Kuei-Feng Chang. Jin-Xu Lin. Shih-Mo Lin. Yen-Heng Chen. Chung Yuan Christian University. Chung Yuan Christian University

Transcription

1 Jin-Xu Lin Chung Yuan Christian University Shih-Mo Lin Chung Yuan Christian University Kuei-Feng Chang Chung Yuan Christian University Yen-Heng Chen Massuchusas Institute of Technology 40 th Annual IAEE International Conference

2 Introduction Background Model specification Baseline settings & simulation results Policy settings & simulation results Conclusion 2

3 The National Congress of China passed its 13th Five-Year Plan in 2016, in which social and economic roadmap including climate change issues are identified. The Five-Year Plan paves ways for green development and sets specific agendas to promote clean energy and reduce carbon emissions. China s INDC has promised to reduce the rate of growth of CO 2 emissions in order that the peak of CO 2 emissions would be reached around

4 Taiwan government passed the Greenhouse Gas Emission Reduction and Management Act in 2015, which offers a legal basis for a series of response measures to climate change in Taiwan. A long-term CO 2 emission reduction target in 2050, as well as periodic five-year reduction targets shall be met with the introduction of various policy measures and economic incentives. Taiwan has long and close economic ties with China over the past decades. 4

5 Source: WIOD (2016), Compiled by the authors. 5

6 Source: WIOD (2016), Compiled by the authors. 6

7 Source: WIOD (2016), Compiled by the authors. 7

8 The climate policies of both economies which set differential future carbon emission trajectories should have different effects to the economy of Taiwan. The aim of this paper is to examine the potential economic responses of Taiwan facing different carbon emission trajectories in both China and Taiwan. 8

9 Source: Bureau of Energy, Ministry of Economic Affairs, R.O.C.. 9 9

10 Source: Bureau of Energy, Ministry of Economic Affairs, R.O.C.. 10

11 Model Institution Model Feature Description EPPA MIT Multi-national dynamic CGE WEM IEA Multi-national energy economic model NEMS EIA Energy-economy modeling system of U.S AIM NIES Dynamic CGE model with 17 Asia-Pacific regions GTAP-E IEEJ An Energy- Environmental Version of the GTAP Model Dynamic CGE model with detailed energy & electricity sectors setting. Analyze the emission of green house gas issues. Exogenous economic growth, population, technology development, electricity demand, electricity price. Forecast the energy demand and energy supply, CO 2 emissions Projects the production, imports, conversion, consumption, and prices of energy, subject to assumptions on macroeconomic and financial factors, world energy markets, resource availability and costs... Evaluate the environmental policies with simulating the future situation of economy energy and environment in Asia-Pacific region A dynamic multi-regional 3E CGE model based on GTAP model which is with detailed trade data. Assess the effects of alternative climate change policies on economic and carbon emissions. 11

12 Model Institution Model Feature Description TAIGEM-III Taiwan Research Institute Single-country dynamic CGE A ORANI type dynamic CGE model with Taiwan s industrial structure, technology level, policy targets and social desirability, which is the first 3E dynamic CGE model in Taiwan. TaiSEND Taiwan Research Institute Single-country dynamic CGE model A dynamic computable general equilibrium (CGE) model which features several mechanisms that describe investment behaviors, retirement of electricity generation technologies, social costs originating from electricity shortages and unemployment. GEMEET Institute of Nuclear Energy Research Single-country dynamic CGE model A ORANI type dynamic CGE model with detailed specification of renewable energy technologies and sectors, taking into account the learning effect especially for new and renewable energy sectors, and specifying functions that link cumulative production and R&D investment with total factor productivity. 12

13 A dynamic multi-regional CGE model with detailed energy and electricity settings Data source: GTAP 8 Features in the Model o Refer to the EPPA 6 model which was developed by MIT o Based on the Social Accounting Matrix (SAM) of GTAP o 3 regions, including Taiwan, China, and ROW (rest of the world) o Including different renewable energy technologies and the detailed specification of power generation with different generation technologies. o Formulated and solved as a mixed complementarity problem, the advanced technologies will join the market when they become cost-effective as the economy evolves 13

14 Exogenously o Reference case GDP growth rate o Population growth o Total factor productivity growth (calibrated to match the GDP growth) o autonomous energy efficiency improvement index, AEEI o Fossil fuel endowments Endogenously o o Capital accumulation Fossil fuels depletion 14

15 Non-energy sectors Energy sectors Agriculture (crop, livestock, forest) Electricity Food Crude oil Energy intensive Refined oil Other manufacturing Coal Transportation Gas Dwelling Service Electricity Non-energy Primary inputs Energy Coal-fired Hydro Capital Oil Gas-fired Wind Labor Gas Oil-fired Solar Fire NGCC Biofuels Hydro NGCC-CCS Nuclear Nuclear IGCC-CCS Wind and solar 15

16 output Agri Energy intensity σ DM domestic service Other man transportation imported σ MM Energy input Composite Electricity σ ENOE capital-labor-energy Composite σ EVA Non-electricity Primary Factors Composite Labor σ VA Capital region:1 n σ EN Coal Oil Gas Refined oil 16

17 Electricity σ EWS Other electricity Wind & solar σ= Conventional fired power Nuclear Hydro Advanced technologies σ NGR σ NGR Coal Gas Oil Nuclear resources Primary Factors Composite Hydro resources Primary Factors Composite σ VA σ VA Labor Capital Labor Capital 17

18 Exogenous the GDP growth rage (obtained from Global Insight), then calibrate the Total Factor Productivity growth to match the GDP growth. 18

19 ,243 9,363 19

20 Global CO 2 emissions target follows the 2 C Scenario (2DS) in Energy Technology Perspectives 2017 (IEA, 2017) Met the 2DS in ETP

21 63% 83% Meet the 2DS target in ETP 2017 Meet the Greenhouse Gas Emission Reduction and Management Act s target: 50% below 2005 levels by the year % Meet the 2DS target in ETP

22 Taiwan China ROW Policy 1 V V V Policy 2 V X V Policy 3 X V V Policy 4 X X V V: Met the CO 2 emission target X: Act as reference case 22

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24 policy3 policy4 Ref. TWN CHN ROW X V V X X V X X X policy2 policy1 V X V V V V V: Met the emission target X: Act as reference case 24

25 Taiwan V P T P C Export TWN GDP TWN GDP CHN final goods Export TWN GDP TWN Export CHN intermediate goods Export TWN GDP TWN China X ROW V 2. P C P R Export CHN GDP CHN V: Met the emission target X: Act as reference case 25

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30 The climate policies of Taiwan and China which set differential future carbon emission trajectories should have different effects to the economy of Taiwan. Using a dynamic multi-regional SAM-based CGE model, we show that o o Economic growth of Taiwan will be lower if both Taiwan and China met CO 2 emission targets. On the contrary, economic growth of Taiwan will be higher than BAU if China met CO 2 emission target while Taiwan s emission levels are not binded. 30

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