Coupling bottom-up & top-down models for simulations of international energy policy GEMINI-E3 and TIMES within the TOCSIN FP7 project 1
Outline The TOCSIN project The models GEMINI-E3 TIMES Harmonization of the models Coupling the models 2
TOCSIN objectives To provide a detailed description of the available energy/technology options that might significantly reduce GHG emissions in China and India and their relative costs in comparison with EU and other OECD members 3
TOCSIN objectives (2) To define the possible self-enforcing international agreements on GHG emission abatement, taking into account their economic impacts as well as the possible gains of multilateral and bilateral collaborations, CDM and IET in order to stimulate RD&D cooperation and technology transfers toward China and India 4
TOCSIN objectives (3) To enhance capacity for modeling activities in China and India. Researchers from China and India who joined this project will benefit from high level scientific cooperation with leading European researchers and will develop databases and models for China and India that will be fully compatible with the most recent developments in EU and America 5
6 GEMINI-E3
GEMINI-E3 main features World computable general equilibrium model Total price flexibility Detailed representation of indirect taxation Measure of welfare cost of policies and components Database : GTAP 6 7
GEMINI-E3 dynamics GEMINI-E3 is a recursive CGE 4 elements of dynamics Capital accumulation Population growth Technical progress Resources depletion 8
GEMINI-E3 regions 14 regions Name GEMINI-E3 Regional Description EUR XEU FSU USA CAN AUZ JAP MEX CHI IND ASI LAT MID AFR Countries European Union (25) Other European Countries Former Soviet Union (except Baltic States) United States of America Canada Australia and New Zealand Japan Mexico China India Rest of Asia Central and Latin America Middle East Africa 9
GEMINI-E3 sectors 10
GEMINI-E3 Production Function 11
GEMINI-E3 Households Exogenous labor supply Stone-Geary specification of utility direct calculation of households surplus Energy price elasticity» -0.6 12
GEMINI-E3 Government Government budget Detailed representation of indirect taxation - final consumption - factors of production (labor, capital, inter. cons.) - imports and exports - production necessary in order to take into account fiscal distortions 13
GEMINI-E3 World trade Armington assumption Trade closure Trade balanced through exchange rate 14
GEMINI-E3 Inputs Social Accounting Matrixes (SAM) by region for the base year Population growth Fossil fuel energy prices Technical progress 15
GEMINI-E3 outputs Production sector (inputs, prices) Consumption side (values, prices) External trades (import/export) Household welfare GHGs emissions (CO 2, CH 4, N 2 O, Fluos) Carbon taxes/permit prices 16
17 TIMES
TIMES main features Successor of the MARKAL model Linear Programming model Local, national or multi-regional energy systems Inter-temporal optimization representing partial equilibrium Technology rich 18
TIMES Reference Energy System 19
TIMES inputs The demand components of a TIMES scenario future demand in useful energy driven by economy drivers or experts projections The supply components of a TIMES scenario set of supply curves for primary energy and material resources - trading possibilities The policy components of a TIMES scenario emission reductions or taxes. micro measures (e.g. technology portfolios, or targeted subsidies to groups of technologies) broader policy targets (such as general carbon tax, or permit trading system on air contaminants) The techno-economic components of a TIMES scenario set of technical and economic parameters assumed for the transformation of primary resources into energy services 20
TIMES outputs PRIMAL SOLUTION A set of investments in all technologies; The operating levels of all technologies; The imports and exports of each type of tradable energy forms and materials; The extraction levels of each primary energy form and material; The flows of each commodity into and out of each technology; The emissions of each substance by each technology, sector, and total; DUAL SOLUTION In addition, the dual solution of the Linear Program provides: The shadow price of each commodity present in the RES (energy form, demand, emission, material); The reduced cost of each technology in the RES, i.e. the required cost reduction to make that technology competitive. (RES=Reference Energy System) 21
22 Harmonizing the models Similar baselines
Phase I: soft coupling Exogenous assumptions: - World Population (UN2004) - Technical progress (labor) 1. GEMINI-E3 2. GDP Growth TIMES 3. and iterate until convergence Energy prices 23
Phase 2: data comparison Energy final demands GHGs emissions 18000 16000 14000 12000 10000 8000 6000 World Carbon Emissions in Mtc 2001 2010 2030 2050 TIMES GEMINI-E3 24
Data comparison (2) US Carbon Emissions in Mtc 3100 2900 2700 2500 2300 2100 1900 1700 1500 6000 5000 4000 3000 2000 1000 0 2001 2010 2030 2050 China Carbon Emission in Mtc 2001 2010 2030 2050 TIMES GEMINI-E3 1600 1400 1200 1000 800 600 400 200 0 Emissions are pretty close! India Carbon Emissions in Mtc 2001 2010 2030 2050 25
Coupling the models 26
Coupling framework GEMINI-E3 End-use demands changes Fuel mixes Energy prices Technical progress TIMES 27
Coupling regions We use TIMES regions (fewer regions) 28
Mapping between the 2 models GEMINI-E3 Energy sectors TIMES Commodities Non-energy sectors Households TIMES End-use demands Households: the residential sector and part of transport sector Dwellings: not connected (no energy) 29
30 -> Coupling sets
Definitions Express the models as functions TIMES is T(D) GEMINI-E3 is G(P,F,θ) 31
32 Algorithm
GEMINI-E3 changes Same production sectors Integrating fuel mixes The CES functions for fossil energy mix and energy mix become Leontief functions, with shares provided by TIMES Energy consumption (tep) is converted into monetary equivalents, with spending shares provided by TIMES 33
GEMINI-E3 changes (2) Coefficient of multiplicative technical progress for energy θ e computed by TIMES runs Re-calibration of the CES functions for the aggregated inputs reflecting the changes in spending on energy: compensation through adjustment of labor remuneration in order to maintain value of production constant Replace CES functions for fossil fuel production sectors by Leontief functions with prices and input shares provided by TIMES: compensation through adjustment in remuneration of fixed factor 34
GEMINI-E3 changes (3) Households sector is now a CES function 35
TIMES changes Re-projection of end-use demands Detailed commodity uses are summed into the energy commodities needed by GEMINI-E3, for the common definition of the sectors Corresponding fuel mix shares are computed and transferred to GEMINI-E3 Energy efficiency is computed as ratio production / consumption Technical progress is ratio of current energy efficiency to base year value: θ e transferred to GEMINI-E3 36
37 Work in progress!