Are energy efficiency and renewable energy technology complementary or substitute in mitigating climate change?

Transcription

1 Are energy efficiency and renewable energy technology complementary or substitute in mitigating climate change? Jun Li Ruben Bibas International Centre for Research on Environment and Development (CIRED) WEHIA 2013, Reykjavik University June 2013 J.L, R.B EE and RE interactions in global climate policy 1 / 30

2 Background and objectives Existing studies stress on EEI and RE policies 1 Introduction J.L, R.B EE and RE interactions in global climate policy 2 / 30

3 Background and objectives Existing studies stress on EEI and RE policies Background and objective Energy efficiency and renewable energy constitute the backbones of mitigating the global climate change and minimizing long-term macroeconomic impacts to achieve the global energy transition to competitive low carbon economy. Energy Access, Poverty, and Development Energy Security Environment and health (air pollution mitigation) Energy efficiency is cost-effective in mitigating GHG emissions and improving economic competitiveness in the global context ( IEA 2102). Renewable energy turns out to be necessary component in global energy supply to achieve the ambitious climate targets, in particular the biomass (e.g. Bibas and Méjean 2012) J.L, R.B EE and RE interactions in global climate policy 3 / 30

4 Background and objectives Existing studies stress on EEI and RE policies Background and objective A key issue is whether EE and REN policies are complementary or substitute for climate policy making policymakers are often assumed to choose either energy efficiency improvement (EEI) or RenE technologies to address climate change challenges separately IEA s WEO ppm scenario put emphasis on both policies with a focus on energy efficiency policy WEC 2012 Global Energy Assessment points out the importance of end-use efficiency and supply-side decarbonisation EU s policy package is focused on three combined policy priorities It is important to understand the interaction between the EE and RE policies to improve the climate change mitigation effectiveness. J.L, R.B EE and RE interactions in global climate policy 4 / 30

5 Background and objectives Existing studies stress on EEI and RE policies Objectives This study aims to evaluate the EE/RE interactions with a CGE model. We try to elucidate the complementarity/substitutability between EEI and RE policies from global perspective In the most abstract form, an economy produces manufactured goods with producing factors Y = f(k, L, E(r, f)) where r, f is renwable and fossil fuels, respectively If dln(r/e) < 0 holds, suggesting RE and EEI are complementary, otherwise dln(e/y ) they are substitute We also investigate the extent to which combined energy policy may help recude transition costs through EEI improvement and fast REN penetration when the world economy is subject to strong global climate policy. J.L, R.B EE and RE interactions in global climate policy 5 / 30

6 Background and objectives Existing studies stress on EEI and RE policies Energy intensity indice across countries source: IEA-WEO2012 J.L, R.B EE and RE interactions in global climate policy 6 / 30

7 Background and objectives Existing studies stress on EEI and RE policies Critical role of EE in decarbonizing future world energy supply source : IEA-WEO2012 J.L, R.B EE and RE interactions in global climate policy 7 / 30

8 Background and objectives Existing studies stress on EEI and RE policies Figure: World energy supply hasn t changed very much to date source: Riahi et al.2011 J.L, R.B EE and RE interactions in global climate policy 8 / 30

9 Background and objectives Existing studies stress on EEI and RE policies Figure: Future pictures would need drastic change source: Riahi et al.2011 WBGU Exemplary Pathway J.L, R.B EE and RE interactions in global climate policy 9 / 30

10 Background and objectives Existing studies stress on EEI and RE policies Prospects for world primary supply in different radiative forcing targets source: Riahi et al J.L, R.B EE and RE interactions in global climate policy 10 / 30

11 Background and objectives Existing studies stress on EEI and RE policies RE is particularly important to decarbonize private transport source: Riahi et al J.L, R.B EE and RE interactions in global climate policy 11 / 30

12 model Study frame 1 Introduction J.L, R.B EE and RE interactions in global climate policy 12 / 30

13 model Study frame Simulation method Numerical simulations have been carried out with IMACLIM-R model which accounts for imperfect foresight and infrastructure inertia as a result of short-sighted investments. In order to identify the main drivers of the structural changes of carbon emissions mitigation and to account for uncertainty of prospective energy supply and demand and underlying energy price, we simulate several combinations of parameters associating oil market(e.g. OPEC s strategies) with technological progress. J.L, R.B EE and RE interactions in global climate policy 13 / 30

14 model Study frame Simulation method Numerical simulations have been carried out with IMACLIM-R model which accounts for imperfect foresight and infrastructure inertia as a result of short-sighted investments. In order to identify the main drivers of the structural changes of carbon emissions mitigation and to account for uncertainty of prospective energy supply and demand and underlying energy price, we simulate several combinations of parameters associating oil market(e.g. OPEC s strategies) with technological progress. Drivers of endogenous technical change may be twofold: knowledge progress along with capital accumulation (learning by doing); changes in relative price of production factors(hicks induced innovation)partly due to public policy. J.L, R.B EE and RE interactions in global climate policy 13 / 30

15 model Study frame IMACLIM is characterised by a recursive dynamic framework: Succession of static equilibriums under short-term constraints; Consistent Macroeconomic snapshot Technology and capacity constraints Moving constraints informed by reduced forms of BU models A comprehensive price & physical quantities account : Hybrid matrices, physical production capacities, physical i/o coefficients Secure the dialogue with sector-based expertise (sources of technical inertia, technical asymptotes in efficiency gains...) Assure consistency between economic projections and technical projections J.L, R.B EE and RE interactions in global climate policy 14 / 30

16 Introduction model Study frame Schematic representation of IMACLIM model J.L, R.B EE and RE interactions in global climate policy 15 / 30

17 model Study frame Scenarios description BAU scenario refers to the situation in which no climate policy is implemented in any country over the period. In policy scenarios, world emissions trajectories are subjected to exogenous climate constraints compatible with 2-degree targets,i.e. 550 ppmco 2eq 3.7 W/m 2. A unique global carbon tax will be imposed. Policy scenarios simulated in this study comprise an array of assumptions defined in the EMF-27 study protocol. J.L, R.B EE and RE interactions in global climate policy 16 / 30

18 model Study frame EMF-27 protocol:policy combinatorics snapshot J.L, R.B EE and RE interactions in global climate policy 17 / 30

19 model Study frame EEI/RE interaction matrix matrix of BAU runs RE/high RE/low EEI/fast R3G2 R3G81 EEI/BAU R3G1 R3G6 matrix of policy runs RE/high RE/low EEI/fast R3G18 R3G34 EEI/BAU R3G17 R3G23 J.L, R.B EE and RE interactions in global climate policy 18 / 30

20 model Study frame RE and EEI settings in the simualtions EEI is conditioned by endogenous learning, public policy and price signals (e.g carbon tax), in general we assume larger potentials of EEI in developing countries Non-fossil renewable electricity (hydro,solar, wind, biomass a )and nuclear power are considered in the electricity generation module Certain deepened mitigation scenarios also consider CCS technology a biomass is critical to achieving extremely ambitious RCPs, i.e. negative emissions in the longer term. J.L, R.B EE and RE interactions in global climate policy 19 / 30

21 EEI/RE interactions in the simulated policy scen carbon tax and economic impacts 1 Introduction J.L, R.B EE and RE interactions in global climate policy 20 / 30

22 EEI/RE interactions in the simulated policy scen carbon tax and economic impacts World economy s energy intensity would follow two descent trajectories. EI would be reduced over half by mid-century J.L, R.B EE and RE interactions in global climate policy 21 / 30

23 Renewalbe energy deployment differ significantly between two potentials clusters. For a given RE prospects, faster EEI will actually delay deployment by 2050 of RE as theory suggests J.L, R.B EE and RE interactions in global climate policy 22 / 30 Introduction EEI/RE interactions in the simulated policy scen carbon tax and economic impacts

24 EEI/RE interactions in the simulated policy scen carbon tax and economic impacts As theory suggests, slower EEI and higher RE will lead to higher final energy demand. Faster deployment or higher availability of RE technologies make energy price lower, resulting in reduced incentives for consumers to save energy consumption. J.L, R.B EE and RE interactions in global climate policy 23 / 30

25 EEI/RE interactions in the simulated policy scen carbon tax and economic impacts EEI and RE interaction is hardly discernible in the short term. However, faster EEI will eventually accelerate deployment of RE resulting in higher share of RE in primary energy supply,i.e. 318 > 317 and 334 > 323. J.L, R.B EE and RE interactions in global climate policy 24 / 30

26 Results confirm theoretical prediction that EEI may slower the pace of RE deployment rates. Average global RE growth rate in 318 and 334 run is significantly slower than 317 and 323, respectively RE will increase faster during the first half of the century than the second period, suggesting that most RenE potentials, including the biomass sequestration (in 317 and 318 run), is likely to be tapped in the next forty years to achieve the climate stabilization target J.L, R.B EE and RE interactions in global climate policy 25 / 30 Introduction EEI/RE interactions in the simulated policy scen carbon tax and economic impacts Figure: average growth rate of total renewable energy supply in the world

27 EEI/RE interactions in the simulated policy scen carbon tax and economic impacts Figure: global carbon tax trajectories combined policy portfolio (318) can persistently lower carbon prices for global economy EEI plays a crucial rule in mitigating increase in carbon price, note prices in 317 and 323 are significantly higher than 318 and 334 runs (high EEI rates) in the next decades J.L, R.B EE and RE interactions in global climate policy 26 / 30

28 EEI/RE interactions in the simulated policy scen carbon tax and economic impacts J.L, R.B EE and RE interactions in global climate policy 27 / 30

29 EEI/RE interactions in the simulated policy scen carbon tax and economic impacts J.L, R.B EE and RE interactions in global climate policy 28 / 30

30 1 Introduction J.L, R.B EE and RE interactions in global climate policy 29 / 30

31 Summary Numerical simulation is a useful tool to test the theoretical prediction about the relationship between EEI and RenE policies A unified theoretical framework should integrate the temporal dimension EEI and RenE has opposite effect on each other in the short term. i.e. faster EEI may shrink RenE s share in total energy supply However, EEI/RE policies may positively interact with each other in the longer term Impacts of variation in EEI/RE turn out to be heterogenous across world regions Comprehensive policies may do better job for economic resilience vis-a-vis of climate policy instruments, integrative EEI and RenE portfolio will significantly reduce the transition costs of climate mitigation policies at both global and regional levels J.L, R.B EE and RE interactions in global climate policy 30 / 30