Global Greenhouse Gas Technological Mitigation Potentials and Costs in 2020 (Second Edition) 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500

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1 Global Greenhouse Gas Technologcal Mgaon Poenals and Coss n 2020 (Second Edon) Asa-Pacfc AIM Inegraed Model Margnal abaemen cos (US$/CO2eq) ,000 4,000 6,000 8,000 10,000 12,000 14,000 GHG reducon poenal (MCO2eq) 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Fluorocarbons (HFCs, PFCs, SF6) Muncpal sold wase (CH4) Agrculure(CH4, N2O) Fugve & Combuson (CH4, N2O) Power generaon (CO2) Trasporaon (CO2) Resdenal & Commercal (CO2) Indusry (CO2) 50 GHG reducons (MCO 2 eq) JPN CHN IND IDN KOR THA XSE XSA XME AUS NZL CAN USA XE15 XE10 RUS MEX ARG BRA XLM ZAF XAF XRW AIM Inerm repor March 2009

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3 AIM Inerm Repor 2009 March Noe) Full repor wll be uploaded on he followng webse. hp://www-am.nes.go.jp/am/ Auhors Tasuya Hanaoka* : Naonal Insue for Envronmenal Sudes Conac: hanaoka@nes.go.jp Osamu Akash : Naonal Insue for Envronmenal Sudes Yuko Kanamor: Naonal Insue for Envronmenal Sudes Takash Ikegam: Naonal Insue for Envronmenal Sudes Mkko Kanuma : Naonal Insue for Envronmenal Sudes Tomoko Hasegawa: Kyoo Unversy Shnchro Fujmor : Kyoo Unversy Yuzuru Masuoka : Kyoo Unversy Go Hbno : Mzuho Informaon & Research Insue Kazuya Fujwara: Mzuho Informaon & Research Insue Yuko Mook: Mzuho Informaon & Research Insue * Edor of hs repor

4 Global Greenhouse Gas Technologcal Mgaon Poenals and Coss n 2020 (Second Edon) Table of conens 1 Inroducon Background of hs sudy Objecve of hs sudy Mehodology Overvew of he model Srucure of he model Defnon of regons, gases and secors Defnon of reducon poenals and margnal abaemen coss Margnal abaemen cos curves Oulne of margnal abaemen cos curves Formulaons Global Warmng Poenal values n hs repor Daa assumpons Overvew Soco-economc and macroeconomc sengs Populaon GDP Energy prces Composon of power sources Fossl fuels Renewable energy Servce demands Indusry Transpor Resdenal and commercal Agrculure Wase managemen Fugve emssons from fuel producon Fluorocarbon emssons Mgaon echnology opons Resuls and dscussons Overvew of case sudes Coverage of mgaon opons arge secors Global margnal abaemen cos curves and reducon poenals

5 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon Regonal reducon poenals Composon of power sources n major developed counres Emsson esmaes and reducon poenals Secor-wse comparson of hs sudy wh he IPCC AR Concluson REFERENCES Appendx 1 Defnon of geographcal coverage

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7 Acknowledgemens Ths research was suppored by he Global Envronmen Research Fund BC-088. We acknowledge he generosy of hs fund.

8 1 Inroducon 1.1 Background of hs sudy Clmae change ssues have been he focus of nernaonal aenon n recen decades. The Inergovernmenal Panel on Clmae Change suggesed n he Fourh Assessmen Repor (AR4) (IPCC, 2007a) ha mos of he observed ncrease n globally-averaged emperaure snce he md-20 h cenury s very lkely due o he observed ncrease n anhropogenc greenhouse gas (GHG) concenraons. Clmae change due o hese anhropogenc GHG emssons affecs no only he global envronmen bu also he global economy. Especally n he case of developng counres such as hose n Asa and Lan Amerca, s mporan o consder a balance beween her economc growh, whch nduces rse n GHG emssons, and GHG mgaon polces, whch mpose economc burdens. Therefore, formal and nformal dalogue on he fuure clmae regme afer he Kyoo Proocol has ncreased among hose who have a sake n clmae change negoaons n recen years, and s requred o assess global GHG mgaon arges and burden-sharng schemes dependng on he level of soco-economc characerscs of each regon n order o avod abrup clmae change. For hs purpose, s also requred o assess GHG mgaon poenals and hese coss, and o look no he mporance of nernaonal cooperaon such as echnology ransfer mechansms and fnancal asssances o developng counres. There were varous sudes on GHG mgaon poenals and hese coss n each secor. The IPCC Fourh Assessmen Repor Workng Group III (AR4 WG3) (IPCC, 2007b) provdes an n-deph analyss of mgaon opons, GHG mgaon poenals and coss by revewng varous leraure, and he IPCC AR4 WG3 repors mgaon measures by secor n seven chapers on energy supply, ranspor, buldngs, ndusry, agrculure, foresry, and wase managemen. In addon, he IPCC AR4 WG3 provdes one addonal chaper dealng wh he cross-secoral ssues ha combnes nformaon from boom-up echnologcal sudes wh resuls of op-down modelng exercses n varous secors, and summarzes he range of mgaon poenals n seven secors n OECD, EIT (economes n ranson), Non-OECD and all over he World. However, here s no dealed nformaon abou he range of mgaon poenals n he major GHG emng counres or he range of baselne emssons and her soco-economc sengs used for esmang hose poenals. As s seen n Chaper 11 n he IPCC AR4 WG3, mgaon poenals even a he same level of carbon prce wll vary wdely due o he dfferen sengs of soco-economc assumpons, defnon of coss, scope of mgaon opons, he annual dscoun rae, assumpon of he baselne scenaro, and oher aspecs. Thus, whle comparng a parcular sudy s mgaon poenals and coss wh oher sudes, s mporan o clarfy varous precondons and undersand he dfferences of defnons, assumpons, and daa sengs. Ths sudy provdes nformaon of mgaon poenals by regon and by secor as well as daa assumpons such as soco-economc and macroeconomc sengs, energy servce demands and echnology opons, and hen compares hose resuls wh he IPCC AR4 WG

9 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon Objecve of hs sudy Ths repor s he exensvely revsed and updaed verson of he prevous sudy by Hanaoka, e al (2008). Ths sudy enlarges he coverage of arge secors and GHGs, mproves mgaon opons daabase and makes conssen n relaon o energy servce demands across all secors by usng common soco-economc assumpons. In addon, hs sudy akes care of he balance beween elecrcy demand n end-use echnologes and energy supply n power generaon, hereby prevenng double counng or msmach whle esmang mgaon poenals. Mgaon poenals vary dependng on he sengs for fuure energy prces and he echnology opons, as well as assumpons for he baselne scenaro, such as soco-economc and macroeconomc sengs and energy servce demands. Mgaon poenals also vary dependng on he sengs for fuure carbon prces and payback perods when consderng a framework of mgaon echnology selecons. Thus, when dscussng mgaon poenals, s mporan o show he ranges of hese poenals n dfferen case sengs. The objecve of hs sudy s hus o esmae GHG emssons, evaluae reducon poenals n varous regons hroughou he world and o esmae margnal abaemen coss (MAC) hrough In addon, mgaon poenals and her cos-effecveness are assessed n erms of her regonal, secoral, and echnologcal aspecs. 2 Mehodology 2.1 Overvew of he model 1) Man oupu of he model Indusral goods and servces producon, energy supply and demand, GHG emssons, ar polluan emssons, wase generaon, cos of counermeasures 2) Regon World, classfed no 23 geographcal regons 3) Year ) Secor Power generaon, ndusry (ron and seel, cemen, oher ndusres), resdenal and commercal, ransporaon, agrculure, wase managemen, fugve emssons from fuels, and fluorocarbon emssons 5) Technology Abou 200 o 300 GHG emssons mgaon echnologes are consdered. However, should be noed ha hs sudy s based on realsc and currenly exsng echnologes, and - 2 -

10 here are oher mgaon opons whch are no able o be consdered n hs sudy due o he lack of daa avalably. A lack of daa prevens consderaon of nnovave echnologes ha may be used n he fuure. 6) Demand esmaon A large amoun of sascal daa was used o esmae fuure servce demands, such as ndusral goods producon, ransporaon volume, and space heang demand n he resdenal secor. 7) GHG emssons esmaon GHG emssons and he poenal for her reducon are esmaed by usng a boom-up opmzaon model wh dealed echnology selecon framework. In he model, echnologes are deermned under he crera of oal cos mnmzaon. 2.2 Srucure of he model Fgure 1 shows overall srucure of AIM/Enduse[Global]. The model consss of hree pars: a macroeconomc model, a servce demand model, and a echnology boom-up model. Frs, macroeconomc ndcaors, such as GDP and secor-wse value added n real erms, are esmaed by he Soco-economc Macro Frame model, whch s a supply-sde macroeconomc model ha uses fuure populaon as an npu. Second, servce demands, such as seel producon, cemen producon, ransporaon volume, and energy servce demand n he resdenal and commercal secor, are esmaed usng several servce demand models. These models use macroeconomc ndcaor esmaes generaed by he Soco-economc Macro Frame model. Fnally, GHG emssons and he poenal for her reducon are esmaed by usng a boom-up opmzaon model wh dealed echnology selecon framework, whch s assocaed wh a echnology daabase ha conans approx. 200 o 300 GHG emsson mgaon echnologes. The model smulaes he dffuson of hose echnologes n he fuure under several consrans, such as he sasfacon of servce demand. The echnologes are deermned under he crera of oal cos mnmzaon. The echnology boom-up model frs esmaes he emssons and fnal energy consumpon n he fnal demand secors, such as he ndusry and resdenal secors. I hen uses he gven fnal energy demand o esmae he emssons and prmary energy consumpon for he power generaon secor. Fnally, uses he gven prmary energy demand o esmae fugve emssons from fuel producons

11 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon - Soco-economc macro frame model Populaon GDP Secor-wse value added Servce demand model Seel producon and rade model Cemen producon model Transporaon demand model energy servce demand model Agrculural rade model Wase generaon model Fluorocarbon emsson model Crude seel producon Cemen producon Value added of secondary ndusry Transporaon volume Energy servce demand (resdenal) Energy servce demand (commercal) Agrculural producon Wase generaon Emsson of fluorocarbon Technology boom-up model Iron and seel secor Cemen secor Oher ndusres secor Transporaon secor Resdenal secor Commercal secor Agrculure secor Wase managemen secor Fluorocarbon emsson secor Elecrcy demand Technology daabase Inal cos Effcency Energy daabase Energy prce Technology boom-up model (power generaon secor) Prmary energy producon lfeme Maxmum dffuson rae Exogenous varable Emsson facor Endogenous varable Technology boom-up model (energy mnng secor) Model Daabase GHG emsson Fgure 1 Srucure of AIM/Enduse[Global] 2.3 Defnon of regons, gases and secors There are dfferen approaches for regonal aggregaons dependng on he purpose of he analyss. Ths sudy focused on he major GHG emng regons, especally he Asan regons, and covered 23 geographcal world regons as shown n Fgure 2. As for he gases and secors, hs sudy covered sx GHGs regulaed under he Kyoo Proocol, n mulple secors such as power generaon, ndusry, resdenal and commercal, ransporaon, agrculure, wase and fluorocarbon emssons secors as shown n Table 1. Technology daabase were developed and emsson reducon poenals and her coss were evaluaed secor-wse and regon-wse, based on a boom-up approach. Table 1 Targe secors and gases GHG Secor CO Power generaon 2 CH Indusry 4 N Transpor 2 O Resdenal & commercal CH 4, N 2 O Agrculure CH Muncpal sold wase 4 Fugve emssons from fuels HFC, PFC, SF 6 Fluorocarbon emssons - 4 -

12 Table 2 World 23 regons n AIM/Enduse[Global] Code Regon Code Regon JPN Japan Developed CAN Canada Developed CHN Chna Developng USA Uned Saes Developed IND Inda Developng XE15 EU15 n Wesern EU Developed IDN Indonesa Developng XE10 EU10 n Easern EU Developed KOR Korea Developng RUS Russa Developed THA Thaland Developng ARG Argenne Developng XSE Oher Souh-eas Asa Developng BRZ Brazl Developng XSA Oher Souh Asa Developng XLM Oher Lan Amerca Developng XME Mddle Eas Developng XAF Oher Afrca Developng AUS Ausrala Developed XRW Res of he World Developng NZL New Zealand Developed World 23 regons JPN (Japan) CHN (Chna) IND (Inda) IDN (Indonesa) KOR (Korea) THA (Thaland) XSE (Oher Souh-eas Asa) XSA (Oher Souh Asa) XME (Mddle Eas) AUS (Ausrala) NZL (New Zealand) CAN (Canada) USA (Uned Saes) XE15 (EU15 n Wesern EU) XE10 (EU10 n Easern EU) RUS (Russa) ARG (Argenna) BRA (Brazl) MEX (Mexco) XLM (Oher Lan Amerca) ZAF (Souh Afrca) XAF (Oher Afrca) XRW (Res of he World) Fgure 2 World 23 regons n AIM/Enduse[Global] 2.4 Defnon of reducon poenals and margnal abaemen coss Frsly, he ermnology used n hs sudy should be clearly defned. In hs sudy, a servce s defned as a measurable need whn a secor ha can be sasfed by supplyng an oupu from a devce, and can be defned n eher angble or absrac erms. Thus, servce demand refers o he quanfed demand creaed by a servce;.e. servce oupus from devces sasfy servce demands. Examples of servce demands nclude he demand of crude seel producs (angble, nermedae oupu from blas furnaces and converers), person-km raveled by road (absrac, fnal oupu of road ranspor vehcles), and hea energy for rasng superheaed seam (absrac, nermedae oupu from hea exchangers n - 5 -

13 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon - combned cycle power plans). I mus be noed here ha conceps of fnal servce and nermedae servce are defned by he users for convenence n hs sudy, and may no necessarly mply real-lfe nerpreaons of hese erms. Secondly, he defnon of reducon poenals needs o be clarfed. Accordng o he IPCC AR4(2007b), reducon poenal s descrbed as he scale of GHG reducons ha could be acheved, relave o emsson baselnes, for a gven level of carbon prce (expressed n cos per un of carbon doxde equvalen emssons avoded or reduced), and a baselne s defned as he reference from whch an alernave oucome can be measured, e.g. a non-nervenon scenaro s used as a reference n he analyss of nervenon scenaros. The reducon poenals and her coss vary no only he key daa-sengs such as he rae of echnology developmen and dffuson, he cos of fuure echnology, fuure energy and carbon prces, bu also he sengs of acvy levels under dfferen baselnes. In hs sudy, a echnology frozen case, whch was ofen used n he boom-up analyss n some papers revewed n he IPCC AR4(2007b), was se as he baselne, and he fuure share and energy effcency of sandard echnologes were fxed a he same level as n he base year. Therefore, reducon poenals n hs sudy are defned as reducon amouns whch are esmaed by comparng he effec of nroducon of new mgaon echnologes n he arge year, arge regon and arge secor as compared o he effec of sandard echnologes fxed a he same level as n he base year. Thus, mgaon coss are defned as he addonal coss, ncludng capal cos and operaonal cos, ha are requred for nroducng new mgaon measures. As here are varous echnology opons and scales n dfferen secors and regons, he margnal abaemen cos vares wdely. Someme he margnal abaemen cos can show negave ne cos because a gven echnology may yeld enough energy cos savngs o more han off-se he coss of adopng and usng he earler echnology. 2.5 Margnal abaemen cos curves Oulne of margnal abaemen cos curves Reducon poenals and mgaon coss were esmaed by usng a dealed echnology opons daabase developed n he AIM/Enduse[Global] model. Based on he daabase, he margnal abaemen cos curve n a arge year (), arge regon/secor () and servce ype (j),ghg s descrbed as follows. Frsly, he GHG emsson reducon of an energy devce l, ˆ Δ Q l,, addonal cos of energy devce l, ˆ Δ C l,, and maxmum poenal of sock of energy devce l, max, Δ S l,, n a me perod (year) were calculaed. Nex, he abaemen cos of un reducon,, GHG Δ Cˆ l, ΔQˆ, was ploed along he y-axs, and GHG emsson reducon of an energy devce l,,ghg l, ˆ Δ Q l,, was ploed along he x-axs n order of ascendng abaemen cos per un,ghg reducon. ˆ Δ Q l,, ˆ max, Δ C l,, and Δ S l, represen he dfferences beween he respecve values n he me perod and n he base year 0. The suffx of ndces and ses are defned as follows; : regon/secor, j : servce ype, k : energy ype, l : energy devce (.e. echnology opon), m : gas ype, : me perod (year), 0 : base year, and ^: quany per un noe1). noe1) For some parameers hs ndcaes quany per un of devce and for ohers quany per un of energy use

14 Margnal abaemen cos 0 Technology 1Technology 2 Technology 3 Technology 4 Technology 5 Cumulave GHG Reducons (-CO 2 eq) Fgure 3 Schemac of margnal abaemen cos curve Formulaons,m Gas emsson per un servce supply Q j, Emsson of gas m per un supply of servce j n regon/secor n me perod, Q,m j,, s formulaed as follows:, m, m Q j = X l eˆ,, l, (1) l W j where, X l, : Operang quany of energy devce l n regon/secor. Formula (4)., e ˆ m l, : Emsson of gas m per un operaon of energy devce l n regon/secor n me perod. Formula (2)., Gas specfc emsson e ˆ m l, Emsson of gas m per un operaon of energy devce l n regon/secor n me perod,, e ˆ m l,, s formulaed as follows: m, ˆm, ˆm, ˆ, 0,, ( 1,, ) ˆ el = f l + fkl ξkl Ekl,, Ukl, (2) k where, ˆ m, f 0, l : Emsson of gas m per un operaon of energy devce l oher han energy combuson n me perod. Exogenous varable. ˆ m, f kl, : Emsson of gas m of energy devce l per un consumpon of energy k n me perod. Exogenous varable. ξ kl,, : Energy savng rao due o manenance and mprovemen of usage of energy k by energy devce l n regon/secor n me perod. Exogenous varable. ˆ E kl,, : Consumpon of energy k by energy devce l per un operaon n me perod. Exogenous varable. U k,l : Proporon of energy k used n energy devce l. Exogenous varable

15 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon - Servce demand D j, Demand for servce j n regon/secor s equal o he summaon of he servce supply of energy devce l ha can mee he demand for servce j:, (, ) ˆ D j = 1+Ψ j Al, j, Xl. (3) l W j where, D j, : Servce demand for servce j n regon/secor n me perod. Exogenous varable. Ψ j, : Improvemen n supply-effcency of servce j n regon/secor n me perod. Exogenous varable. ˆ A l, j, : Supply-quany of servce j per un operaon of energy devce l n regon/secor n me perod. Exogenous varable. X l, : Operang quany of energy devce l n regon/secor n me perod. Formula (4) Operang quany of energy devce X l, The operang quany of energy devce l n regon/secor n me perod, X l, s formulaed as follows: Sl, X l, = (4) 1 + Λ l, where, S l, : The quany remanng n me perod of devce l ha exsed n he base year. Formula (7). 1+Λ l, : Operang rae of energy devce l n regon/secor n me perod. Exogenous varable. ˆ Annual cos of energy devce C l, The annual cos of energy devce l n regon/secor n me perod, ncludng he fxed, energy, and manenance coss, C ˆ l,, s formulaed as follows: 0,, 1,, (,, ) ˆ ˆ T g l+ 1,, l, g k -ξkl Ekl ˆ ˆ α(1 + α) k Cl, = Bl, (1 SCl, ) + (5) Tl, (1 + α ) 1 1+Λ l, where, B ˆ l, : Fxed cos of energy devce l n regon/secor n me perod. Exogenous varable. SC l, : Subsdy rae of energy devce l n regon/secor. Exogenous varable. α : Ineres rae. Exogenous varable. T l, : Lfeme of energy devce l. Exogenous varable. g ˆ 0, l, : Manenance and operang cos per un operaon of energy devce l, oher han fuel cos n me perod. Exogenous varable. g ˆ 1, k, : Prce of energy k per un consumpon n me perod. Exogenous varable. ξ kl,, : Energy savng rao due o manenance and mprovemen of usage of energy k by energy devce l n regon/secor n me perod. Exogenous varable. ˆ E kl,, : Consumpon of energy k by energy devce l per un operaon n me perod. Exogenous varable

16 Annual cos of servce supply C j, The annual cos of supplyng servce j, ncludng he fxed, energy, and manenance coss, n regon/secor n me perod, C j,, s formulaed as follows: ˆ Cj, = Cl, Sl, (6) l Wj where, ˆ C l, : Annual cos of supplyng servce j, ncludng he fxed, energy, and manenance coss, n me perod. Formula (5). S l, : Sock remanng n me perod of energy devce l ha exsed n he base year. Formula (7). Remanng sock of energy devce S l, The sock of an energy devce recrued n a gven year wll rere a he end of s lfe, wh s quany reducng exponenally durng s lfeme. The remanng sock of energy devce l n regon/secor n me perod, S l,, s formulaed as follows: ( 0 ) 0 T l. S S e l, = l, (7) where, 0 S : Sock of energy devce l n regon/secor n he base year. Exogenous varable. l, 0 : Base year. : Tme perod (years). T l,i : Lfeme of energy devce l n regon/secor. Exogenous varable. Gap beween servce demand and servce supply of remanng sock Δ 0 n, 0 T 1+Ψ l, j, ˆ 0 j, j, l, l. j. l W 1+Λl, j n, D j, The gap beween he demand for servce j and he summaon of he servce supply of n remanng sock ha can supply servce j n regon/secor n me perod, Δ D, j,, s formulaed as follows: ( ) Δ D = D S e A (8) where, 0 S l, : Sock of energy devce l n regon/secor n he base year. Exogenous varable. 1+Λ l, : Operang rae of energy devce l n regon/secor n me perod. Exogenous varable. Ψ j, : Improvemen n supply-effcency of servce j n regon/secor n me perod. Exogenous varable. 0 A ˆ l, j, : Supply-quany of servce j per un operaon of energy devce l n he base year. Exogenous varable

17 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon -,,GHG Reducon of gas emsson per un of servce Δ Q l,, Δ Q l, The reducon of emsson of gas m per un of servce j of energy devce l n regon/secor n, me perod, ˆ m Δ, s formulaed as follows: Q l, 0, m m, Q,, ˆ m j el, l, 0 ˆ D j, Al, j, 1 j, Δ Qˆ = ( +Ψ ) ˆ m ˆ (9) ˆ,GHG ˆ, m Δ Ql, = GWPm ΔQl, (10) m where, m Q 0, j, : Emsson of gas m per un supply of servce j n regon/secor n he base year. Formula (1). D 0 j, : Servce demand for servce j n regon/secor n he base year. Exogenous varable., e ˆ m l, : Emsson of gas m from energy devce l per un operaon n me perod. Formula (2). ˆ A l, j, : Supply-quany of servce j per un operaon of energy devce l n me perod. Exogenous varable. Ψ : Improvemen n supply-effcency of servce j n regon/secor n me perod. j, Exogenous varable. GWP m : Global warmng poenal of gas m. Addonal annual cos per un of servce of energy devce C l, The addonal annual cos per un of servce j of energy devce l n regon/secor, ˆ Δ C l,, s he dfference beween he cos n he base year 0 and ha n gven year : 0 ˆ C ˆ j, Cl, (1 + Λ, ) l Δ Cl, = (11) 0 ˆ D,,, (1 j Al j +ψ j, ) where, 0 C j, : Annual cos of supplyng servce j, ncludng he fxed, energy, and manenance coss, n he base year 0. Formula (6). D 0 j, : Servce demand for servce j n regon/secor n he base year 0. Exogenous varable. ˆ C l, : Annual cos of energy devce l, ncludng he fxed, energy, and manenance coss, n me perod. Formula (5). ˆ A l, j, : Supply quany of servce j per un operaon of energy devce l n regon/secor n me perod. Exogenous varable. 1+Λ l, : Operang rae of energy devce l n regon/secor n me perod. Exogenous varable. Ψ j, : Improvemen n supply-effcency of servce j n regon/secor n me perod. Exogenous varable. ˆ

18 Abaemen cos per un reducon of energy devce AC l, The abaemen cos per un reducon of energy devce l n regon/secor n me perod, AC, s formulaed as follows: l, where, ˆ C l, AC ˆ = (12) Δ ΔCl, l, ˆ,GHG Ql Δ : Addonal annual cos per un of servce j of energy devce l n regon/secor n me perod. Formula (11). ˆ,GHG ΔQ l, : Reducon of GHG emsson per un of servce j of energy devce l n regon/secor n me perod. Formula (10). Maxmum share θ l, j, The maxmum share of energy devce l for servce j n regon/secor, θ l, j,, s he smaller of he rao of he nroducon poenal and he exogenous value, as expressed below: where, n, ΔD j, θ l, j, ΔD = Mn( n, j, + S 0 l, e ( 0 ) T l, ˆ A D l, j, j, (1 + Ψ j, ) /(1 + Λ l, ) ', θ l, j, ) (13) : Gap beween demand for servce j and summaon of servce supply of remanng sock ha can supply servce j n regon/secor n me perod. Formula (8). 0 S l, : Sock of energy devce l n regon/secor n base year. Exogenous varable. 1+Λ l, : Operang rae of energy devce l n regon/secor. Exogenous varable. Ψ : Improvemen n supply-effcency of servce j n regon/secor. Exogenous varable. j, ˆ l, j, A : Supply-quany of servce j per un operaon of energy devce l n regon/secor n me perod. Exogenous varable. T l, : Lfeme of energy devce l. Exogenous varable.. D j, : Servce demand for servce j n regon/secor n me perod. Exogenous varable. ' θ : Maxmum share of energy devce l for servce j n regon/secor. Exogenous varable. l, j, Maxmum servce supply of recrued energy devce Δ D l, j, I s assumed ha energy devces are nroduced preferenally n ascendng order of addonal cos. The maxmum supply of servce j by recrued energy devce l n regon/secor s equal o he servce quany ha canno be suppled by energy devces whose addonal cos s lower han ha of energy devce l: max, ˆ Sl', A ',, (1 + Ψ, ) l j j ΔD l, j, = D j,, (14) (1 + Λ S l ' ( AC l ', < l, ) ', ) AC l D j, θ l, j, (1 + Λ l, ) =, (15) ˆ A (1 + Ψ ) max, l, l, j, j,

19 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon - where, D j, : Servce demand for servce j n regon/secor n me perod. Exogenous varable. θ : Maxmum share of energy devce l for servce j n regon/secor. Formula (13). l, j, ˆ l, j, A : Supply-quany of servce j per un operaon of energy devce l n me perod. Exogenous varable. 1+Λ l, : Operang rae of energy devce l n regon/secor n me perod. Exogenous varable. Ψ j, : Improvemen n supply-effcency of servce j n regon/secor n me perod. Exogenous varable.,ghg Reducon poenal of GHG emsson Δ Qpo, l, The reducon poenal of GHG emsson of energy devce l n regon/secor n me perod,ghg, Δ Qpo, l,, s formulaed as follows:,ghg ˆ,GHG Δ Qpo, l, =ΔQl, Δ Dl, j,, (16) where, ˆ,GHG Δ Q l, : Reducon of GHG emsson per un of servce j of energy devce l n regon/secor n me perod. Formula (10). Δ D l, j, : Maxmum supply of servce j by recrued energy devce l n regon/secor. Formula (14)

20 2.6 Global Warmng Poenal values n hs repor The envronmenal mpacs of non-co 2 GHGs on global warmng are calculaed n ons of CO 2 equvalen, by usng he value of Global Warmng Poenal (GWP) whch represens he me-negraed radave forcng from he nsananeous release of 1 kg of a race gas expressed relave o ha of 1 kg of a reference gas (IPCC, 2001). These GWP values, whch are defned by he IPCC, represen he drec global warmng poenals relave o CO 2 by njecon of nfrared absorbng gases no he amosphere. These values do no nclude ndrec effecs, for example, oher warmng or coolng effecs by he chemcal ransformaons of greenhouse gases. I should be noed ha he GWP values are defned dfferenly n Clmae Change 1995(IPCC, 1995), Clmae Change 2001(IPCC, 2001), and Clmae Change 2007(IPCC, 2007a) ), as shown n Table 3. The GWP values repored n he Clmae Change 2007(IPCC, 2007a) are he laes, however n order o compare hs sudy wh oher resuls revewed n he IPCC AR4 WG3, he GWP values n Clmae Change 1995(IPCC, 1995) whose values are also used for GHGs naonal nvenory repors, because of he spulaon n he Kyoo Proocol, are consdered n hs sudy. For example, he drec GWPs of HFCs per un of wegh range from abou a few dozen o a hundred housand mes larger han ha of CO 2. Amospherc lfemes of dfferen GHGs vary from several dozen years o ens of housands years. Thus he GWP values vary wdely accordng o he me horzon over whch he calculaon s consdered. The IPCC defned hese GWP values n he me horzon of 20 years, 100 years, and 500 years. Table 3 shows he GWP values n he me horzon of 100 years whch s normally used as he sandard. Table 3 The Global Warmng Poenals of major non-co 2 GHGs Speces Chemcal Formula Clmae Change 1995 Clmae Change 2001 Clmae Change 2007 Mehane CH Nrous oxde N 2 O HFCs HFC-23 CHF HFC-32 CH 2 F HFC-125 C 2 HF HFC-134a CH 2 FCF HFC-143a CF 3 CH HFC-152a C 2 H 4 F HFC-227ea C 3 HF HFC-236fa C 3 H 2 F HFC-245ca C 3 H 3 F HFC-43-10mee C 5 H 2 F PFCs Perfluoromehane CF Perfluoroehane C 2 F Perfluoropropane C 3 F Perfluorobuane C 4 F Perfluorocyclobuane c-c 4 F Perfluoropenane C 5 F Perfluorohexane C 6 F SF 6 Sulphur hexafluorde SF

21 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon - 3 Daa assumpons 3.1 Overvew Ths sudy s based on a boom-up analyss, wheren, o evaluae mgaon poenals a regonal and global levels, s necessary o frs deermne fuure servce demands n each servce and secor exogenously. These servce demands are esmaed secor-wse and regon-wse based on several models developed for hs sudy. The daa for hese models come from several dozens of nernaonal and naonal sascs and oulooks. As for he soco-economc drvers, fuure populaon are se based on he UN World Populaon Prospecs(2007) and GDP growh are se based on he Soco-economc Macro Frame model. The fuure servce demands are orgnally esmaed n hs sudy based on hese populaon and GDP daa. Thus, hs sudy akes no accoun conssency of soco-economc assumpons no only n he same secor across counres bu also among dfferen secors n global regons. In addon, hs sudy lnks he energy supply sde and demand sde, hus elecrcy supply and demand s conssen across secors and regons. Curren domesc and nernaonal energy prces are based on Energy Prces and Taxes (IEA, 2007b), whle fuure global energy prces are based on assumpons made by he Insue of Energy Economcs, Japan (personal communcaon, 2009), ha are beween he esmaes n World Energy Oulook 2007 (IEA, 2007a) and World Energy Oulook 2008 (IEA, 2008). The base year and he arge year are se as 2005 and 2020 respecvely. I s mporan o noe ha, n hs sudy, s necessary o deermne servce demands exogenously. Hence hs sudy does no ake no accoun spllover effecs due o nroducng mgaon measures, such changes n he ndusral srucure, changes of servce demands, and changes n echnology and energy prce. In hs sudy, mgaon coss are measured by capal cos and operaonal cos;.e. capal cos, whch s he nal nvesmen cos requred o recru one un of a devce, and operaonal cos, whch s he annual cos ncurred n operang one un of a devce. Mgaon coss vary dependng on he sengs for he annual dscoun rae for specfc nvesmens. In hs sudy, he annual dscoun rae for specfc nvesmens s deermned exogenously so as o exogenously f he rae of he payback perod. The payback perod represens he perod of me requred for he reurn on an nvesmen, such as energy savngs, o break cos on capal cos and operaonal cos. As mgaon coss vary dependng on he sengs, shorer payback perods are obvously preferable o longer payback perods, especally for prvae ndusres ha assume hgh rsk for nvesng n energy conservng α echnologes. The capal recovery facor [ P M ] T L s formulaed as Equaon (17), where α : annual dscoun rae and T L : he lfeme of energy devce l. Thus, he correlaon beween he annual dscoun rae for specfc nvesmens and he payback perod depends on he lfeme of energy devce l. TL α α ( α + 1) [ P M ] T = (17) L TL (1 + α) 1 In developng counres and economes n ranson, economy s unsable and nvesmen rsk s very hgh, so ha payback perod should be consdered shorer (.e. annual dscoun

22 rae s larger) han oher counres. Moreover, sense of values and sably of economy vary across counres, so ha valuaon sandards of annual dscoun raes should be dfferen across regons. However, o evaluae mgaon poenals comparavely regon by regon, counry rsks are no aken no accoun n hs sudy and he same level of annual dscoun raes are assumed across he world as shown n Table 4 Case Secor Seng of payback perod Reference case Polcy case Indusry, Resdenal, Commercal, Transpor Power plan Indusry plan Infrasrucure House nsulaon Agrculure Wase Fluorocarbons All secors Table 4 Seng of payback perod Payback perods were se as hree years n he ndusry secor and fve years n he resdenal and commercal secor respecvely n a repor by Global Envronmen Commee of Cenral Envronmen Councl (2001), and also he Energy Conservaon Cener, Japan (1998) conduced an quesonnare survey on all secors and repored he average payback perod was 4.4 years across secors. In addon, based on he quesonnare survey whch was execued for companes and households n Japan relaed o hs sudy showed ha he payback perod of nvesmen on energy savng echnology was abou hree years. Thus, for energy-relaed secors such as ndusry, resdenal, commercal and ranspor, where a rae of echnology mprovemen s hgh and here are echnology perspecves on he emporal horzon, he payback perod s assumed as around hree years across hese secors. (.e. he annual dscoun rae s se a 33% whch corresponds o approxmaely hree years payback perod). he power generaon secor s consdered as a knd of publc ndusry ha akes no accoun low nvesmen rsks by consderng governmenal suppors. Moreover, facles wh long lfemes, such as ndusral plans, publc ransporaon (rans, shps, arcraf), and hermal nsulaon for homes and buldngs, have longer payback perods o reduce nvesmen rsks. Therefore, he payback perod s consdered longer and assumed as around en years. (.e. he annual dscoun rae s se a 10 % whch corresponds o approxmaely nne o en years payback perod under he assumpon of 30 years lfeme for power plans). The feaures of he agrculure, wase, and fluorocarbon emsson secors are dfferen from hose of energy-relaed secors. In hese secors, a rae of echnology mprovemen s slow and here s less echnology perspecve n a shor erm, he payback perod should be assumed longer enough o consder he lfeme of echnology opons. (.e. n hs sudy, s se a a fve % annual dscoun rae noe 1) ). Assumng shorer payback perods, as descrbed n he reference case, only echnologes wh a low nvesmen rsk and a ceran level of energy conservaon are nroduced. In order o promoe more measures for energy conservaon, polcy measures should allow adequaely long payback perods correspondng o abou 50~70% of he echnology s lfeme. (.e. a 5% annual dscoun rae noe 1) was consdered across all secors and all regons). Example of payback perod (Lfeme use n he model) Resdenal equpmens: 3 years (10-15years) Car, ruck, bus: 3 years (8-12 years) Plan: 9-10 years (30 years) Tran, shp, arcraf: 8-9 years (20 years) Insulaon housng: 9-10 years (30years) Agrculure: 1-11 year (1-15 year) MSW: year (15-30 year) Fluorocarbons: 1-13 year (1-20year) Resdenal equpmens: 7-10 years (10-15years) Car, ruck, bus: 6-9 years (8-12 years) Plan: years (30 years) Tran, shp, arcraf: years (20 years) Insulaon housng: years (30years) Noe 1) Correlaon of annual dscoun rae and payback perod depends on he lfeme of echnology. For example, payback perod s 15.4 and 7.7 years when he lfeme of echnology s 30 years and 10 years respecvely under a fve % annual dscoun rae

23 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon Soco-economc and macroeconomc sengs Populaon 1) Overvew The populaon growh n 23 regons s se based he fuure prospecs a medum varan by UN World Populaon Prospecs(2007a). Ths secon nroduces how populaon daa are aggregaed no 23 regons n hs sudy and explans he characerscs of populaon growh. The populaon scenaro descrbed here s used for all secors n hs sudy. 2) Mehodology and assumpon UN (2007a) eded observed populaon changes from 1950 o 2005 and esmaed fuure populaon prospec n 218 counres. In hs sudy, hese daa are aggregaed no 23 counres and regons. I seems ha UN(2007a) does no nclude daa of Tawan, hus hs sudy also revewed populaon daa from 1971 o 2007 based on Tawan sascal daa book(cepd, 2007a) and fuure populaon prospecs a medum varan from 2008 o 2020 based on Populaon Projecons for Tawan Areas(CEPD, 2007b). 3) Resuls n 23 regons Populaon n 23 regons shown as Table 5.Global populaon s 6.5 bllon n 2005 and s expeced o reach approxmaely 7.7 bllon n 2020 whch s 1.18 mes more han he populaon n Populaon growh n developng counres s sgnfcan, for example n 2020, 1.43 bllon n Chna (1.08 mes from 2005 levels), 1.38 bllon n Inda (1.22 mes from 2005 levels) and 1.22 bllon n Oher Afrca n 2020 (1.39 mes from 2005 levels). The populaon n Asa regons ncludng Chna and Inda rses o 4.1 bllon whch accouns for 54% of he global populaon n

24 Table 5 Populaon n 23 regons Populaon Populaon year-old / /2005 Japan Chna 1,321 1, Inda 1,134 1, Indonesa Korea Thaland Oher Souh-eas Asa Oher Souh Asa Mddle Eas Ausrala New Zealand Canada Uned Saes EU15 n Wesern EU EU10 n Easern EU Russa Mexco Argenne Brazl Oher Lan Amerca Souh Afrca Oher Afrca 874 1, Res of World World 6,538 7, ,208 5, mllon

25 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon GDP 1) Overvew Regonal GDP s esmaed by he Soco-economc Macro Frame model. The Soco-Economc Macro Frame model s a supply-sde model, whch esmaes GDP from fxed capal sock and labor force, and soco-economc macro ndces are deermned based on he esmaed GDP. Oupus of hs model are GDP, fnal consumpon, gross capal formaon, secor-wse value added such as agrculure, ndusry and servce secor, ec. These economc values are n US$ a consan year 2000 prces. 2) Mehodology and assumpon Populaon from 16 o 64 year-old s used as an npu daa o hs model. The daa source of populaon changes and fuure prospecs are based on UN (2007a) and Councl for Economc Plannng and Developmen (2007b) as descrbed n secon GDP s deermned by usng daa of labor force, fxed capal sock and Tme rend as shown n Fgure 4. The GDP s esmaed based on he producon funcon of Cobb-Douglas ype as shown n equaon (18). β TIME γ 1 γ GDP, = αe K, L, (18) Where, : regon : year α, β, γ: parameers K: fxed capal sock L: labor force TIME: me-rend varable Fxed capal sock n ha perod s esmaed from fxed capal sock n he prevous year -1, gross capal formaon and depleon of fxed capal n he year. Gross capal formaon s esmaed from GDP. And depleon of fxed capal s esmaed from fxed capal sock n he prevous year -1 and depleon rae. Based on he esmaed GDP, shares of prmary, secondary and erary ndusres are calculaed, and fnal consumpon and secor-wse value added of prmary, secondary and erary ndusres are esmaed

26 Populaon ages POP1564, Fxed Capal Sock K, Gross capal formaon I, Exogenous varable Endogenous varable Labor force L, Gross domesc produc GDP, Tme rend TIME Share of agrculure, Indusry and servce secor RVA,s, Esmaon equaon Defnonal equaon Fnal consumpon CP, Value added of agrculure, ndusry and servce secor VA,s, : regon : year s: secor Fgure 4 Srucure of he Soco-economc Macro Frame model 3) Resuls n 23 regons Table 6 shows he esmaed GDP n 23 regons. Table 6 Esmaed GDP n 23 regons GDP per Capa GDP / /2005 [housand US$] 1) [bllon US$] 1) Japan ,960 5, Chna ,024 6, Inda , Indonesa Korea , Thaland Oher Souh-eas Asa Oher Souh Asa Mddle Eas , Ausrala New Zealand Canada , Uned Saes ,868 14, EU15 n Wesern EU ,690 11, EU10 n Easern EU Russa Mexco , Argenne Brazl , Oher Lan Amerca , Souh Afrca Oher Afrca , Res of World ,317 2, World ,782 55, ) Consan year 2000 prces

27 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon Energy prces 1) Overvew Curren domesc and nernaonal energy prces are based on Energy Prces and Taxes (IEA, 2007b). Fuure nernaonal energy prces are based on assumpons made by he Insue of Energy Economcs, Japan (personal communcaon, 2009), ha le beween he esmaes n World Energy Oulook 2007 (IEA, 2007a) and World Energy Oulook 2008 (IEA, 2008). 2) Mehodology and assumpon Inernaonal energy prces n he curren and fuure years are based on assumpons made by he Insue of Energy Economcs, Japan (IEEJ). As for fuure nernaonal energy prces, he IEEJ has esmaed he 2020 and 2030 energy prces for coal, crude ol and naural gas. Those esmaes le abou half-way beween he esmaes n World Energy Oulook 2007 (IEA, 2007a) and World Energy Oulook 2008 (IEA, 2008). Table 7 Fuure energy prces Un (real prce) Crude ol $/barrel Gas US $/MBu EU $/MBu Japan $/MBu Coal $/onne Domesc energy prces n curren year are se based on Energy Prces and Taxes (IEA, 2007b). IEA (2007b) shows he laes value n 2006, however, here s lack of daa n some counres. In such a case, energy prce daa are subsued by he daa of he surroundng counres or he average value among OECD counres. Fuure energy prces n each counry and regon are se under he assumpon ha domesc energy prces wll rse accordng o he ncrease n nernaonal energy prces

28 Table 8 Secor-wse energy prces n 23 regons JPN CHN IND IDN KOR THA XSE XSA XME AUS NZL CAN Indusry 2000 Coal Ol Gas Elecrcy Coal Ol Gas Elecrcy Coal Ol Gas Elecrcy Elecrcy plans 2000 Coal Ol Gas Coal Ol Gas Coal Ol Gas Resdenal 2000 Coal Ol Gas Elecrcy Coal Ol Gas Elecrcy Coal Ol Gas Elecrcy Transporaon 2000 Ol Ol Ol USA XE15 XE10 RUS MEX ARG BRA XLM ZAF XAF XRW Indusry 2000 Coal Ol Gas Elecrcy Coal Ol Gas Elecrcy Coal Ol Gas Elecrcy Elecrcy plans 2000 Coal Ol Gas Coal Ol Gas Coal Ol Gas Resdenal 2000 Coal Ol Gas Elecrcy Coal Ol Gas Elecrcy Coal Ol Gas Elecrcy Transporaon 2000 Ol Ol Ol Un: US$/kgoe

29 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon Composon of power sources Fossl fuels In hs sudy s baselne case for 2020, he composon of coal, ol, gas, nuclear, hydro, wnd, solar, bomass, and geohermal power refers o he regonal composons of energy ypes gven n he reference scenaro n World Energy Oulook (IEA, 2007a). Nuclear, hydro and geohermal power are no consdered as mgaon opons n hs sudy. Thus, he amoun of power generaon of nuclear, hydro and geohermal power s se a he same level as he baselne scenaro, n all cases of carbon prces. Even f elecrcy demands decrease due o he effecs of mgaon measures n he demand sde, he amoun of nuclear, hydro and geohermal power generaon does no change and only he composon of fossl fuels and renewable energy changes. In he counermeasure case, mgaon opons are consdered for he end-use sde by examnng wo dfferen cases for he supply sde and esmang CO 2 emssons from he balance of elecrcy demand n end-use echnologes and energy supply from power generaon. Case Energy secury case Opmzaon case Table 9 Composon of fossl fuels Composon of fuel ypes In realy, he composon of fossl fuel energy ypes s no flexble, even n 2020, due o socal barrers, such as energy secury and coss and echnologcal resrcons. Thus, shfs n energy from coal and ol power plans o effcen gas power plans or renewables are resrced o a ceran amoun. For example, new gas power plans are nroduced only when exsng coal and ol power plans are rered or an addonal power plan s needed o mee ncreased energy demand. No resrcon or barrer exss, and he composon of fossl fuel energy ypes s freely deermned by oal-cos opmzaon. Thus, f a shf n energy from coal and ol power plans o effcen gas power plans provdes a cos benef even before he coal and ol power plans are rered, hen he exsng coal and ol power plans wll be mmedaely sopped and replaced by new gas power plans Renewable energy Accordng o he esmaons of renewable energy of solar, wnd and bomass, here are large echnologcal poenals n he global scale. However, here may be some socal barrers, echnologcal resrcons and grd-access ssues dependng on regons. Thus n hs sudy, he maxmum lm of he rao of he oal renewable energy of solar, wnd and bomass s se a 20 % of he oal energy supply n each regon and counry Solar phoovolacs The global poenal of solar energy s esmaed as follows usng a grd cell approach based on GIS (Geographc Informaon Sysem) daa. - Frs, he monhly and hourly solar elevaon and he solar azmuh angle n

30 arc-mnue grd cells are calculaed. - The monhly and hourly nsolaon nenses on a horzonal surface are calculaed usng GIS daa for average nsolaon. - The shade of landform s esmaed n each grd cell by consderng elevaon, solar elevaon, and solar azmuh angle. - The monhly and hourly nsolaon nenses a opmum l are calculaed. - Areas avalable for he nsallaon of solar-pvs are esmaed based on GIS daa for land cover ypes and he area-rao of avalable nsolaon for each land cover ype. - Fnally, he echncal poenals of solar energy are esmaed by consderng he monhly and hourly nsolaon nenses a opmum l, he avalable area for solar-pv, and he effcency of he PV module. - Ths poenal s dvded no several grades accordng o he annual nsolaon ncden a opmum l. The daa for he grd cells s aggregaed o oban he poenal for regons and counres. Avalable rao AVRPV lc Land cover LD g Slope SLP g Elevaon ELV g Shade of landform SHD g,m,h Laude, Longude LAT g, LON g Solar elevaon, Solar azmuh angle SELV g,m,h, SAZM g,m,h Insolaon ncden on a horzonal surface ISH g,m Insolaon nensy on a horzonal surface ISINTH g,m,h Avalable area for phoovolacs APV g Phoovolacs module effcency EFFPV Insolaon nensy on he opmum l ISINTO g,m,h Exogenous varable Solar phoovolacs poenal POTPV g Endogenous varable Esmaon equaon g: grd m: monh h: hour lc: land cover Fgure 5 Srucure of he Solar Phoovolacs Poenal model Onshore wnd The global poenals of onshore wnd energy are esmaed as follows usng a grd cell approach based on GIS daa. - Frs, he monhly and hourly wnd speeds n 3 3 arc-mnue grd cells are calculaed. - Areas avalable for he nsallaon of wndmlls are esmaed based on GIS daa for land cover ypes, he area-rao of avalable wnd n each land cover ype, he slope, and he elevaon. - The number of wndmlls avalable for wnd energy producon are esmaed based on a sandard wndmll wh a raed power oupu of 2 MW

31 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon - - The frequency dsrbuon of each wnd speed level a a gven wndmll hub hegh s esmaed usng he Raylegh dsrbuon mehod and he Power Law for wnd shear. The esmaon s based on GIS daa for he monhly average wnd speed a a hegh of 50 m above he surface. - Fnally, he echncal poenal for onshore wnd energy s esmaed by consderng he energy oupu curve of a wndmll, he wnd speed frequency dsrbuon, he number of avalable wndmlls, he oupu correcon, and oher losses. - Ths poenal s dvded no several grades accordng o he annual ulzed capacy of wndmlls. The daa for he grd cells s aggregaed o oban he poenal for regons and counres. Avalable rao AVRWD lc Land cover LD g Avalable area for wndmll AWD g Number of Wndmll NWM g Elevaon ELV g Slope SLP g Oupu correcon OPC lc Oher losses OLS lc Wnd speed a 50m above WS50 g,m Wnd speed a he hub hegh WSHH g,m Power Law for Wnd Shear Raylegh Dsrbuon Wnd speed frequency dsrbuon WSF g,m,ws Exogenous varable Wnd power poenal POTWN g Endogenous varable Esmaon equaon g: grd m: monh ws: wnd speed lc: land cover Fgure 6 Srucure of he Wnd Power Poenal model Bomass For bomass energy, he poenals of resdual bomass are esmaed as follows: - In hs sudy, resdual bomass s classfed no 11 caegores: 1) ndusral roundwood resdues, 2) black lquor, 3) mll resdues, 4) paper scrap, 5) mber scrap, 6) crop resdues, 7) sugarcane resdues, 8) bagasse, 9) dung, 10) kchen refuse, and 11) human feces. Crop resdues and sugarcane resdues are used n he ransporaon secor, and oher resdual bomass s used for bomass power generaon. - The echnologcal poenals of resdual bomass for power generaon n 2020 are esmaed from he amoun of avalable resdual bomass used n

32 3.4 Servce demands Indusry Iron and seel 1) Overvew Volume of global rade of ron and seel n he ron and seel secor accouns for approxmaely 42 % of he global ron and seel producon n 2004 (IISI, 2006a).Thus, n order o esmae ron and seel producon n each counry, s necessary o consder no only domesc demands bu also volume of nernaonal rade. In hs sudy, ron and seel producon s esmaed by he Seel Producon and Trade model, whch ncludes global rade across regons. The Seel Producon and Trade model s a paral equlbrum model whch consders ron and seel prce and he balances of domesc and nernaonal ron and seel demand and supply. Regonal producon and volume of mpor and expor are deermned a he equlbrum pon. Daa sengs of GDP and populaon are he same as descrbed n secons and ) Mehodology and assumpon The srucure of he Seel Producon and Trade model s shown n Fgure 7. Per capa consumpon of ron and seel s esmaed by per capa GDP n each counry and regon. Then he oal consumpon s esmaed by mulplcaon wh he populaon n each counry and regon. Iron and seel producon s dependen upon he producer prce. The hgher he prce, he more producs he producer makes. Expor amoun by counry and regon s deermned by mulplyng domesc producon wh expor raon (.e. percenage of expor volume n he oal producon n a ceran counry and regon). And expor raon depends on he relaon beween domesc prce and nernaonal prce. Thus, expor amoun depends on domesc producon, domesc and nernaonal prces. By he same oken, mpor amoun also depends on domesc consumpon, and domesc and nernaonal prces. The volume of producon, expor and mpor n each counry and regon s affeced by he level of domesc and nernaonal prces. Each volume and prce s deermned a he equlbrum pon o mee he balance of domesc and nernaonal marke

33 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon - Endogenous varable Exogenous varable Esmaon equaon Defnonal equaon TIME rend TIME Domesc prce PD, Inl. prce PW GDP per capa GDPP, Producer Prce PS, Expor prce PE, Impor prce PM, Consumpon per capa CNSP, Relave expor prce PEW, Relave domesc prce PDM, Populaon POP, Producon PRD, Expor rao REXC, Impor rao RMC, Consumpon CNS, Expor EXC, Impor MC, Fgure 7 Domesc marke equlbrum : CNS, =PRD, -EXC, +MC, Inernaonal marke equlbrum: EXC, = MC, : regon : year Srucure of he Seel Producon and Trade model 3) Resuls n 23 regons Fgure 8 shows esmaed producon of crude seel n 23 regons. Producon (mllon on) JPN CHN IND IDN KOR THA XSE XSA XME AUS NZL CAN USA XE15 XE10 RUS MEX ARG BRA Fgure 8 Esmaed producon of crude seel n 23 regons XLM ZAF XAF XRW

34 Cemen 1) Overvew Volume of global rade n he cemen secor accouns for approxmaely 4.3 ~ 8.6 % of he global cemen producon from 1971 o As he share of global rade n he oal global producon s small, n hs sudy cemen producon s esmaed under he framework of domesc producon and consumpon and does no ake global rade no accoun. By usng he Cemen Producon model, domesc cemen producon s esmaed n each counry and regon. Daa sengs of GDP and populaon are he same as descrbed n secons and ) Mehodology and assumpon Per capa consumpon of cemen s esmaed by per capa GDP n each counry and regon. Then he oal consumpon s esmaed by mulplcaon wh he populaon as shown n Fgure 9. Cemen producon s deermned usng equaon (19). Ths equaon s based on he assumpon ha, as per capa GDP ncreases o large levels, growh rae of per capa cemen producon decreases and per capa producon reaches asympocally o a ceran sauraon level. α ln ( PRDP, ) = (19) 1+ exp β { ln( GDPP) γ } Where, : regon : year α, β, γ: parameers GDPP: per capa GDP PRDP: per capa producon GDP per capa GDPP, Producon per capa PRDP, Exogenous varable Endogenous varable Esmaon equaon Populaon POP, Defnonal equaon Producon PRD, : regon : year Fgure 9 Srucure of he Cemen Producon model

35 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon - 3) Resuls n 23 regons Fgure 10 shows esmaed cemen producon n 23 regons. 1,400 1,200 1, JPN CHN IND IDN KOR THA XSE XSA XME AUS NZL CAN USA XE15 XE10 RUS MEX ARG BRA XLM ZAF XAF XRW Cemen Producon (mllon on) Fgure 10 Esmaed producon of cemen n 23 regons Oher ndusry 1) Overvew In case of oher ndusry caegory n he ndusry secor n hs sudy, s dffcul o specfy a angble energy-servce demand of a ceran sngle produc. Thus, value added n secondary ndusry s used as a represenave ndex o explan energy-servce demands n oher ndusry. Daa sengs of GDP and populaon are he same as descrbed n secons and ) Mehodology and assumpon Usng he same mehodology as descrbed n secon 3.2.2, value added n secondary ndusry s esmaed by he Soco-Economc Macro frame model. 3) Resuls n 23 regons Fgure 11 shows esmaed value added n secondary ndusry n 23 regons. Value added of secondery ndusry (Bllon US$, 2000 prce) 3, ,000 2,500 2,000 1,500 1, JPN CHN IND IDN KOR THA XSE XSA XME AUS NZL CAN USA XE15 XE10 RUS MEX ARG BRA XLM ZAF XAF XRW Fgure 11 Esmaed value added n secondary ndusry n 23 regons

36 3.4.2 Transpor Passenger ranspor 1) Overvew Transporaon volumes of passenger car, bus, passenger ral, and domesc and nernaonal arcraf are esmaed by he Passenger Transporaon Demand model, n he un of passenger-km. The Passenger Transporaon Demand model esmaes ransporaon volumes for dfferen ransporaon modes based on he npu daa of populaon and per capa GDP. Toal passenger ransporaon volumes are frs esmaed and ransporaon volumes n each ransporaon mode are esmaed by mulplyng wh ranspor share. Daa sengs of GDP and populaon are he same as descrbed n secons and ) Mehodology and assumpon Fgure 12 shows srucure of he Passenger Transporaon Demand model. GDP per capa GDPP, Populaon POP, Toal ransporaon volume per capa PKTOTP, Toal ransporaon volume PKTOT, Transporaon volume of each mode PK m,, Modal share SH m,, Exogenous varable Endogenous varable Defnonal equaon Esmaon equaon : regon : year m: mode Fgure 12 Srucure of he Passenger Transporaon Demand model Toal passenger ransporaon volume per capa s esmaed by per capa GDP n each counry and regon. Toal passenger ransporaon volume per capa s esmaed by equaon (20) whch uses he logsc funcon of S-shaped curve. α PKTOTP, = (20) 1 + exp β GDPP γ Where, : regon : year { (, ) }

37 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon - α, β, γ: parameers GDPP: per capa GDP PKTOTP: oal passenger ransporaon volume per capa Toal passenger ransporaon volumes are esmaed by mulplyng populaon wh oal ransporaon volume per capa. The ranspor share for each mode s formulaed usng he log model shown n equaon (21), whch uses he naural log of per capa GDP as an explanaory varable. SH m,, = m' exp exp { αm, + βm ln ( GDPP, )} { αm', + βm' ln ( GDPP, ) } Where, m: mode (car, bus, ral, domesc arcraf and nernaonal arcraf) α, β: parameers SH: ranspor share of each mode (21) Transporaon volumes for dfferen ransporaon modes are deermned by mulplyng oal ransporaon volumes wh ranspor share. 3) Resuls n 23 regons Fgure 13 shows esmaed ransporaon volume by passenger car n 23 regons. Passenger rans. volume by car (bllon passenger km) 10,000 8,000 6,000 4,000 2, JPN CHN IND IDN KOR THA XSE XSA XME AUS NZL CAN USA XE15 XE10 RUS MEX ARG BRA XLM ZAF XAF XRW Fgure 13. Esmaed oal passenger ransporaon volumes n 23 regons Fregh ranspor 1) Overvew Fregh ransporaon volumes of ruck, ral, and domesc and nernaonal shppng are esmaed by he Fregh Transporaon Demand model. For ruck and fregh ral, he un of ransporaon volume s aken as on-km. Bu for domesc and nernaonal shppng, here s no relable daase, hence he un of energy consumpon s used as an alernave ndcaor. The Fregh Transporaon Demand model esmaes ransporaon volumes for dfferen ransporaon modes based on he npu daa of populaon and GDP. For land ransporaon modes such as ruck and fregh ral, oal fregh ransporaon volumes

38 are frs esmaed and ransporaon volumes n each ransporaon mode are esmaed by mulplyng wh respecve ranspor shares. For domesc and nernaonal shppng, ransporaon volumes are esmaed ndvdually. Daa sengs of GDP and populaon are he same as descrbed n secons and ) Mehodology and assumpon Fgure 14 shows srucure of Fregh Transporaon Demand model. Land ransporaon Shp ransporaon GDP per capa GDPP, GDP GDP, Toal land rans. volume per capa TKTOTP, Populaon POP, Toal land rans. volume TKTOT, Modal share SH m,, Trans. volume of each mode TK m,, Trans. volume of each mode TK m,, Exogenous varable Endogenous varable Defnonal equaon Esmaon equaon : regon : year m: mode Fgure 14 Srucure of Fregh Transporaon Demand model For ruck and fregh ral, oal fregh ransporaon volume per capa s esmaed by per capa GDP n each counry and regon. The oal fregh ransporaon volume per capa s esmaed by equaon (22) whch uses he logsc funcon of S-shaped curve. α TKTOTP, = (22) 1 + exp{ β ( GDPP, γ ) } Where, : regon : year α, β, γ: parameers GDPP: per capa GDP TKTOTP: oal fregh ransporaon volume per capa Toal fregh ransporaon volumes are esmaed by mulplyng populaon wh oal ransporaon volume per capa. The ranspor share for each mode s formulaed usng he log model shown n equaon (23), whch uses he naural log of per capa GDP as an explanaory varable

39 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon - SH m,, = m' exp exp { αm, + βm ln ( GDPP, )} { αm', + βm' ln ( GDPP, ) } Where, m: mode α, β: parameers SH: ranspor share of each mode (23) Transporaon volumes for dfferen ransporaon modes are deermned by mulplyng ne ransporaon volumes wh ranspor share as shown n Fgure 14. For domesc and nernaonal shppng, fregh ransporaon volumes are esmaed drecly by GDP as follows rm, TK = α GDP β (24) rm,, rm, 3) Resuls n 23 regons Fgure 15 shows esmaed fregh ransporaon volume by ruck n 23 regons. Fregh rans. volume by ruck (bllon on km) 3, ,500 2,000 1,500 1, JPN CHN IND IDN KOR THA XSE XSA XME AUS NZL CAN USA XE15 XE10 RUS MEX ARG BRA XLM ZAF XAF XRW Fgure 15 Esmaed fregh ransporaon volume by ruck n 23 regons Resdenal and commercal 1) Overvew In resdenal and commercal secor, arge energy servces and energy ypes are se as follows: -Energy ype: coal, bomass, naural gas, kerosene, LPG, geohermal, solar (ncludng solar hea and solar lgh), elecrcy, and hea. -Energy servce ype: warmng, coolng, ho waer, cookng, lghng, refrgeraor, TV( only for resdenal secor), and ohers. Energy demands n hs sudy are defned as equaon (25), whch explans he relaon beween oal energy consumpon and energy consumpon per un n he un of on of ol equvalen (oe). Energy consumpon Energy demands of servce ype = (25) Energy consumpon per un of energy servce

40 2) Mehodology and assumpon Whle energy servce demand should be esmaed from he key facor ha has an mpac (drvng force), drvng force daa by regon s dffcul o oban. Therefore, we use a smple mehodology o esmae fuure energy servce demand. Fgure 16 s an oulne of he mehodology. Consumpon expendure per capa (GDP per capa(terary ndusry)) * Energy consumpon per capa Exogenous varable Populaon Endogenous varable Energy consumpon Esmaon equaon Rao of energy consumpon by energy ype and by servce energy ype Defnonal equaon *( ) :Case of servce secor Energy consumpon by energy ype and by energy servce** **Assumpon: The growh of energy servce demand s equal o ha of energy consumpon Fgure 16 Oulene of mehodology a) Daa for pas energy consumpon Energy consumpon by regon, by secor, by energy ype and by servce ype n he base year s based on he daa of IEA Energy Balance Table (IEA, 2007c, 2007d). However, n he Energy Balance Table, he caegory named oher secor ncludes daa of resdenal, commercal, agrculure, fshng, and non-specfed secors. In hs sudy, hese non-specfed daa are dsaggregaed no ceran secors based on he mehodology by OECD developmen cener(1998) and he Energy Balances are adjused n he base year b) Esmaon of fuure energy consumpon The energy consumpon n 2020 by secor s esmaed based on he me-seres daa, and he rao of energy consumpon by energy ype and by servce ype s se based on SAGE (USDOE, 2003) and World Energy Oulook (IEA, 2007a). Then energy consumpon by regon, by secor, by energy ype and by servce ype n 2020 s esmaed by hese daa ses. For esmaon of energy consumpon by secor, varous parameers are deermned based on he regresson analyss mehod usng me seres daa of GDP and populaon from 1971 o Due o regonal economc growh, characerscs of energy use n 2020 wll be dfferen from he curren suaon, especally n he developng counres. For example, people n he developng counres are lkely o use more elecrcy and less radonal bomass. Thus, n hs sudy, rao of energy consumpon by energy servce s se by consderng several daa sources such as SAGE (USDOE, 2003)

41 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon - and World Energy Oulook (IEA, 2007a). c) Fuure energy servce demand We defne he growh of energy consumpon as equal o he growh of energy servce demand. 3) Resuls n 23 regons Energy consumpon by regon, by secor, by energy ype and by servce ype n 2020 s esmaed, and Fgure 17 shows growh rae of energy consumpon by servce ype n resdenal and commercal secor n some major counres n 2020, as compared o he baselne n I can be seen ha growh raes n developng counres are larger han n developed counres. Growh rae n resdenal secor (2005 = 1) JPN CHN IND IDN USA XE15 XE10 RUS BRA World Warm Cool HW Cook Lgh Refrgeraor TV Oher (a) Resdenal secor Growh rae n resdenal secor (2005 = 1) JPN CHN IND IDN USA XE15 XE10 RUS BRA World Warm Cool HW Cook Lgh Refrgeraor Oher (b) Commercal secor Fgure 17 Growh rae of energy servce by servce ype n some major counres n 2020 (2005 =1)

42 3.4.4 Agrculure Agrculure sol and rce culvaon 1) Overvew Agrculural producs are defned as servce demand n rce culvaon and cropland secor. Targe agrculural producs are lsed n Table 10. Table 10 Targe agrculural producs n rce culvaon and cropland secor Servce Source Producs Targe gas Corn Whea N 2 O Cropland Bean Coon Agrculural producs Ohers (8 producs) Rce Rce N 2 O, CH 4 culvaon Agrculural producs are esmaed by he Agrculural Trade Model n hs sudy, based on he npu daa such as populaon and GDP. The framework of he Agrculural Trade Model s based on he PEATSIM model (Abler, 2007) ncludng nernaonal agrculural rade developed by he US Deparmen of Agrculure. However, he PEATSIM model does no consder fuure populaon growh and mpacs of ncome ncrease on food demands. The Agrculural Trade Model used n hs sudy ncludes hese aspecs and consders 34 ypes of agrculural producs such as beef, pork, chcken, rce, whea, corn, beans, ec. 2) Mehodology and assumpon The Agrculural Trade Model s a recursve dynamc model. Domesc and nernaonal demand and supply of agrculural producs s adjused and deermned by agrculural prces. Afer regonal demand and supply s esmaed, global demand and supply s balanced n order o fll he gap of demand and supply n each regon a nernaonal agrculural prces n me perod. The nernaonal agrculural prces affec he regonal agrculural prces, and subsequenly he regonal demand and supply n me perod +1 s esmaed. Agrculural producs are esmaed based on he npu daa such as populaon and GDP. The Agrculural Trade Model consss of smulaneous equaons consderng producon, supply and demand, sock, expor and mpor, nernaonal rade prces, domesc prce, and so on, and varous parameers are fxed n order o mee he acual values repored by FAOSTAT (FAO, 2005), as shown n Fgure 18. Agrculural producs are esmaed by mulplyng cropland area by crop producvy. The resuls of esmaed fuure cropland area of argeed agrculural producs n hs sudy are smlar o hose of FAO(2002) and Rosegran, e a. (2001,2002). As for oher cropland area whch s ou of scope n hs sudy, frsly, a rao of coverage of cropland area of hs sudy s compared wh he oal cropland daa n he regonal landuse daabase of FAOSTAT (FAO, 2005) n he base year. Then, cropland area covered n hs

43 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon - sudy s se a he consan rao of he oal cropland coverage n he fuure. Thus he argeed cropland area and oher cropland area are esmaed. Inernaonal prces 23 world regons Shppng cos Producer subsdy equvalens Consumer subsdy equvalens Inermedae prce Producer subsdy equvalens Populaon GDP Consumer prces Socks Producer prces Demand Domesc Marke P 0 Q Crops producon Lvesock producon Ne rade P 0 Q Inernaonal Marke Exogenous parameer Endogenous parameer Fgure 18 Srucure of he agrculural rade model 3) Resuls n 23 regons Fgure 19 shows esmaed agrculural producon n 23 regons. Toal agrculural produc [mllon on] 1,600 1,400 1,200 1, JPN CHN IND IDN KOR THA XSE XSA XME AUS NZL CAN USA XE15 XE10 RUS MEX ARG BRA XLM ZAF XAF XRW Fgure 19 Esmaed agrculural producon n 23 regons

44 Manure managemen and enerc fermenaon 1) Overvew Lvesock producs are defned as servce demand n manure managemen and lvesock rumnaon secor. Targe lvesock producs are lsed n Table 11. Table 11 Lvesock producs n manure managemen and lvesock rumnaon secor Servce Source Producs Targe gas Dary cale Buffalo Manure Beef cale Goa managemen N 2 O, CH 4 Lvesock Sheep Horse producs Camel Donkey Lvesock Mule Chcken rumnaon Swne Turkey CH 4 Duck Lvesock producs are esmaed by he same Agrculural Trade Model as he one descrbed n secon ) Mehodology and assumpon As descrbed n secon , fuure lvesock producs such as daly cale, beef cale, swne, chcken ec. are esmaed usng he Agrculural Trade Model. On he oher hand, for lvesock producs whch are no deal whn he Agrculural Trade Model such as buffalo, goa, sheep ec., growh rae of producs s se based on he represenave prevous sudy by FAO(2002). 3) Resuls n 23 regons Fgure 20 shows esmaed lvesock producon n 23 regons. Toal lvesock producon [mllon on] JPN CHN IND IDN KOR THA XSE XSA XME AUS NZL CAN USA XE15 XE10 RUS MEX ARG BRA XLM ZAF XAF XRW Fgure 20 Esmaed lvesock producon n 23 regons

45 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon Wase managemen 1) Overvew Generaed muncpal sold wase s aken as a drver of CH 4 emsson n he wase managemen secor (Table 12). Ths sudy covers only muncpal sold wase managemen and does no nclude wase waer managemen. Table 12 Targe wase and wase managemen measures Drver Source Managemen measures Targe gas Landfll CH 4 Sold wase generaon Muncpal sold wase Incneraon Open burnng Compos N 2 O, CH 4 2) Mehodology and assumpon Per capa muncpal sold wase generaon s esmaed based on per capa GDP. There s a ceran relaonshp beween per capa muncpal sold wase generaon and per capa GDP. Parameers of correlaon beween hese wo varables are esmaed by 304 daa pons ncludng me seres daa from 1995 o 2003 n EU regons (EEA, 2005), he daa n major 23 counres n 1996 and ha n 69 counres n 2000 (IPCC, 2006a). Muncpal sold wase generaon s esmaed by mulplyng per capa muncpal sold wase generaon by he correspondng populaon,.e. oal populaon n developed counres (UN, 2007a) and urban populaon n developng counres (UN, 2005a). As for open burnng, he correspondng populaon s he number of rural populaon. The ypes of muncpal sold wase n each wase managemen measure are esmaed based on he parameers defned by he IPCC Invenory Gudelne (IPCC, 2006a). 3) Resuls n 23 regons Fgure 21 shows esmaed muncpal sold wase generaon per capa n 23 regons. MSW/cap [ wase/cap/yr] JPN CHN IND IDN KOR THA XSE XSA XME AUS NZL CAN USA XE15 XE10 RUS MEX ARG BRA XLM ZAF XAF XRW Fgure 21 Esmaed muncpal sold wase generaon per capa n 23 regons

46 3.4.6 Fugve emssons from fuel producon 1) Overvew In coal mnng, CH 4 s sored n a coal seam. Durng he process of coal mnng operaon, CH 4 s released no he amosphere. CH 4 s emed durng mnng, processng, ranspor, and sorage, bu he larges source of emsson s he mnng process. Deeper coal generally conans more CH 4 n a coal seam, hus s necessary o dsngush beween wo dfferen ypes of coal mnng: underground coal mnng and surface coal mnng. In naural gas producon, processng, ransporaon and sorage, and dsrbuon, naural gas s ranspored under hgh pressure. Thus he larges source of CH 4 emsson s he leakage durng he ransporaon process. In crude ol producon, ransporaon, and refnng n onshore or offshore ol plans, he larges source of CH 4 emsson s fugve emssons from he producon process. 2) Mehodology and assumpon For coal mnng, he underground mnng and surface mnng assumpons are se as follows. In Annex I counres, he rao of underground o surface coal mnng s based on he naonal GHG nvenory repored by each counry under he UNFCCC(2008). In non-annex I counres, he rao of underground o surface coal mnng s based on he daa source for WEC Survey of Energy Resources (WEC, 2007). However, s mporan o noe ha no clear and nernaonal defnons exs for underground mnng and surface mnng. Ths sudy caegorzes bumnous coal mnng as underground mnng and sub-bumnous & lgne coal mnng as surface mnng. For ol and naural gas producon and ranspor n hs sudy, he oal producon for he 2005 base year s based on Energy Balance Table (IEA, 2007). The regonal share of ol and gas producon n he global marke s also fxed a he 2005 level. I s mporan o noe ha no clear mehod exss for measurng he ranspor volumes of ol and naural gases. The Annex I counres repored her naonal GHG nvenory n dfferen ways under he UNFCCC. For example, some counres assumed ha he ranspor and producon volumes were equal, whle ohers assumed ha he ranspor volumes were 10 o 1000 mes larger or smaller han he producon volumes. Ths sudy assumes ha he ranspor and producon volumes are equal. Ths sudy lnks he energy supply and demand sdes, hus energy supply and demand are conssen across secors and regons. The gven fnal energy demand s used o esmae he prmary energy consumpon for he power generaon secor, and fugve emssons from fuels such as coal, ol, and gas producon are esmaed usng he gven prmary energy demand. 3) Resuls n 23 regons Fgure 22 shows an example of he assumed rao of underground o surface coal mnng. The rao of underground o surface coal mnng wll change n 2020 accordng o resource resrcon. However, no clear sascal daa exss for resource resrcon and

47 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon - he rao of underground o surface coals. Thus, n hs sudy, he rao of underground o surface coal s se a he 2005 level. Rao of underground and surface mnng 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Underground Surface JPN CHN IND IDN KOR THA XSE XSA XME AUS NZL CAN USA XE15 XE10 RUS MEX ARG BRA XLM ZAF XAF XRW Fgure 22 Assumpon of rao of underground and surface coal mnng n Fluorocarbon emssons HFCs 1) Overvew Snce 1930s, CFCs and HCFCs have been consumed for varous purposes such as refrgerans, aerosol propellans, opened and closed foams and solvens, and HFCs have been used as alernaves for CFCs and HCFCs snce 1990s. CFCs and HCFCs were regulaed as Ozone Depleng Subsances (ODSs) and he phase-ou schedules of he producon and consumpon of ODSs were esablshed under he Monreal Proocol n 1987 as shown n Fgure 23. Ths means ha, he more CFCs and HCFCs are regulaed, he more HFCs wll be used as refrgerans, foams, solvens and aerosol propellans n he world. Ths rend wll connue unl new alernaves for HFCs become mansream opons n he fuure. Thus, when fuure HFC emsson scenaros are examned, s also necessary o ake no consderaon he phase-ou schedules of CFCs and HCFCs. Phaseou of producon and consumpon [%] CFCs (Non-Arcle5) CFCs (Arcle5) HCFCs (Non-Arcle5) HCFCs (Arcle5) Fgure 23 Phase-ou schedules of he producon and consumpon of CFCs and HCFCs under he Monreal Proocol

48 There are several ypes of HFCs. The ypes consdered are shown n Table 13. Table 13 Targe gases and servces of HFCs, HCFCs and CFCs Servce Targe gases By-produc of HCFC-22 HFC-23 Refrgerans HFC-134a, R-410A,R-507A, R-502,HFC-236fa, CFC-12,CFC-11, HCFC-22,CFC-115 Foams (closed, open) HFC-134a,HFC-152a,CFC-11,CFC-12,HCFC-141b,HCFC-142b, HCFC-22 Aerosol propellans HFC-134a,HFC-152a,HFC-227ea,CFC-12,CFC-11,CFC-114 Solvens HFC-134a, HFC-43-10mee, CFC-113,CFC-11,CFC-12,HCFC-141b, HCFC-22,HCFC-225, Ohers HFC-23, HFC-134a, HFC-125, HFC-236fa, HFC-227ea 2) Mehodology and assumpon Consumpon of he arge gases are esmaed by regon, servce ype, and gas ype usng several daa sources, ncludng UNFCCC(2008), UNEP(2005), AFEAR(2008), and Hanaoka, e al.,(2004). Thereafer, consumpon of HFCs by servce ype and gas ype n he 23 regons are esmaed by consderng soco-economc daa and he phase-ou schedules of he Monreal Proocol. In order o calculae he overall releases no he amosphere, s necessary o ake no accoun he me delays beween consumpon and emsson for each caegory and end-use. In some caegores, such as aerosol propellans, opened foams, and solvens, HFCs are drecly released no he amosphere a he me hey are consumed. On he oher hand, n some caegores, such as refrgerans and closed foams, he HFCs are hermecally closed n applances and released no he amosphere when he applances are scrapped and dsposed of. Thus, based on varous daa sources, such as AFEAR(2008), McCulloch e al., (1998), WMO/UNEP (1999), and IPCC/UNEP (2005), he emssons funcons are deermned by consderng he me delays beween consumpon and emssons and depend on dfferen servce ypes n each end-use caegory. 3) Resuls n 23 regons Fgure 24 shows an example of assumpon of rao of HFCs usage n Refrgeran n refrgeraon and ar condonng equpmen accouns for large amoun n HFC uses. Rao of HFCs usage n % 80% 60% 40% 20% 0% By produc of HCFC 22 Refrgrans Aerosols Foams Solvens Ohers JPN CHN IND IDN KOR THA XSE XSA XME AUS NZL CAN USA XE15 XE10 RUS MEX Fgure 24 rao of HFCs usage n 2020 ARG BRA XLM ZAF XAF XRW

49 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon PFCs and SF 6 1) Overvew PFCs are used for alumnum smelng, echng n semconducor manufacurng and lqud crysal, and oher smlar applcaons. SF 6 are used for elecrc ules, magnesum smelng, and echng n semconducor manufacurng and lqud crysal. All hese servce ypes are consdered n hs sudy. 2) Mehodology and assumpon Due o he lack of daa sources for he drvng forces for PFCs and SF 6, he consumpon of PFCs and SF 6 s esmaed by consderng pas rends and soco-economc daa, whle fuure consumpon s esmaed from several daa sources, ncludng UNFCCC(2008), Schaefer, e al., (2006), USEPA(2006), he Indusral Commody Producon Sascs Daabase (UN, 2005b), and IPCC SRES(2000). PFCs and SF 6 are drecly used and released no he amosphere a he me hey are consumed. Thus, hs sudy reans s rgor even hough does no ake no accoun he me delays beween consumpon and emsson. 3) Resuls n 23 regons Fgure 25 shows an example of assumpon of rao of PFCs and SF6 usage n The major emsson sources vary dependng on he soco-economc characerscs of each regon. For example, emssons from alumnum and magnesum smelng are major sources n some counres, meanwhle elecrc ules accoun for large share of emssons n oher counres. Rao of PFCs & SF6 usage n % 80% 60% 40% 20% 0% Meal Producon Semconducor Manufacurng Elecrc Ules Ohers JPN CHN IND IDN KOR THA XSE XSA XME AUS NZL CAN USA XE15 XE10 RUS MEX ARG BRA XLM ZAF XAF XRW Fgure 25 Rao of PFCs and SF6 usage n

50 3.5 Mgaon echnology opons To esmae reducon poenals and mgaon coss, dealed echnology opons and nformaon abou hem such as lfeme, dffuson rae, energy and effcency, were assembled n he daabase. The echnology opons consdered n hs sudy are descrbed as he ls shown n Table 14. Oher mgaon opons are avalable n some secors, bu canno be consdered n hs sudy due o a lack of daa for CO 2 and N 2 O mgaon echnologes n he ndusral process, N 2 O mgaon echnologes n wase waer managemen, ec. I s mporan o noe ha hs sudy s based on realsc and currenly exsng echnologes and does no ake no accoun fuure nnovave echnologes ha are expeced o appear n For example, carbon capure and sorage (CCS) (IPCC, 2006b) s lkely o have a large effec on mgaon measures. However, he feasbly of CCS s sll beng suded and lacks daa regardng locaon, volume, and cos. Therefore, hs sudy does no ake no accoun CCS as a mgaon measure. I s also mporan o noe ha, under he reference case, share of nuclear power generaon n he Energy Supply secor s consdered under he baselne a he same level repored by IEA world Energy Oulook(IEA, 2007a), bu s no consdered as a mgaon measure n hs sudy

51 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon - Table 14 Ls of echnology opons for mgaon measures Secor Caegory Technology opons Power generaon Indusry Resdenal & Commercal Transpor Coal power plan Gas power plan Renewables Seel Cemen Oher ndusres Coolng Warmng Ho waer Cookng Lghng Refrgeraor TV Ohers Passenger car Truck Passenger bus Shp Arcraf Ral Road ranspor Effcen coal power plan, PFBC (Pressurzed fludzed bed combuson), IGCC (Inegraed Gasfcaon Combned Cycle) Effcen gas power plan, ACC (Advanced Combned Cycle) Wnd power, Phoovolacs, Bomass power plan Coke oven (Coke gas recovery, Auomac combuson, Coal we adjusmen, Coke dry ype quenchng, COG laen hea recovery, Nex generaon coke oven), Sner furnace (Auomac gner, Cooler wase hea recovery, Manly wase hea recovery, Effcen gner), Blas furnace(large sze blas furnace, Blas furnace gas recovery, We op pressure recovery urbne, Dry op pressure recovery urbne, Hea recovery of ho blas sove, Coal njecon, Dry op pressure gas recovery), Basc oxygen furnace(ldg recovery, LDG laen hea recovery), Casng & rollng (Connuous caser, Ho charge rollng, Ho drec rollng, Effcen heang furnace, Hea furnace wh regenerave burner, Connuous annealng lnes), Elecrc furnace(dc elecrc furnace, Scrap pre-hea) Mll (Tube mll, Vercal mll), Kln (We kln, Sem-we kln, Dry long kln, Dry shaf kln, SP/NSP) Boler (Effcen boler [coal, ol, gas], Boler wh combuson conrol [coal, ol, gas], Cogeneraon [coal, ol, gas], Regenerave gas boler), Process hea (Effcen ndusral furnace [ol, gas]), Moers (Moor wh Inverer conrol, Effcen moor) Effcen cooler (sold average n developed counres n 2005, op runner, hghes performance) Effcen ar condoner (sold average n developed counres n 2005, op runner, hghes performance), Insulaon (Wall nsulaon, Double-glazed glass wh Low-e) Effcen waer heaer [kerosene, LPG, gas, coal], CO 2 refrgeran waer heaer, Solar hermal waer heaer Effcen cookng sove [kerosene, LPG, gas, coal, elecrcy] Fluorescen of ncandescen ype, Fluorescen wh energy savng sablzer, Inverer ype fluorescen, Hf Inverer ype fluorescen Effcen refrgeraor (sold average n developed counres n 2005, op runner, hghes performance) Effcency TV (sold average n developed counres n 2000, op runner, hghes performance) Effcen oher devces Effcen gasolne passenger car (Varable valve conrol, Cylnder deacvaon, Drec njecon, Engne frcon reducon, Rollng ressance reducon, Alumnum body, Lghwegh Chasss, Alumnum Block, CVT), Hybrd passenger gasolne car, Plug-n hybrd gasolne car, Effcen desel passenger car (Engne frcon reducon, Rollng ressance reducon, Drec njecon, Common-ral, Alumnum body, Lghwegh Chasss, Alumnum Block, CVT), Hybrd passenger desel car, Plug-n hybrd desel car, Elecrc passenger car, Fuel-cell passenger car, Effcen small-szed ruck (Rollng ressance reducon, Engne mprovemen), Effcen large-szed ruck (Rollng ressance reducon, Engne mprovemen) Effcen bus (Rollng ressance reducon, Engne mprovemen), Hybrd bus Effcen shp Effcen arcraf (Engne Improvemen, Wegh reducon, Drag reducon) Effcen ran Bo fuel

52 Table14 Ls of echnology opons for mgaon measures (connued) Secor Caegory Technology opons Agrculure Wase Fugve emssons Fluornaed gases emsson Rce culvaon Cropland Manure managemen Lvesock rumnaon Muncpal Wase Sold Fugve emssons from fuel producon By-produc emssons Refrgerans Aerosols Foams Solvens Semconducor Manufacurng Meal Producon Elecrcal equpmen Fre Exngushng Waer managemen (Mdseason dranage, Shallow floodng, Alernave floodng and dranage), Ferlzer managemen (Ammonum sulfae, Addon of phosphogypsum), Culvaon managemen (Upland rce, Drec we seedng, Off-season sraw), Rce sraw compos Ferlzer managemen (Reduce ferlzaon, Nrogen nhbor, Spreader manenance, Spl ferlzaon, Sub-opmal ferlzer applcaon), Replacng ferlzer (Replacng ferlzer wh manure-n and resdue), Culvaon managemen (Ferlzer free zone, Opmze dsrbuon geomery, Conver ferlzaonal llage o no-ll), Waer managemen (Irrgaon, Dranage) Anaerobc dgeson (cenralzed plan, farm-scale plan), Covered lagoon (farm use, household use), Bogas use for cook and lgh from domesc sorage, Manure reamen (Daly spread of manure, Slowng down anaerobc decomposon), Fxed-flm dgeser, Plug flow dgeser, Chemcal subsance managemen (Proponae precursors, Prbocs, Anbocs, Anmehanogen, Mehane oxdsers), Feed managemen (Improve feed converson, Improved feedng pracces, Hgh fa de, Replace roughage wh concenraes), Genec (Hgh genec mer, Improved feed nake and genecs) Bologcal reamen, Improved oxdaon hrough mproved cappng and resoraon, Drec use (Drec use of landfll gas, Elecrcy and hea generaon from landfll gas, Upgrade naural gas), Flarng landfll gas, Anaerobc dgeson, Composng (wndrow plan, unnel plan, hall plan), Incneraon, Paper recyclng, Producon of RTD (refuse-derved fuel) Coal mnng (Degasfcaon for naural gas ppelne njecon, Degasfcaon for elecrcy, Venlaon for elecrcy, Venlaon oxdzer for hea), Naural gas producon and dsrbuon (Use of nsrumen ar, Use of low bleed pneumac devces), Crude ol producon (Flarng n place of venng, Drec use of CH 4, Renjecon of CH 4 ) Thermal oxdaon Alernave sysem (Carbon doxde, Hydrocarbons, Hydrocarbons & NH 3 ), Leakage reducon (for Moble ar condonng, Commercal refrgeraon, Indusral refrgeraon, Saonary ar condonng DX, Saonary ar condonng chller), Recovery (for Moble ar condonng, Domesc refrgeraon), Decomposon Alernave aerosol (Hydrocarbon aerosol propellans, No-n-knd alernaves), 50% reducon (for Medcal applcaons, General aerosol propellans) Recovery, Decomposon, Alernave sysem (waer-blown CO 2 sysems, Lqud CO 2 foam blowng, Hydrocarbon foam blowng) (for Resdenal Buldngs, Commercal Buldngs) Alernave solvens (NIK aqueous, NIK sem-aqueous), Rerof opons, 50% reducon Cleanng facly (NF 3 n su clean, NF 3 remoe clean), Recapure/desroy, Plasma abaemen, Caalyc desrucon, Thermal oxdaon Rerof(PFPB,SWPB,CWPB,VSS,HSS)n alumnum producon, SO 2 replacemen n magnesum producon Leakage reducon, Devce recycle Iner gas sysems, Carbon doxde sysems

53 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon - 4 Resuls and dscussons 4.1 Overvew of case sudes Mgaon poenals, mgaon coss, and emsson esmaes vary dependng on he sengs of he soco-economc assumpons, such as populaon, GDP, servce demands n each secor, and energy prces. In hs sudy, hese soco-economc assumpons are deermned exogenously and he sudy does no ake no accoun spllover effecs due o nroducng mgaon measures, such changes n he ndusral srucure and GDP, changes n he servce demands n each secor, and changes n he echnology and energy prce. However, mgaon poenals and coss also vary dependng on boh he varey of mgaon opons and he sengs for energy prce and polcy measures, such as rsng carbon prces and exended payback perods. Fuure energy prces wll flucuae due o varous facors and we fnd dffcul o forecas hem n hs sudy, so hey are se exogenously and a sensvy analyss of he energy prce s no performed. Wh regard o polcy measures, several opons are avalable for enhancng and accelerang he nroducon of mgaon echnologes. Two major polcy nsrumens are 1) mpose a carbon prce on energy consumpon, and 2) exend he payback perod o nroduce echnologes ha have hgh nvesmen rsk bu offer hgh energy conservaon. In hs sudy, for he echnology selecon framework for varous mgaon echnologes, he followng equaon compares he ncremenal coss of nvesmens and he coss of energy savngs. If he operaonal coss of energy savngs are hgher han he ncremenal coss of capal nvesmen, he mgaon echnology s nroduced nsead of a convenonal echnology under he baselne scenaro. As for he mgaon polcy ha exends he payback perod, several opons are avalable, such as low-neres fnancng or governmen nvesmen n energy-savng echnologes, promoon of ESCO (Energy Servce Company), and vsualzaon of he nformaon abou energy consumpon and CO 2 emssons durng he lfeme of he seleced echnology. Incremenal coss of capal nvesmens amoun of energy savngs (energy prce + emsson facor carbon prce) payback perod Wh regard o mgaon echnologes, s mporan o ake no accoun boh he demand sde and he supply sde. One effecve measure for nroducng hghly effcen echnologes on he demand sde s exendng he payback perod. For he supply sde, a key facor s he composon of he power sources. Secon descrbes he wo dsnc cases energy secury and opmzaon ha are used n hs sudy. In he energy secury case, socal barrers resrc o a ceran exen any drasc energy shf from coal and ol power plans o effcen gas power plans or renewable energes. However, n he opmzaon case, a drasc energy shf s allowed for reasons of cos opmzaon. For example, f a gas power plan s more cos effecve han a exsng coal or ol power plan, hen he coal or ol power plan s mmedaely sopped and replaced wh a gas power plan. Therefore, hs sudy analyzes mgaon poenals a several margnal abaemen coss (.e., mposng carbon prce) n he followng hree cases: Case 1: Energy secury case & reference payback perod case Case 2: Energy secury case & polcy payback perod case Case 3: Opmzaon case & reference payback perod case

54 Comparng effecs of payback perod Payback perod (reference case) Payback perod (polcy case) Comparng effecs of composon of power sources Energy secury case Opmzaon case Case 1 Case 2 Case 3 Fgure 26 Overvew of case sudes By comparng resuls n case 1 and case 2, effecs of promong hgh effcen echnologes especally on he demand sde can be analyzed, whle comparson of case 1 and case 3 shows effecs of a energy shf from coal and ol power plans o effcen gas power plans or renewable energy. 4.2 Coverage of mgaon opons arge secors Ths sudy focuses on he arge GHGs and secors shown n Table 1 and Table 14. However, due o nadequae daa, hs sudy could no cover all of he mgaon echnologes for all anhropogenc GHGs emssons from all secors n each regon. The prevous sudy by Hanaoka, e al. (2008) covered abou 70 80% of all anhropogenc secors. Ths sudy enlarges he coverage of he arge secors and gases, coverng abou 80 95% of he arge secors by revewng he GHGs emssons from daa sources repored by IEA (IEA, 2007e). I s mporan o noe ha he major emng secors are regon dependen, so he secor coverage rae s lower n some counres. 4.3 Global margnal abaemen cos curves and reducon poenals Reducon poenals n 2020 were esmaed by consderng he marke selecons of realsc advanced echnologes n he echnology daabase. In he prevous sudy by Hanaoka, e al (2008), margnal abaemen cos curves were descrbed under wo dfferen cases of dscoun rae for nvesmens, enablng a comparson of he effecs of mgaon measures. I was found ha he feaures of margnal abaemen cos curves dffered dependng on he level of dscoun rae for nvesmens. In hs sudy, hree dfferen cases were aken no accoun as descrbed n Fgure 26. Fgure 27 shows global margnal abaemen cos curves n developed and developng/eit (economes n ranson) regons n Comparng he resul beween developed and developng/eit regons, here are much larger reducon poenals for cos-effecve measures n developng/eit regons. Thus, nernaonal cooperaon n

55 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon - echnology ransfers and fnancal asssance o developng counres such as he Clean Developmen Mechansm under he Kyoo Proocol may play an mporan role n achevng GHG emsson reducons. Comparng he resuls beween case 1 and case 3, feaures of margnal abaemen cos curves are smlar when carbon prce s low enough. However, more mgaon poenals are esmaed a a hgher carbon prce above 50 US$/-CO 2 eq due o he effecs of a drasc energy shf from exsng coal and ol power plans o new effcen gas power plans. On he oher hand, comparng he resuls beween case 1 and case 2, more mgaon poenals are esmaed n case 2 due o he effecs of promong hgh effcen echnologes especally on he demand sde. There were varous sudes on GHG mgaon poenals and hese coss n each secor n he IPCC AR4, however, mgaon poenals and margnal abaemen coss wll vary dependng on dfferen daa sengs and assumpons as descrbed n hs sudy. Thus s very mporan o pon ha, when dscussng regonal GHG mgaon arges and comparng resuls beween dfferen sudes, s necessary o focus on no only mehodology of s model bu also soco-economc daa sengs and assumpons of s analyss. The rao of secor-wse reducon poenals n developed and developng/eit regons under 100 US$/CO 2 margnal abaemen cos are shown n Fgure 28. As s also descrbed n Fgure 27, reducon poenals are larger n developng/eit regons whch accoun for % of oal global poenals. In erms of secors, large reducon poenals were denfed n he power generaon and ndusry secors due o he use of low energy-effcen echnologes n developng/eit regons. These secors accoun for % of oal global reducon poenal. Margnal abaemen cos (US$/CO2eq) Developed(Case 1) Developng/EIT(Case1) Developed(Case 2) Developng/EIT(Case2) Developed(Case 3) Developng/EIT(Case 3) 2,000 4,000 6,000 8,000 10,000 12,000 14, GHG reducons (MCO 2 eq, 2020) Fgure 27 Margnal abaemen cos curves n 2020 n Developed and Developng/EIT regons

56 6% 1% 3% 2% 7% 5% Developed 33% Indusry (CO2) Resdenal & Commerc al (CO2) 10% 10% Trasporaon (CO2) Developng & EIT 67% 27% 15.2 GCO2eq 4% 4% 11% 2% 5% 2% 1% Power generaon (CO2) Fugve & Combus on (CH4, N2O) Agrculure(CH4, N2O) Muncpal sold wase (CH4) Fluorocarbons (HFCs, PFCs, SF6) (a) Case 1: Energy secury case & reference payback perod case 9% 5% 1% 2% 2% 8% 8% Developed 37% Indusry (CO2) Resdenal & Commercal (CO2) Trasporaon (CO2) Developng & EIT 63% 22% 5% 17.9 GCO2eq 8% 10% 2% 10% 4% 1% 1% Power generaon (CO2) Fugve & Combus on (CH4, N2O) Agrculure(CH4, N2O) Muncpal sold wase (CH4) Fluorocarbons (HFCs, PFCs, SF6) (b) Case 2: Energy secury case & polcy payback perod case 1% 6% 2% 2% 6% 4% Developed 30% Indusry (CO2) Resdenal & Commercal (CO2) 9% 11% Trasporaon (CO2) Developng & EIT 70% 33% 16.9 GCO2eq 4% 4% 10% 4% 2% 2% 1% Power generaon (CO2) Fugve & Combus on (CH4, N2O) Agrculure(CH4, N2O) Muncpal sold wase (CH4) Fluorocarbons (HFCs, PFCs, SF6) (c) Case 3: Opmzaon case & reference payback perod case Fgure 28 Rao of secor-wse reducon poenals from baselne n developed and developng/eit regons under 100 US$/CO2-49 -

57 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon Regonal reducon poenals Fgure 29 shows regon-wse reducon poenals n 2020 for dfferen cos caegores under 100 US$/CO 2 margnal abaemen cos. The resuls show ha Chna, he Uned Saes, Inda, EU25 and Russa are fve major regons wh large reducon poenals, accounng for 66-68% of he oal reducon poenal n he world. Therefore, promong echnology ransfers from developed o developng counres such as Chna and Inda wll be an effecve measure for reducng GHG emssons under he fuure clmae regme afer he Kyoo Proocol. I was found ha, under he no-regre case (.e. 0US$/CO 2 eq.), here would be large reducon poenals no only n developng/eit bu also n developed regons. However, s mporan o hnk carefully abou he meanng of he no-regre case. One of he mplcaons s ha markes and nsuons do no behave perfecly because of marke falures such as lack of nformaon, lack of compeon, and/or nsuonal falures such as nadequae regulaon, so ha effcen echnologes have ye o be adequaely nroduced n he markes n hese regons. Anoher mporan pon o noe s ha, even f s no-regre, such mgaon opons canno be nroduced whou mposng nal coss. Thus s mporan o nroduce clmae polces more proacvely and s hoped ha marke-drven echnologes are seleced more effcenly n such regons. Fgure 30 shows secor-wse reducon poenals for each regon under 100 US$/CO 2 margnal abaemen cos. The major secors whch have large reducon poenals vary dependng on he soco-economc characerscs of each regon. For example, n he regons wh hgh economc growh such as Chna and Inda, reducon measures n ndusry and power generaon secors are sgnfcan. In developng counres, s also effecve o reduce emssons from agrculure and wase secors. In developed counres such as he US, EU and Russa, s mporan o underake mgaon polces n he ndusry and power generaon secors, bu reducon poenals n ransporaon, resdenal and commercal secors are also large. As for fossl fuel producng counres such as Chna, Russa, Mddle Eas, he USA and Inda, s effecve o ake measures o mgae hese fugve emssons. There are more reducon poenals whch cos more han 100 US$/CO 2, especally n ranspor, agrculure, resdenal, commercal, and power generaon secors, boh n developed and developng counres

58 GHG reducon poenal (MCO2eq) 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, US$/CO US$/CO US$/CO2 < 0 US$/CO2 0 JPN CHN IND IDN KOR THA XSE XSA XME AUS NZL CAN USA XE15 XE10 RUS MEX ARG BRA XLM ZAF XAF XRW (a) Case 1: Energy secury case & reference payback perod case GHG reducon poenal (MCO2eq) 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, US$/CO US$/CO US$/CO2 < 0 US$/CO2 0 JPN CHN IND IDN KOR THA XSE XSA XME AUS NZL CAN USA XE15 XE10 RUS MEX ARG BRA XLM ZAF XAF XRW (b) Case 2: Energy secury case & polcy payback perod case 5,500 5, US$/CO2 GHG reducon poenal (MCO2eq) 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, US$/CO US$/CO2 < 0 US$/CO JPN CHN IND IDN KOR THA XSE XSA XME AUS NZL CAN USA XE15 XE10 RUS MEX ARG BRA XLM ZAF XAF XRW (c) Case 3: Opmzaon case & reference payback perod case Fgure 29 Regon-wse reducon poenals from baselne n 2020 under 100 US$/CO

59 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon - GHG reducon poenal (MCO2eq) 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Fluorocarbons (HFCs, PFCs, SF6) Muncpal sold wase (CH4) Agrculure(CH4, N2O) Fugve & Combuson (CH4, N2O) Power generaon (CO2) Trasporaon (CO2) Resdenal & Commercal (CO2) Indusry (CO2) JPN CHN IND IDN KOR THA XSE XSA XME AUS NZL CAN USA XE15 XE10 RUS MEX ARG BRA XLM ZAF XAF XRW (a) Case 1: Energy secury case & reference payback perod case GHG reducon poenal (MCO2eq) 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Fluorocarbons (HFCs, PFCs, SF6) Muncpal sold wase (CH4) Agrculure(CH4, N2O) Fugve & Combuson (CH4, N2O) Power generaon (CO2) Trasporaon (CO2) Resdenal & Commercal (CO2) Indusry (CO2) JPN CHN IND IDN KOR THA XSE XSA XME AUS NZL CAN USA XE15 XE10 RUS MEX ARG BRA XLM ZAF XAF XRW (b) Case 2: Energy secury case & polcy payback perod case GHG reducon poenal (MCO2eq) 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 Fluorocarbons (HFCs, PFCs, SF6) Muncpal sold wase (CH4) Agrculure(CH4, N2O) Fugve & Combuson (CH4, N2O) Power generaon (CO2) Trasporaon (CO2) Resdenal & Commercal (CO2) Indusry (CO2) JPN CHN IND IDN KOR THA XSE XSA XME AUS NZL CAN USA XE15 XE10 RUS MEX ARG BRA XLM ZAF XAF XRW (c) Case 3: Opmzaon case & reference payback perod case Fgure 30 Secor-wse reducon poenals from baselne n 2020 under 100 US$/CO

60 4.5 Composon of power sources n major developed counres Fgure 32 shows he composon of power sources n major developed counres under dfferen margnal abaemen coss. As s descrbed n Fgure 27, feaures of margnal abaemen cos curves n case 1 and case 3 are dfferen a a hgher carbon prce above 50 US$/-CO 2 eq due o he effecs of a drasc energy shf, whch s explaned by Fgure 32. In case 1, by consderng some socal barrers such as energy secury, energy coss and echnologcal resrcons, shfs n energy from coal and ol power plans o effcen gas power plans are allowed only when exsng coal and ol power plans are rered or an addonal power plan s needed o mee ncreased energy demand. As for renewable energy such as solar, wnd and bomass, he maxmum lm of he rao of renewables s se a 20% of he oal energy supply n each regon and counry boh n case 1 and case 3. However, n case 3, no resrcon or barrer s consdered and he composon of fossl fuel energy ypes s freely deermned by oal cos opmzaon. Thus, f a shf from coal and ol o gas power plans s cos effecve even before exsng coal and ol power plans are rered, hen he exsng coal and ol power plans wll be mmedaely sopped and oally replaced by new gas power plans a around 100 o 200 US$/CO 2 abaemen coss. I s obvous ha achevng large GHG mgaons requres varous mgaon measures regardng he use of less-carbon nensve fossl fuels, he shf o non-fossl fuel energes and promoon of advanced echnologes. However, as for case 3, he energy shf from coal and ol o gas s no realsc n 2020, hus s necessary o dscuss composon of power sources carefully. Elecrcy oupu (TWh) 1,600 1,400 1,200 1, PV WIN BMS GEO/HYD NUC GAS OIL COL Elecrcy oupu (TWh) 1,600 1,400 1,200 1, PV WIN BMS GEO/HYD NUC GAS OIL COL 2005 Baselne Baselne (a-1) Japan n Case 1 (b-1) Japan n Case 3 Elecrcy oupu (TWh) 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, PV WIN BMS GEO/HYD NUC GAS OIL COL Elecrcy oupu (TWh) 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Baselne Baselne PV WIN BMS GEO/HYD NUC GAS OIL COL (a-2) USA n Case 1 (b-2) USA n Case 3 Fgure 31 Composon of power sources

61 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon - Elecrcy oupu (TWh) 4,000 3,500 3,000 2,500 2,000 1,500 1, PV WIN BMS GEO/HYD NUC GAS OIL COL Elecrcy oupu (TWh) 4,000 3,500 3,000 2,500 2,000 1,500 1, PV WIN BMS GEO/HYD NUC GAS OIL COL 2005 Baselne Baselne (a-3) EU25 n Case 1 (b-3) EU25 n Case 3 Elecrcy oupu (TWh) 1,200 1, PV WIN BMS GEO/HYD NUC GAS OIL COL Elecrcy oupu (TWh) 1,200 1, PV WIN BMS GEO/HYD NUC GAS OIL COL 2005 Baselne Baselne (a-4) Russa n Case 1 (b-4) Russa n Case 3 Elecrcy oupu (TWh) 30,000 25,000 20,000 15,000 10,000 5,000 0 PV WIN BMS GEO/HYD NUC GAS OIL COL 30,000 25,000 20,000 15,000 10,000 5, Baselne Baselne Elecrcy oupu (TWh) PV WIN BMS GEO/HYD NUC GAS OIL COL (a-5) World n Case 1 (b-5) World n Case 3 Fgure 32 Composon of power sources (connued)

62 4.6 Emsson esmaes and reducon poenals Table 15 and Fgure 33 show he comparson of esmaed emssons and reducon poenals n major GHG emng counres and he world. Ths resul shows GHG emssons from all anhropogenc GHGs from all secors n each regon. Table 15 Emssons n major counres and regons (range of case 1 o case 3) Frozen < 0 US$/CO2 < 100 US$/CO2 < 200 US$/CO2 Japan CO2 GCO non CO2 GCO2eq GHG GCO2eq vs % 0% 11% 9% 1% 13% 2% vs % 11% 2% 20% 12% 22% 13% vs Frozen 19% 10% 27% 20% 29% 21% USA CO2 GCO non CO2 GCO2eq GHG GCO2eq vs % 0% 13% 16% 2% 23% 9% vs % 13% 2% 27% 15% 33% 21% vs Frozen 24% 14% 36% 26% 42% 32% EU25 CO2 GCO non CO2 GCO2eq GHG GCO2eq vs % 16% 7% 24% 17% 27% 21% vs % 14% 5% 22% 16% 25% 20% vs Frozen 22% 14% 30% 24% 33% 27% Chna CO2 GCO non CO2 GCO2eq GHG GCO2eq vs % 169% 186% 101% 127% 85% 111% vs % 38% 46% 3% 16% 6% 8% vs Frozen 21% 17% 41% 34% 46% 38% Inda CO2 GCO non CO2 GCO2eq GHG GCO2eq vs % 98% 104% 42% 62% 36% 57% vs % 30% 34% 7% 7% 11% 3% vs Frozen 23% 20% 45% 37% 47% 39% Russa CO2 GCO non CO2 GCO2eq GHG GCO2eq vs % 32% 28% 42% 38% 46% 40% vs % 5% 0% 19% 14% 25% 16% vs Frozen 27% 23% 37% 34% 42% 35% Developed CO2 GCO non CO2 GCO2eq GHG GCO2eq vs % 14% 5% 25% 17% 29% 21% vs % 28% 21% 38% 31% 41% 35% vs Frozen 23% 15% 34% 26% 37% 30% Developng CO2 GCO & EIT non CO2 GCO2eq GHG GCO2eq vs % 89% 99% 57% 67% 45% 58% vs % 10% 5% 25% 20% 31% 24% vs Frozen 21% 17% 34% 30% 39% 34% World CO2 GCO non CO2 GCO2eq GHG GCO2eq vs % 36% 46% 17% 25% 8% 18% vs % 7% 15% 8% 2% 15% 7% vs Frozen 22% 16% 33% 28% 38% 32%

63 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon - Case 1 Case 2 Case 3 GHG reducon from 1990 emssons level 20% 10% 0% 10% 20% 30% 40% < 0US$/CO2 < 50US$/CO2 < 100$/CO2 < 200$/CO2 25% 50% 0 Japan 2 4 USA 6 8 EU Russa Developed regons Fgure 33 Comparson among developed counres a he same level of margnal abaemen coss I was found ha, by nroducng mgaon echnologes under 100 US$/CO 2 margnal abaemen cos, a large amoun of reducon poenal can be acheved as compared o he baselne (.e. echnology frozen case) n However, he emssons n 2020 sll exceed he level of emssons n 1990 n he world due o he effecs of ncrease of he fuure servce demands. The same feaure can be seen n developng/eit regons ncludng Chna and Inda. Moreover, n Chna and Inda, mgaon measures under 200 US$/CO 2 margnal abaemen cos are no ye enough o reduce emssons lower han he level n For example, In Chna, hgh ncrease of he fuure servce demands n power generaon, ndusry, and ranspor secors s expeced. I mples ha, n Chna, mgaon measures based on realsc and currenly exsng echnologes are no enough o reduce GHG emssons, and changes n he ndusral srucure and servce demands are also requred o acheve he Low Carbon Socey. In Japan and he USA, by nroducng mgaon echnologes under 100 US$/CO 2 margnal abaemen cos, a ceran amoun of reducon poenal can be acheved o reduce emssons lower han he level n 1990, around -9 o -1 % and -16 o -2 % n Japan and he USA respecvely, In Russa and EU25 (ncludng Wesern EU and Easern EU), here are more avalable capacy o reduce emssons compared o Japan and USA. In order o acheve a 25% reducon arge from he level n 1990 n developed counres under he equal abaemen cos (.e. 200 US$/CO 2 abaemen cos n hs sudy), Japan, USA, EU25 and Russa are requred o reduce GHG emssons around -11 ~ - 13%, -21 ~ -23 %, -27 %, -42 ~ -46 % respecvely from he level n I s mporan o noe ha he baselne GHG emssons n 2020 are esmaed under he

64 echnology-frozen case (.e. when fuure share and energy effcency of echnologes are fxed a he same level as n he base year) whch does no ake no accoun changes n he ndusral srucure. Moreover, fuure servce demands are exogenous parameers n hs sudy, so ha changes n he ndusral srucure and servce demands due o nroducng mgaon measures such as compac cy, modal shf, and publc-awareness acons are no aken no accoun. Thus baselne emssons and reducon poenals may be overesmaed as compared o he echnology-frozen case. Anoher mporan pon o noe s ha hs sudy s based on realsc and currenly exsng echnologes, and fuure nnovave echnologes expeced n 2020 are no aken no accoun. Therefore, by ncludng fuure nnovaon echnologes n hs analyss, s expeced ha he emsson would be reduced more han he amoun shown n Table 15 and Fgure 33. Moreover, due o he lack of daa avalably of echnologes, some mgaon opons n some arge secors were no consdered n hs sudy. Therefore, by enlargng he coverage of mgaon opons by collecng more comprehensve nernaonal daa, he emssons are expeced o be reduced furher. Therefore, whle he assumpons of echnology-frozen case and non-accounng of possble changes n ndusral srucure and servce demands have led o an overesmaon of he baselne and reducon poenal, on he oher hand, he non-consderaon of fuure nnovaons and wder se of mgaon opons has conrbued o an underesmaon of reducon poenal. Though he drecon of ne effec of hese wo opposng devaons s no ceran, s crucal o be aware of hese caveas. However, n order o promoe drasc GHG reducons, s mporan o hnk of no only effcency mprovemen of curren echnologes bu also he fuure nnovaons and changes of socal srucure owards he Low Carbon Socey. I s also necessary o noe ha hs sudy esmaed reducon poenals compared o he echnology-frozen case under he defnon of reducon poenals descrbed n Secon 2.4. Hence reducon poenals under he no regre case would be large as shown n Fgure 29. However, such mgaon opons under he no regre case canno be nroduced whou mposng nal coss. As here would be ceran mgaon echnologes exsng n developed counres bu no n developng counres, nernaonal cooperaon owards echnology ransfers and fnancal asssance o developng counres may play an mporan role. 4.7 Secor-wse comparson of hs sudy wh he IPCC AR4 The IPCC Fourh Assessmen Repor Workng Group III 3) (AR4 WG3) provdes an n-deph analyss of mgaon opons, GHG reducon poenals and coss by revewng varous leraure, and repors he mgaon measures by secor n seven chapers on energy supply, ranspor, buldngs, ndusry, agrculure, foresry, and wase managemen. In addon, he IPCC AR4 WG3 provdes one addonal chaper (Chaper 11) dealng wh he cross-secoral ssues ha combne nformaon from boom-up echnologcal sudes wh resuls of op-down modelng exercses n he varous secors. Fgure 34 shows he comparson of hs sudy n case 2 wh he resuls shown n Table 11.3, page 632, Chaper 11 of he IPCC AR4 WG3 (whch summarzes economc poenals for GHG mgaon for

65 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon - dfferen cos caegores n each secor under 100 US$/CO 2 eq margnal abaemen cos). However, mus be noed ha he emporal horzon s dfferen beween hs sudy and he resuls n Table 11.3 n he IPCC AR4 WG3 whch shows mgaon poenals n The resuls of reducon poenals n hs sudy are on he whole lower han hose n he IPCC AR4 WG3, parly because assumpons of acvy levels are dfferen due o he dfference n emporal horzons. Moreover, he IPCC AR4 WG3 covers a larger varey of mgaon opons so ha he amoun of mgaon poenal s much larger n he IPCC AR4 han n hs sudy. For example, he followng mgaon opons are aken no accoun n he IPCC AR4 bu no n hs sudy: ranspor echnologes such as fuel-cell elecrc vehcles, resdenal and commercal echnologes such as buldng energy managemen sysems, and ndusral echnologes such as n he perochemcal secors. Moreover, he poenal n he agrculure secor ncludes CO 2 emssons arsng from agrculural acves ha are aken no accoun n he IPCC AR4 bu no n hs sudy. Anoher reason for he dfference s he level of he annual dscoun rae. Economc poenals for GHG mgaon vary wdely accordng o annual dscoun rae and arge secors. Thus s mporan o ake no accoun he dfferences of annual dscoun rae and arge secors before comparng he resuls beween dfferen repors. Energy Supply Transpor Buldngs Indusry Agrculure Wase IPCC non OECD IPCC OECD AIM non OECD AIM OECD IPCC non OECD IPCC OECD AIM non OECD AIM OECD IPCC non OECD IPCC OECD AIM non OECD AIM OECD IPCC non OECD IPCC OECD AIM non OECD AIM OECD IPCC non OECD IPCC OECD IPCC World AIM non OECD AIM OECD AIM World IPCC non OECD IPCC OECD AIM non OECD AIM OECD <0 US$/CO US$/CO US$/CO US$/CO2 Fgure 34 Comparson of hs sudy n case 2 wh he IPCC AR4 WG3-58 -

66 5 Concluson Based on he dealed echnology daabase, emsson reducon poenals and mgaon coss n world regons n 2020 were evaluaed. I can be concluded ha: 1) Comparng dfferen sengs of payback perod for echnology selecons and composon of power sources, mgaon poenals n 2020 are esmaed n he range beween 15.2 o 17.9 GCO 2 eq n global under 100 US$/CO 2 margnal abaemen cos. 2) Chna, he Uned Saes, Inda, Wesern Europe and Russa are fve major regons wh large reducon poenals, accounng for 66-68% of he oal reducon poenal n he world. 3) In order o acheve a 25% reducon arge from he level n 1990 n developed counres under he equal abaemen cos (.e. 200 US$/CO 2 margnal abaemen cos n hs sudy), Japan, USA, EU25 and Russa are requred o reduce GHG emssons around -11 ~ - 13%, -21 ~ -23 %, -27 %, -42 ~ -46 % respecvely from he level n ) The major secors whch have large reducon poenals vary dependng on he soco-economc characerscs of each regon. In general, large reducon poenals exs n power generaon and ndusry due o he use of low energy-effcen echnologes especally n developng/eit counres, and hese secors accoun for approxmaely 45~55% of he oal global reducon poenal. 5) There s a much larger poenal for cos-effecve measures n developng counres, herefore nernaonal cooperaon such as echnology ransfer and fnancal asssance o developng counres wll play an mporan role owards achevng GHG emssons reducons. 6) Alhough a large amoun of reducon poenal s esmaed n 2020, s no enough compared o he emssons n 1990 n he world, especally n developng counres due o he rapd ncrease of economc growh and realsc and currenly exsng echnologes are no enough o reduce GHG emssons. In order o promoe drasc GHG reducons, s mporan o hnk of no only effcency mprovemen of curren echnologes bu also he fuure nnovaons and changes of socal srucure owards he Low Carbon Socey. However, hs sudy has ceran caveas. The followng pons mus be kep n mnd whle nerpreng he resuls. a) The mplemenaon of no-regre mgaon opons n boh developed and developng counres may requre nal coss o overcome varous barrers. b) Ths sudy s based on realsc and currenly exsng echnologes, and fuure nnovave echnologes expeced n 2020 are no aken no accoun. Moreover, he coverage of some realsc and currenly exsng echnology opons for hs mgaon analyss s lmed due o he lack of daa avalably. Therefore, hs sudy may underesmae mgaon poenals as compared o IPCC AR4, and may be possble o reduce more f nnovave echnologes become avalable n he fuure

67 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon - c) On he oher hand, he assumpons of echnology-frozen case and non-accounng of possble changes n ndusral srucure and servce demands have led o an overesmaon of he baselne and reducon poenal. Though he drecon of ne effec of hese wo opposng devaons s no ceran, s crucal o be aware of hese caveas. d) Economc poenals for GHG mgaon n hs sudy are dfferen as compared o he IPCC AR4. I s mporan o ake no accoun he dfferences of he annual dscoun rae, arge GHGs and arge secors before comparng he resuls beween dfferen repors. I s necessary o enlarge he coverage of arge secors, arge GHGs and mgaon opons by collecng nernaonal daa, o connue o develop he daabase, and o evaluae GHG mgaon poenals and coss more comprehensvely for varous secors

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71 Global Greenhouse Gas Techncal Mgaon Poenals and Coss n 2020 Second Edon - Appendx 1 Defnon of geographcal coverage Code JPN CHN IND IDN KOR THA XSE XSA XME AUS NZL CAN USA XE15 XE10 RUS ARG BRA MEX XLM ZAF XAF XRW Deals Japan Chna Inda Indonesa Korea Thaland Brune Darussalam, Myanmar, Camboda, Lao People's Democrac Republc, Malaysa, Phlppnes, Tmor-Lese, Sngapore, Ve Nam Bangladesh, Bhuan, Sr Lanka, Maldves, Nepal, Paksan Bahran, Iran, Iraq, Israel, Jordan, Kuwa, Lebanon, Oman, Qaar, Saud Araba, Syran Arab Republc, Uned Arab Emraes, Yemen Ausrala New Zealand Canada Uned Saes Ausra, Belgum, Denmark, Fnland, France, Germany, Greece, Ireland, Ialy, Luxembourg, Neherlands, Porugal, Span, Sweden, Uned Kngdom Cyprus, Czech Republc, Esona, Hungary, Lava, Lhuana, Mala, Poland, Slovaka, Slovena Russa Argenna Brazl Mexco Angua and Barbuda, Bahamas, Barbados, Bolva, Belze, Vrgn Islands(Brsh), Cayman Islands, Chle, Colomba, Cosa Rca, Cuba, Domnca, Domncan Republc, Ecuador, El Salvador, Falkland Islands (Malvnas), French Guana, Grenada, Guadeloupe, Guaemala, Guyana, Ha, Honduras, Jamaca, Marnque, Monserra, Neherlands Anlles, Aruba, Ncaragua, Panama, Paraguay, Peru, Puero Rco, San Ks And Nevs, Angulla, San Luca, San Vncen and The Grenadnes, Surname, Trndad And Tobago, Turks and Cacos Islands, Vrgn Islands(U.S.), Uruguay, Venezuela Souh Afrca Algera, Angola, Boswana, Burund, Cameroon, Cape Verde, Cenral Afrcan Republc, Chad, Comoros, Mayoe, Congo, The Democrac Republc Of The Congo, Benn, Equaoral Gunea, Ehopa, Errea, Djbou, Gabon, Gamba, Ghana, Gunea, Côe D'Ivore, Kenya, Lesoho, Lbera, Lbyan Arab Jamahrya, Madagascar, Malaw, Mal, Maurana, Maurus, Morocco, Mozambque, Namba, Nger, Ngera, Gunea-Bssau, Réunon, Rwanda, San Helena, Sao Tome and Prncpe, Senegal, Seychelles, Serra Leone, Somala, Zmbabwe, Wesern Sahara, Sudan, Swazland, Togo, Tunsa, Uganda, Egyp, Uned Republc of Tanzana, Burkna Faso, Zamba Afghansan, Åland Islands, Albana, Amercan Samoa, Andorra, Anarcca, Azerbajan, Armena, Bermuda, Bosna and Herzegovna, Bouve Island, Brsh Indan Ocean Terrory, Solomon Islands, Bulgara, Belarus, Chrsmas Island, Cocos (Keelng) Islands, Cook Islands, Croaa, Faroe Islands, Fj, French Polynesa, French Souhern Terrores, Georga, Palesnan Terrory, Gbralar, Krba, Greenland, Guam, Heard Island And Mcdonald Islands, Holy See (Vacan Cy Sae), Iceland, Kazakhsan, Democrac People's Republc of Korea, Kyrgyzsan, Lechensen, Macao, Monaco, Mongola, Republc of Moldova, Nauru, New Caledona, Vanuau, Nue, Norfolk Island, Norway, Norhern Marana Islands, Uned Saes Mnor Oulyng Islands, Federaed Saes of Mcronesa, Marshall Islands, Palau, Papua New Gunea, Pcarn, Romana, San Perre And Mquelon, San Marno, Serba and Monenegro, Svalbard And Jan Mayen, Swzerland, Tajksan, Tokelau, Tonga, Turkey, Turkmensan, Tuvalu, Ukrane, The Former Yugoslav Republc of Macedona, Uzbeksan, Walls And Fuuna, Samoa

72 AIM Independen Admnsrave Insuon Naonal Insue for Envronmenal Sudes hp://www-am.nes.go.jp/am/