OPERATIONS RESEARCH AND ENVIRONMENTAL MANAGEMENT

Transcription

1 OPERATIONS RESEARCH AND ENVIRONMENTAL MANAGEMENT

2 FONDAZIONE ENI ENRICO MATTEI (FEEM) SERIES ON ECONOMICS, ENERGY AND ENVIRONMENT This series serves as an outlet for the main results offeem's research programmes in the areas of economics, energy and environment. The Scientific Advisory Board of the series is composed as follows: Kenneth J. Arrow Department of Economics, Stanford University, Stanford, California, USA William J. Baumol C.V. Starr Center for Applied Economics, New York University, New York City, USA Partha Dasgupta Cambridge University, Cambridge, United Kingdom Siro Lombardini University of Turin, Turin, Italy Karl-Goran Maler The Beijer Institute, Stockholm, Sweden Ignazio Musu University of Venice, Venice, Italy James M. Poterba Department of Economics, Massachusetts Institute of Technology, Cambridge, Massachusetts, USA Domenico Siniscalco (Series Editor) Director, Fondazione Eni Enrico Mattei, Milan, Italy and University of Turin, Turin, Italy Giorgio Barba Navaretti (Series Associate Editor) Fondazione Eni Enrico Mattei and University of Milan, Milan, Italy The titles published in this series are listed at the end of this volume.

3 Operations Research and Environmental Management Edited by: CARLO CARRARa University of Venice, Greta and Fondazione Eni Enrico Mattei, Milan, Italy and ALAIN HAURIE Universite de Geneve, Switzerland Kluwer Academic Publishers Dordrecht / Boston / London

4 Library of Congress Cataloging-in-Publication Data Operations research and environmental management / edited by Carlo Carrara and Alain Hauri. p. cm. -- (Economics. energy. and environment) ISBN (HB : printed on acid free paper) 1. Energy policy--mathematical models--congresses. 2. Regional planning--mathematical models--congresses. 3. Operations research -Congresses. I. Carrara. Carlo. II. Hauri. Alain. III. Series. HD9502.A dc ISBN-13: e-isbn-13: DOl: / Published by Kluwer Academic Publishers, P.O. Box 17, 3300 AA Dordrecht, The Netherlands. Kluwer Academic Publishers incorporates the publishing programmes of D. Reidel, Martinus Nijhoff, Dr W. Junk and MTP Press. Sold and distributed in the U.S.A. and Canada by Kluwer Academic Publishers, 101 Philip Drive, Norwell, MA 02061, U.S.A. In all other countries, sold and distributed by Kluwer Academic Publishers Group, P.O. Box 322,3300 AH Dordrecht, The Netherlands. Printed on acid-free paper All Rights Reserved 1996 Kluwer Academic Publishers Softcover reprint of the hardcover I st edition 1986 No part of the material protected by this copyright notice may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, without written permission from the copyright owner.

5 Table of contents PREFACE Domenico Siniscalco INTRODUCTION Carlo Carraro and Alain Haurie vii ix Part One - Regional Environmental Policies 1. COMMUNITY-BASED REGIONAL ENERGY ENVIRONMENTAL PLANNING A. losefsson, l. lohnsson and C.-D. Wene 2. REGIONAL DEMANDS FOR REFINED BIO-FUELS: USING MARKAL FOR REGIONAL STUDIES utf Boman and Maria Rosell 3. MARKAL-GENEVA: A MODEL TO ASSESS ENERGY ENVIRONMENT CHOICES FOR A SWISS CANTON E. Fragniere and A. Haurie 4. ENERGY MASTER PLAN FOR A COMMUNITY: A CASE STUDY OF "GIS/ECONOMIC" ANALYSIS B. Saugy, D. Graf and B.G. Diirr Part Two - Global Environmental Policies 5. UNCERTAINTY ANALYSIS OF A GREENHOUSE EFFECT MODEL lerzy A. Filar and Radoslaw Zapert 101

6 VI Table of contents 6. A DECOMPOSITION APPROACH TO MULTIREGIONAL ENVIRONMENTAL PLANNING: A NUMERICAL STUDY O. Bahn, A. Haurie, S. Kypreos, f.-p. Vial 7. ALLOCATION OF CARBON TAX REVENUES TO NATIONAL AND INTERNATIONAL MITIGATION OPTIONS S. Kypreos Part Three - Tools for Energy Planning and Environmental Management 8. MESAP-III: AN INFORMATION AND DECISION SUPPORT SYSTEM FOR ENERGY AND ENVIRONMENTAL PLANNING Christoph Schlenzig and Albrecht Reuter 9. MARKAL MODEL WITH ELASTIC DEMANDS: APPLICATION TO GREENHOUSE GAS EMISSION CONTROL Richard Loulou and Denis Lavigne 10. HAZARDOUS MATERIALS LOGISTICS: AN ANNOTATED BIBLIOGRAPHY Vedat Verter and Erhan Erkut

7 Preface The activities of the Fondazione ENI Enrico Mattei cover a broad spectrum of research topics, ranging from economics to engineering, from environmental management at the industry or regional level to basic mathematical modelling research. It is the combination of the activities on these last two topics that led the Fondazione to organise, with the University of Geneva, a workshop where operation research tools were designed with the aim to provide national and local policy makers with appropriate analytical and policy instruments for environmental management. In the recent past, attention has often been devoted to global environmental issues in which the level of policy making is either international, through multi-country agreements on emission control, or national, when environmental policies are designed to control domestic pollution. Many environmental problems, however, have a local or regional dimension. Even when their dimension is global, e.g. in the case of the greenhouse gas effect, relevant decisions on emission control, such as the adoption of energy saving utilities, are taken at the local level. In many countries, the current legislation imposes the local authorities to prepare plans and adopt measures to control energy consumption or to reduce waste of natural resources. It is therefore important to analyze the way in which local or regional authorities optimise their environmental management. The main objective of the book is to provide examples of such management activities, by looking at cases in which modern analytical tools have been used to help local and regional policy makers to adopt appropriate environmental policies. Operations Research has certainly contributed to developing models and techniques for environmental management. As shown in this book, these models and techniques have actually been used in many practical situations. In particular, the book emphasises different cases in which MARKAL, an Operations Research model for energy planning, has been used to make policy decisions by regional and local policy makers. Other tools are proposed too: from models for the management of hazardous wastes to geographical integrated systems to control polluting emissions. This book therefore contains useful information both on methods and

8 viii Preface techniques and on their concrete applications. Hence, it can stimulate further academic research and, more importantly, it can improve energy and environmental policy making and resource management. Domenico Siniscalco Series Editor Milano, July 1995

9 Introduction This book contains a selection of papers presented at the International W orkshop on Operations Research and Environmental Management, held in Geneva, on November 10-12, Environmental management is a new challenge faced by private and public organizations. The contribution of Operations Research to environmental management is important, as illustrated in the different papers collected in this book. For example, Operations Research tools have been used to determine the optimal site location for unwanted facilities, to implement a systems analysis approach in energy planning under global environmental constraints, to compute economic equilibria with emission taxes or tradable emission rights, and in general in many instances of production planning under environmental constraints. A particularly successful application of Operations Research techniques in the analysis of global environmental management issue has been fostered by the ETSAP (Energy Technology Systems Analysis Program) committee of the International Energy Agency, (lea). Several teams representing 15 countries have developed large scale mathematical programming models to analyze energy policies, perform technology assessment and deal with global environmental issues. Advanced developments, including the coupling of energy models with macroeconomic models, multi-region models, uncertainty and risk management; are currently taking place in several research groups in different parts of the world. The papers selected in this book give a broad perspective on recent contributions of Operations Research to the field of environmental management. Two criteria have guided us in the construction of this book. First, we shall move from local, to regional and global environmental issues. In the first Part of the book, devoted to local and regional environmental policies, four papers deal with Operation Research modelling at the level of urban communities or cantons. These papers are based on recent developments made in Sweden and Switzerland (Geneva canton), concerning energy planning and environmental protection in relatively small communities. The second Part of the book addresses environmental management problems at the national and international level. Three papers deal with greenhouse gas (in particular CO 2) emission control problem. The simulation

10 x Introduction approach, the policy coordination among nations and the economics of mitigation options are discussed in these papers. The second criterion is methodological. We shall move from applications, to more theoretical analyses, and conclude with the presentation of Operation Research tools designed to solve specific environmental management problems. In particular, the third Part of the book presents a decision support system for environmental management, an extended version of the MAR KAL model (this model is extensively used in the first two parts of the book) and an annotated bibliography of the hazardous materials logistics literature. As previously stated, the first Part of the book is devoted to applications of Operation Research tools, in particular the MARKAL model and Geographic Information Systems, to the solution of local and regional environmental problems. The first paper, "Community-based Regional Energy/ Environmental Planning" by A. 10sefsson, 1. 10hnsson and C.O. Wene, begins by observing that large scale optimization models such as MARKAL, have proved to be useful tools for energy-environmental planning in larger communities. However, considerable manpower and expertise are necessary to set up and evaluate the results of such models. Using experience from the optimization models, it should be possible to design accounting models for use in smaller communities. Therefore, the purpose of the paper is twofold: firstly, to develop an energy systems engineering model to be used by local energy planners in smaller communities, and secondly, to use this tool to identify possible areas of co-operation between communities within regions. The project is carried out in a real planning situation in close co-operation with the communities in Skaraborg county. Skaraborg consists of 17 communities, ranging in population from 6,000 to 50,000. The paper describes the methodology behind the planning process and how the computer model is designed to fit into this process. Some preliminary results are also presented from the study of the 17 communities in the country. A similar approach is followed by VIf Boman and Maria Rossel in their "Regional Demands for Refined Bio-fuels using MARKAL for Regional Studies". This paper compares studies that have been undertaken to investigate the energy systems in two Swedish regions, the Skaraborg county and the Malar valley (the region around lake MaIaren). The investigations focused on the possibilities of fuel based on biomass, and in particular combined heat and power (CHP) and residential and commercial heating. Both regions contain a number of district heating systems. Individual heating facilities are thus needed. Today this heat is produced mainly from oil and electricity. The MARKAL model, a demand driven, dynamic LP-model of the technical energy system, is used in both cases. The studies span over a 25-year period, and include several scenarios to deal with different developments in fuel and electricity prices, supply of fuels, costs for refinement and conversion, etc. The studies were performed as part of Vattenfall's R&D program, the Bioenergy Program. Typically, in a regional situation, all primary energy, including electricity,

11 Introduction xi is imported to the regions. No base load electricity is produced within the regions. The supplies and prices of fuels and electricity are given exogenously. The results from the studies show that with new technology for individual heating, a great deal of the demand can be satisfied by refined biomass such as pulverized wood or pellets. This is due to a price increase in both fossil fuels and electricity and to the fact that there is no tax on bio-mass. Depending on the assumed price development of electricity, CHP will not be competitive until after the turn of the century, and then primarily based on natural gas. The prospect for bio-fuels in CHP is highly dependent on the price difference with fossil fuels and on political management. This paper also confirms the possibility of using the MARKAL-model for regional studies. The methodology includes working in close co-operation with a reference group (e.g. representatives from the regional energy system). Without such a reference group, the validity of the output data will suffer and the acceptance and understanding of the results would be poor. A third application of MARKAL for regional environmental management is provided by "MARKAL-Geneva: A Model to Assess Energy-Environment Choices for a Swiss Canton" written by E. Fragniere and A. Haurie. MARK AL-Geneva is a systems analysis model of energy and environment technology assessment for the "Canton de Geneve", in Switzerland. Modelling the energy system at a regional level is relevant for Switzerland since each canton has responsibilities for a great part, in the local energy policy. The situation is similar to Sweden where energy models for urban communities have already been built, as shown by the previous two papers, using MARKAL as the background modelling framework. The MARKAL-Geneva model complements the national version of MARKAL developed at PSI-Villigen. It innovates, in comparison with the Swedish community models, by taking into account (through integer programming techniques) the uncertainties characterizing the scenarios. The scenario presented in the paper focuses on the evaluation of efficient CO2 abatement policies. A different technique is proposed in the paper that concludes the first Part of the book. In "Energy Master Plan for a Community" by B. Saugy, O. Graf, and B.G. Durr, an application of a GIS (Geographic Information System) is presented. In 1989, the municipality of Lutry decided to study the energy supply of the community, in particular, how to secure the district heating of Vieux Bourg. Federal energy stop measures were introduced with the intention of stabilizing the import of energy, and to limit the emissions of pollutants in the environment. In this context, the reintroduction of natural gas in Lutry was considered. The municipality asked itself a number of questions. Should they authorize or prohibit electric heating with low initial investment cost for special circumstances, and for the existing buildings in Bourg, i.e. where the construction of hot water heaters will be expensive and penalizing? Should gas be reintroduced to offer an alternative to oil heating? Should heat pumps be encouraged? What results could be achieved through changing tariffs? The final

12 xii Introduction choice is a political one that must be taken by the authorities. However, this choice must be based on an energy master plan that highlights the possible options, their cost and how they can be implemented. With respect to the priorities of the community, these must be the projects that yield the highest effectiveness in dealing with energy and environmental protection. The development of the Energy Master Plan was conducted using the HyperBird Geographic Information System. The paper shows how a comprehensive plan with several alternatives can be developed quickly and economically using an advanced information management tool. The second Part of the book is more theoretical and deals extensively with global warming issues. In the first paper, "Uncertainty Analysis of a Greenhouse Effect Model", Jerzy A. Filar and Radoslaw Zapert investigate variability and uncertainty of predictions of an integrated Greenhouse Effect model formulated as a stochastic, controlled dynamical system. The model is based on the Dutch Greenhouse Effect model, IMAGE (version 1991). The authors analyze the uncertainty of the model's predictions under the assumption that it is subject to random disturbances, and that the initial state is estimated with error. In the analysis, they use the theory of dynamic systems and stochastic differential equations. This analysis enables them to explicitly compute the approximate distribution function of most of the important environmental variables present in the model. As a consequence, they can also calculate confidence intervals for these variables. The paper claims that in addition to being able to fit historical data, another criterion should be taken into consideration when assessing quality of environmental models. This criterion should capture the rate at which the model magnifies uncertainty caused by noisy environment and measurement errors. In "A Decomposition Approach to Multi-regional Environmental Planning: A Numerical Study", O. Bahn, A. Haurie, S. Kypreos, and J.-P. Vial study the problem of curbing regional or global pollutant emissions using a multi-regional MARKAL model. The paper presents a numerical study of the cooperation of three European countries for jointly curbing their emissions. The multi-regional MARKAL model is solved using the decomposition algorithm ACCPM and a numerical evaluation of ACCPM performances is also provided. The second part of the volume is concluded by "Allocation of Carbon Tax Revenues and International Mitigation Options" written by S. Kypreos. This paper reviews the main Swiss results related to CO2 mitigation options and presents them in comparison with other international studies. By putting the Swiss results in an international perspective, it is possible to understand the difficulty in persuading the public to accept these tax levels. Therefore, three options are discussed that reduce taxes to acceptable levels. The following conclusions can be derived from the paper's quantitative results: - an allocation of investment between CO 2 and other greenhouse gases (GHSs) is a more efficient control policy for mitigating global warming than concentrating on the CO2 alone;

13 Introduction xiii - at the national level, an appropriate policy-mix should introduce taxes and compensation payments to technologies that mitigate GHG emissions; - international cooperation in curbing CO 2 emissions is one of the most effective policies. These conclusions are illustrated by an assessment of cooperation between Switzerland and other OECD countries. The last Part of the book proposes some Operation Research Tools to deal with specific environmental problems. The role of energy planning and environmental management is gaining more and more importance in a world facing increasing environmental degradation, a fast growing population, and rising energy consumption. Decisions in this field are characterized by the long lived consequences, the uncertainty of the future evolution of economic, technological and environmental parameters entering the analysis and a multi-criterion's evaluation of the alternatives. The increasing complexity of energy and environmental problems has not only changed the goals and objective of the analysis, but also created the need for new methodologies and tools. In "MESAP-III: An Information and Decision Support System for Energy and Environmental Planning", Christoph Schlenzig and Albrecht Reuter describe the tendencies in energy planning and environmental management and propose a new conceptual design for energy and environmental planning tools. The emphasis is on the building and maintenance of an information system feeding a MARKAL model. In "MARKAL Model with Elastic Demands: Application to Greenhouse Gas Emission Control", Richard Loulou and Denis Lavigne present an extension of the MARKAL energy model in which the demands for energy services are elastic to their own prices. This is an important contribution that bridges the gap between top-down and bottom-up analyses. The consideration of price-elastic useful demands is made necessary in bottom-up models when the magnitude of the emission taxes considered (for example a carbon content tax) is such that it is impossible to assume that the demand for economic service would not be modified. The approach proposed in this paper extends the classical partial economic equilibrium computation technique introduced in the PIES model in the late seventies. The interesting aspect of the method is that it remains within the reach of linear programming and therefore, can be applied to detailed, large scale models. Finally, in "Hazardous Materials Logistics: An Annotated Bibliography", Vedat Verter and Erhan Erkut discuss recent contributions of Operation Research to the management of hazardous material logistics and compare different tools proposed in the literature. The contributions collected in this book span only a small sector of the possible applications of Operations Research techniques to environmental management and resource or energy planning. However, we believe that the issues analyzed in this book, in particular the emphasis put on local and regional environmental management, and on the necessity to deal with the

14 xiv Introduction uncertainty intrinsically related to environmental problems, constitute some of the major avenues of development of theoretical and applied research in environmental management. We hope that this volume will provide stimulus for more research and further developments in methods and tools to deal with the challenge of designing a better environment at regional, national, and global levels. Finally, we would like to acknowledge the financial participation of the "Office Cantonal de l'energie", and the support from the "Troisieme Cycle Romand de Recherche Operationnelle", the Faculty of Social Sciences and Economics of the University of Geneva and the International Academy of the Environment (Conches, CH), which permitted the organization of the conference where these papers where originally presented. Carlo Carraro Alain Haurie