Sectoral Approaches in International and National Policy

Transcription

1 Sectoral Approaches in International and National Policy 2nd International Expert Meeting on Bottom-up Based Analysis on Mitigation Potential Leon Clarke, Kate Calvin October 21, 2008

2 Acknowledgements GTSP Sponsors Phases 1,2, & 3 Thanks to the supporters of the Global Technology Strategy Project

3 Key Elements of Stabilization

4 The Reference Case: Population and GDP billion trillion 2000$ U.S. MER Population GDP USA Korea Japan Europe Canada Australia_NZ FSU Southeast Asia Middle East Latin America Africa India China USA Korea Japan Europe Canada Australia_NZ FSU Southeast Asia Middle East Latin America Africa India China Most scenarios envision a growing global economy with an evolution in the distribution of economic activity. MiniCAM has 14 regions and represents population growth, labor productivity growth, and labor participation as drivers of economic activity.

5 Stabilization requires that emissions ultimately decline toward the rate at which emissions are balanced by removal processes.

6 Large emissions reductions require large changes in global energy and agricultural systems History Future 2100 CO 2 Concentration ~740 ppm History and Reference Case Stabilization of CO 2 at 4.7 Wm History Future 2100 CO 2 Concentration ~550 ppm EJ/year Present CO 2 Concentration ~380 ppm EJ/year Present CO 2 Concentration ~380 ppm Preindustrial CO 2 Concentration ~280 ppm Oil Natural Gas Coal Biomass Energy Non-Biomass Renewable Energy Oil + CCS Natural Gas + CCS Coal + CCS Nuclear Energy End-use Energy

7 Stabilization implies that greenhouse gases have a price either implicitly or explicitly. If carbon and other GHG s are valued at zero, both implicitly and explicitly you get the reference scenario. None of the reference scenarios that we have examined stabilize GHG concentrations at low levels.

8 All net carbon emissions affect the atmosphere To the extent that marginal costs are similar across all emissions sources, costs will be minimized. To the extent that large marginal cost differences are created, then the total cost of carbon emissions mitigation will rise, and potentially by large amounts. The Implications for sectoral policies The policy needs to reach all sectors. Mitigation costs will be minimized by equalizing marginal costs across sectors, regions, and gases. Three Examples Sectoral Policies in the Energy and Industrial Sectors Land use and Emissions Policies International Participation

9 Energy And Industrial Sectoral Emissions Reductions

10 Stabilization and Sectoral Emissions Reductions Sectoral emissions reductions vary because of differing opportunities buildings industry buildings industry 25 transportation cement electricity emissions reduction 25 transportation cement electricity emissions reduction GtC/yr GtC/yr Sectors in MiniCAM Transport, Refining, Electricity, Cement, Other Industry, Buildings

11 Single Sector Reductions: A Sectoral Policy Experiment If only one sector sees a carbon prices, then the cost of reducing a tonne of carbon emissions rises dramatically. $30 $25 Trillion 2003 USD $20 $15 $10 From Edmonds, J., T. Wilson, M. Wise, and J. Weyant Electrification of the Economy and CO 2 Emissions Mitigation, Journal of Environmental Economics and Policy Studies. (2006) 7: [PNWD-3574]. $5 $0 Carbon Tax Elec Power only Equivalent Reduction All Sectors

12 Equal Shares : A Sectoral Policy Experiment Two CO2 stabilizations scenarios 450 ppm and 550 ppm Two Policy Regimes Full Fossil & Industrial Coverage Universal, globally common carbon tax (CCSP) Each sector reduces its emissions by an equal amount relative to 2005 Land use sector values carbon at the WRE rate in both policy regimes.

13 Equal Shares : Anthropogenic CO2 Emissions and Concentrations Referenc e Referenc e 700 CCSP 550 CCSP 550 CCSP CCSP GtC/yr GtC/yr

14 Equal Shares : Emissions by Sector Reductions Relative to 2005 Reductions Relative to Ref 100% 100% 450 ppm 90% 80% 70% 60% 50% 40% 30% electricity transportation industry building cement average 90% 80% 70% 60% 50% 40% 30% electricity transportation industry building cement average 20% 20% 10% 10% 0% 0% % 100% 550 ppm 80% 60% 40% 20% 0% electricity transportation industry building cement average 80% 60% 40% 20% 0% electricity transportation industry building cement average -20% % % -40% -60% -60%

15 Equal Shares = Unequal Marginal Costs 450 ppm 550 ppm $1,200 $1,000 Electricity Transportation Industry Cement Buildings CCSP 450 $1,200 $1,000 Electricity Transportation Industry Cement Buildings CCSP USD per ton C $800 $600 $ USD per ton C $800 $600 $400 $200 $200 $0 $

16 Equal Shares = Higher Total Costs Present Discounted Costs Trillion 2000 USD CCSP 450 Equal Shares 450 PPM CO2 Concentration

17 Land Use and Sectoral Policy Approaches

18 The Importance of Terrestrial Carbon 6,000 Land use emissions reduction by valuing terrestrial carbon (cumulative 2005 to 2095) 550 ppm 125 PgC 500 ppm 170 PgC 450 ppm 210 PgC TgC/yr 5,000 4,000 3,000 2,000 1, ,000-2, Land Use Change Emissions FirstBest_CCS_450 Reference 450 NoLUCO2 Price No Terrestrial Carbon Price Pricing Terrestrial Carbon

19 The Importance of Terrestrial Carbon Valuing all carbon, including terrestrial carbon Dramatically reduces the price of carbon Reduces the long-term role of bioenergy 2005 Constant USD/tC $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 UCT 550 UCT 500 UCT 450 Reference 550 FFICT 500 FFICT 450 FFICT Universal Carbon Tax Fossil Fuel and Industrial Carbon Tax $500 $

20 International Participation and Climate Policy

21 Three Scenarios of Delayed Participation USA Australia & NZ Canada W. Europe E. Europe Japan FSU NA1 NA1 1st 1st Group Enters USA USA USA USA USA Australia & NZ Australia & NZ Australia & NZ Australia & NZ Australia & NZ Canada Canada Canada Canada Canada W. Europe W. Europe W. Europe W. Europe W. Europe E. Europe E. Europe E. Europe E. Europe E. Europe Japan Japan Japan Japan Japan FSU FSU FSU FSU FSU Korea Korea Korea Korea Korea China China China China China Latin America Latin America Latin America Latin America Latin America Mideast Mideast Mideast Mideast Mideast Other SE Asia Other SE Asia Other SE Asia Other SE Asia India India India India Africa Africa Africa

22 Three Scenarios of Delayed Participation USA USA USA USA USA USA Australia & NZ Australia & NZ Australia & NZ Australia & NZ Australia & NZ Australia & NZ Canada Canada Canada Canada Canada Canada W. Europe W. Europe W. Europe W. Europe W. Europe W. Europe E. Europe E. Europe E. Europe E. Europe E. Europe E. Europe Japan Japan Japan Japan Japan Japan FSU FSU FSU FSU FSU FSU Korea Korea Korea Korea China China China China Latin America Latin America Latin America Latin America Mideast Mideast Mideast Mideast Other SE Asia Other SE Asia Other SE Asia India India India Africa Africa NA1 NA1 1st 1st Group Enters

23 Three Scenarios of Delayed Participation USA USA USA USA USA USA Australia & NZ Australia & NZ Australia & NZ Australia & NZ Australia & NZ Australia & NZ Canada Canada Canada Canada Canada Canada W. Europe W. Europe W. Europe W. Europe W. Europe W. Europe E. Europe E. Europe E. Europe E. Europe E. Europe E. Europe Japan Japan Japan Japan Japan Japan FSU FSU FSU FSU FSU FSU Korea Korea Korea China China China Latin America Latin America Latin America Mideast Mideast Mideast Other SE Asia Other SE Asia India India Africa NA1 NA1 1st 1st Group Enters Note that that India comes in in one one period after after China

24 International participation has can have dramatic implications for global cost. Year 2020 Annex I emissions mitigation, relative to 2005, for different accession assumptions: 450 ppm 100% 90% 80% 70% 60% 50% 40% Set 1: 450 ppm Set 3: 1st Accession Set 3: 1st Accession Set 3: 1st Accession Not Possible Not Possible 30% 20% 10% 0%

25 The Interactions between Delay and International Participation Land Use in Three Regions: 550 CO2-e (Kyoto Gases) with Overshoot to 2100 BRICs Group ROW 13.7 W/m2 Overshoot Immediate Accession 100% UnmanagedLand 90% UnmanagedForest 80% Forest biomass 70% PastureLand 60% Wheat 50% SugarCrop Rice Rice 40% OtherGrain 30% OilCrop MiscCrop 20% FodderCrop 10% FiberCrop FiberCrop 0% Corn 0% Corn BRICs ROW Group W/m2 3.7 W/m2 Overshoot Overshoot Delayed Delayed Accession 100% UnmanagedLand 90% UnmanagedForest 80% Forest biomass 70% PastureLand 60% Wheat 50% SugarCrop Rice 40% OtherGrain 30% OilCrop MiscCrop 20% FodderCrop 10% FiberCrop 0% Corn Pricing carbon in in land land substantially lowers the the costs of of mitigation. Limited sectoral coverage can can have adverse economic and and physical effects Draft Results

26 Discussion