducing (10 8 CNY) SH SC SX GS Total B1: Benefits from carbon reduction under NCESM B2: Cooperation benefit allocation based on the Shapley value method B3: Actural benefit from carbon reduction under the CESM (before benefit allocation) B4: Monetary payment to other provinces: B4=B3- B B5: Added benefit from carbon reduction uner CESM: B5=B2-B

51 3.2.2 SH-SC-SX-GS cooperative carbon-reducing benefit allocation model That is, Shanghai would get CNY by participating in the CCRM. In the same way, we obtained the benefits allocation for Sichuan,Shanxi, and Gansu: CNY , CNY , and CNY , respectively.

52 4 conclusions (1) the paper proposed CESM and CCRM, two more incentive mechanism, to help improve the current energy-saving mode and carbon-reducing mode in China. (2) Under CCRM, we only considered the benefit from carbon emission permit trading. In fact, CCRM create benefit from reducing air pollution and the subsequent health benefit by generation with low-carbon and cleaner energy. Future research could extend this analysis to include other benefits. (3) It is necessary for the central government to establish efficient mechanisms about planning, implementing, evaluating, and coordinating the CESM and CCRM strategy with providing organizational support for the successful application of CESM and CCRM.

53 Thank You!