How can we achieve a global 2 C target in an efficient and equitable manner?

Transcription

1 How can we achieve a global 2 C target in an efficient and equitable manner? James Glynn, Socrates Kypreos, Antti Lehtila, Maurizio Gargiulo, Brian Ó Gallachóir ESRI-UCC Energy Research Workshop Dublin 9 th June 2015

2 Outline Climate Change emissions context Introduction to ETSAP-TIAM-MSA 2 C Decarbonisation Scenarios Macroeconomic consequences Equitable Efficient Burden Sharing Cap cumulative global emissions Trade carbon permits Marginal CO2e abatement price Appropriate capital transfers rules?

3 How to equitably distribute the remaining global carbon quota? Research Question? How to allocate equitable capital transfers to invest in the most efficient GHG mitigation pathway and engage less developed countries. ROW IND EU28 USA CHI

4 A year in the Life of Earth s CO 2 January March 20 th March 20 th - June 21 st June 21 st September 24 th September 24 th - December 31st Source: NASA Goddard Space Flight Centre.

5 ETSAP-TIAM 15 Regions CAN USA WEU EEU MEA CHI SKO JPN MEX AFR IND ODA CSA AUS

6 Crude Oil Raw Gas Coal Gasoline Natural Gas Electrcity TIMES-Model Generator Primary energy prices, Resource availability GDP, Population, Industrial Activity Min NPV Primary energy Final energy Service Demands Domestic sources Imports R r 1 y YEARS (1 d REFYR y r, y ) ANNCOST ( r, y) Transformation Refinery, Power Plants, Gas Network, Briquetting... Consumption Industry, Services, Transport, Residential... Heat Light Motion Res Heat Ind Heat Person Km Freight Km Max U = T t=1 r nwt r. pwt t. dfact r,t. ln C r,t Labour Capital Energy Costs MACRO Stand Alone (MSA) General Equilibrium Macroeconomic Model Investment Demand Response Consumption

7 Scenario Outline Assumes rational optimising choices: not equal to business as usual Remaining CO2 Emission Quota Budget with a cumulative on CO 2 emissions constraint of 1400Gt CO 2 e to achieve the target 2 C (50% probability) Burden Sharing Rules Rule 1 (R1) Equalitarian Emissions Per Capita Rule 2 (R2) Compensated Non-Annex-B Countries for energy cost losses

8 AR5 CO2 Emissions Database 1150 emission pathways from the IPCC Fifth Assessment Report s analyses are shown Data Source: AR5 Emissions Database

9 $/tco2 Gt CO2 Gt CO2 Net CO2 Emissions & CO2 Price WEU USA MEA IND FSU CSA CHI AFR WEU USA SKO ODA MEX MEA JPN IND FSU EEU CSA CHI CAN AUS AFR $3,500 $3,277 $3,000 $2,500 $2,012 $2,000 $1,500 $1,235 $1,000 $286 $465 $758 $500 $66 $108 $175 $ Cumulative

10 %GDP Loss 2030, 2050, 2100 Developing Countries Developed Countries - GDP Loss AFR AUS CAN CHI CSA EEU FSU IND JPN MEA MEX ODA SKO USA WEU (5.00) (10.00) (15.00) (20.00) (25.00) Energy Exporting Countries

11 GtCO2/Capita Rule 1 (R1) Equalitarian Grandfathering to 2050 equal emission/capita CAN 20 USA 15 SKO, AUS JPN, WEU, FSU MEA, EEU, CHI CSA, MEX ODA, IND, AFR

12 Cumulative GDP Change % Cumulative GDP Change Rule 1 Equitable Carbon Per Capita Eff Rule l Rule II AFR AUS CAN CHI CSA EEU FSU IND JPN MEA MEX ODA SKO USA WEU World

13 GtC/yr Permit Transfers - Billion US $ Rule 2 Permits Trade GtC/yr Non-Annex-B EC Compensation IND CHI USA WEU ODA IND CSA AFR CHI MEA WEU WEU USA SKO ODA MEX MEA JPN IND FSU EEU CSA CHI CAN AUS AFR $1,500 $1,000 $500 $0 -$500 -$1,000 ODA IND CSA AFR CHI MEA WEU $1,500

14 Cumulative GDP Change % Cumulative GDP Change Rule 3 Non-Annex B LDCs compensated Compensated for Losses i.e. Net Zero Losses Compensated for Losses i.e. Net Zero Losses Compensated for Losses i.e. Net Zero Losses Compensated for Losses i.e. Net Zero Losses Eff Rule l Rule II -20 AFR AUS CAN CHI CSA EEU FSU IND JPN MEA MEX ODA SKO USA WEU World

15 Conclusions The 2 Degree goal is barely technically feasible and comes with prohibitively expensive marginal abatement costs. New Technology, New Behaviour & New Politics required The technologically efficient global cumulative cost of the 2 Degree goal is 5% GDP on aggregate with regional variations of between 2.5% and 11% GDP. Equitable burden sharing rules require high capital transfers of trillions US $ (undiscounted) per year in the second half of the century. Rule 2 is the most desirable from an equity perspective. Smaller Capital Transfers & Potential for Profiteering

16 Thank You

17 A year in the Life of Earth s CO 2 There is one key reason why we look at models, and that s because if we had observations of the future, we obviously would trust them more than models, but unfortunately, observations of the future are not available at this time. Gavin Schmidt Deputy Chief at NASA Goddard Institute for Space Studies Climate Scientist at Columbia University s Earth Institute Source: NASA Goddard Space Flight Centre.

18 GLOBAL ETSAP-TIAM model Linear programming bottom-up energy system model of IEA-ETSAP Integrated model of the entire energy system Prospective analysis on medium to long term horizon (2100) Demand driven by exogenous energy service demands Partial and dynamic equilibrium (perfect market) Optimal technology selection Minimizes the total system cost Environmental constraints Integrated Climate Model 15 Region Global Model Price-elastic demands in the TIMES-ED version Macro Stand Alone Single-sector, multi-regional, inter-temporal general equilibrium model which maximises regional utility. The utility is a logarithmic function of the consumption of a single generic consumer. Production inputs are labour, capital and energy. Energy demand from ETSAP-TIAM model. MSA Re-estimates Energy Service Demands based on energy cost

19 ETSAP-TIAM Reference Energy System Source: Loulou, R., Labriet, M., ETSAP-TIAM: the TIMES integrated assessment model Part I: Model structure. Comput. Manag. Sci. 5, doi: /s z

20 ETSAP-TIAM MSA (TMSA) Macro Stand Alone Min Max U = T t=1 r nwt r. pwt t. dfact r,t. ln C r,t (1) (MSA OBJ z ) Y r,t = C r,t + INV r,t + EC r,t + NTX(nmr) r,t (2) Y r,t = NPV r 1 kpvs akl r K r ρ r (1 kpvs r,t l r )ρ r r,t + nwt Negishi Weights pwt weight Multiplier dfact utility discount factor C - Consumption Y Production INV Investment EC Energy Cost NTX Net exports R REFYR y ( 1 dr, y ) ANNCOST ( r, y) (TIAM OBJ z ) y YEARS k 1 ρ r ρ b r,k DEM r (3) r,t,k akl production fn constant K Capital kpvs capital value share l - Labour annual growth b Demand coefficient p elasticity of substitution DEM - Energy Demands