Policy, Technology, and Economic Uncertainty Which matters the most for global energy system modeling? 15 th International Association for Energy Economics (IAEE) European Conference Session 6E: Energy Demand Vienna, Austria David Daniels Chief Energy Modeler, Office of Energy Analysis U.S. Energy Information Administration Independent Statistics & Analysis www.eia.gov
Answer depends on assumptions Key uncertainties affect projections of the global energy system Policy (laws and regulations), technology change, consumer choice, macro trends Model structural uncertainty, parameter uncertainty (data quality and availability) Trade-offs in handling these uncertainties can bias model results Scale of cause (national regulation) vs. scale of effect (global emissions) Interactions between region of interest and rest of world Robustness of answer to changes of input assumptions (side cases) 2
Caveats Cannot quantify uncertainty in EIA models Side case scenarios are not probabilistic Can t just compare changes from high/low macro cases to high/low resource assumption cases, for example Can show some illustrative examples that might inform the discussion U.S. Clean Power Plan (CPP) as a policy example High/Low global macro side cases High/Low U.S. oil and gas resource and technology assumptions cases Results in this presentation represent ongoing research into modeling methods and do not constitute official EIA data 3
Summary of U.S. Clean Power Plan (CPP) Regulation limiting carbon dioxide emissions from existing power plants Promulgated by Environmental Protection Agency, based on authority from Clean Air Act State-based program, each state has different emissions targets CPP implemented in NEMS as regional emissions caps State-based program but implemented as a region-based program in NEMS (22 regions) Limits begin in 2022, increase linearly until 2030 to meet average and target emissions levels No intertemporal banking/borrowing, emissions limits assumed to increase linearly Limits held constant after 2030, since the regulation is silent about post-2030 plans 4
CPP affects composition of U.S. energy consumption U.S. energy consumption quadrillion British thermal units 45 2016 projections history 40 35 30 25 20 15 10 5 CPP No CPP liquids natural gas renewables coal nuclear 0 1990 2000 2010 2020 2030 2040 2050 Source: EIA Annual Energy Outlook 2017 (Reference case with, without CPP) 5
Both of EIA s long-run energy models used in this analysis National Energy Modeling System (NEMS) U.S. model used in Annual Energy Outlook World Energy Projection System (WEPS) 16-region global model used in International Energy Outlook 6
Innovation: Linking NEMS and WEPS Generated multiple scenarios using detailed U.S. model, NEMS: NEMS Reference, with and without CPP NEMS High/Low Resource and Technology, with and without CPP NEMS High/Low Macro Growth, with and without CPP Ran NEMS results through world model, WEPS, to get global response WEPS Reference + NEMS Reference, with and without CPP WEPS Reference + NEMS High/Low Resource and Technology, with and without CPP WEPS High/Low Macro Growth + NEMS High/Low Macro Growth, with and without CPP Results should be informative, but do not represent official EIA data 7
CPP impacts projections of world emissions by about 1% energy-related carbon dioxide emissions billion metric tons of carbon dioxide 2015 45 40 world 35 30 25 20 No CPP CPP 15 10 5 U.S. 0 1990 2000 2010 2020 2030 2040 2050 Source: EIA WEPS runs 2017.05.22_160052 (Reference), 2017.05.22_160120 (nocpp) 8
CPP also has emissions implications outside the U.S. change in energy-related carbon dioxide emissions from removal of CPP billion metric tons of carbon dioxide 2015 0,8 0,6 0,4 0,2 U.S. world 0,0 1990-0,2 2000 2010 2020 2030 2040 2050 non-u.s. -0,4-0,6-0,8 Source: EIA WEPS runs 2017.05.22_160052 (Reference), 2017.05.22_160120 (nocpp) 9
Side cases impact emissions by up to 8% per year in the U.S. by 2050 U.S. energy-related carbon dioxide emissions with CPP billion metric tons of carbon dioxide 2016 7,0 6,0 5,0 4,0 3,0 2,0 1,0 0,0 1990 2000 2010 2020 2030 2040 2050 Source: EIA, AEO2017 high high U.S. reference low U.S. low 10
Side case emissions trajectories differ non-trivially from reference U.S. energy-related carbon dioxide emissions, difference from Reference, CPP included billion metric tons of carbon dioxide 2016 0,8 0,6 0,4 high 0,2 0,0 1990 2000 2010 2020 2030 2040 2050-0,2 high U.S. low U.S. -0,4-0,6 low Source: EIA, AEO2017 11
Side case impacts can be large at the world scale world energy-related carbon dioxide emissions, difference from Reference, CPP included billion metric tons of carbon dioxide 2015 5,0 4,0 3,0 2,0 1,0 high U.S. 0,0 1990 2000 2010 2020 2030 2040 2050 low U.S. -1,0-2,0-3,0-4,0-5,0 high low Source: EIA, WEPS runs with CPP: 2017.05.22_160052 (Reference), 2017.0606_103604 (High Macro), 2017.0606_103614 (Low Macro), 2017.0607_165905 (High Resource), 2017.0607_165913 (Low Resource) 12
Side cases impact emissions in the U.S. differently without CPP U.S. energy-related carbon dioxide emissions, change from Reference, no CPP billion metric tons of carbon dioxide 2016 0,8 0,6 0,4 high 0,2 high U.S. 0,0 1990 2000 2010 2020 2030 2040 2050-0,2 low U.S. -0,4-0,6 low Source: EIA, WEPS runs without CPP: 2017.0522_160120 (Reference), 2017.0606_103607 (High Macro), 2017.0606_103620 (Low Macro), 2017.0607_135603 (Low Resource), 2017.0607_135552 (High Resource) 13
World emissions increase due to removal of CPP depends on case change in world energy-related carbon dioxide emissions from removal of CPP billion metric tons of carbon dioxide 2015 0,8 0,6 high 0,4 reference 0,2 high U.S. low 0,0 1990 2000 2010 2020 2030 2040 2050-0,2 low U.S. -0,4-0,6 Source: EIA, WEPS runs with CPP: 2017.05.22_160052 (Reference), 2017.0606_103604 (High Macro), 2017.0606_103614 (Low Macro), 2017.0607_165905 (High Resource), 2017.0607_165913 (Low Resource); WEPS runs without CPP: 2017.0522_160120 (Reference), 2017.0606_103607 (High Macro), 2017.0606_103620 (Low Macro), 2017.0607_135603 (High Resource), 2017.0607_135552 (Low Resource) 14
Three takeaways for evaluating national policy scenarios 1. Consider geographic scales of policy and impact Laws are national, carbon dioxide emissions are measured globally Some policies may have impacts at multiple scales 2. Account for impacts beyond the region of interest How does the policy impact trade with other countries? How does it impact activity both within and outside the region of interest? 3. Check policy impacts across side cases as well as reference The same policy changes can have different impacts in different projection scenarios Robustness checking policy impacts across alternate side cases is important 15
Backup slides 16
Who is EIA? Independent statistical agency Backup Part of USG (DOE) Independent both by statute and by tradition Policy neutral, but not policy irrelevant Collect and disseminate official energy data for U.S. Also, produce forward-looking outlooks to inform policy, inter alia Short-Term Energy Outlook (STEO): monthly forecast, U.S. only, 13-24 months Annual Energy Outlook (AEO): annual projection, U.S. only, 25-35 years International Energy Outlook (IEO): annual projection, world, 25-35 years 17
Removal of CPP impacts projections of U.S. energy consumption U.S. energy consumption quadrillion British thermal units 45 2015 projections history Backup 40 35 30 25 20 15 10 5 CPP No CPP liquids natural gas renewables coal nuclear 0 1990 2000 2010 2020 2030 2040 2050 Source: EIA WEPS runs 2017.05.22_160052 (Reference), 2017.05.22_160120 (nocpp) 18
Side cases impact emissions in the U.S. without CPP U.S. energy-related carbon dioxide emissions, no CPP billion metric tons of carbon dioxide 2016 7,0 6,0 5,0 4,0 3,0 Backup high reference high U.S. low U.S. low 2,0 1,0 0,0 1990 2000 2010 2020 2030 2040 2050 Source: EIA, NEMS runs without CPP: (Reference),etc. 19
Side cases impact world emissions without CPP world energy-related carbon dioxide emissions, change from Reference, no CPP billion metric tons of carbon dioxide 2015 5,0 4,0 3,0 2,0 1,0 high U.S. 0,0 low U.S. 1990 2000 2010 2020 2030 2040 2050-1,0-2,0-3,0-4,0-5,0 high Source: EIA, WEPS runs without CPP: 2017.0522_160120 (Reference), 2017.0606_103607 (High Macro), 2017.0606_103620 (Low Macro), 2017.0607_135603 (High Resource), 2017.0607_135552 (Low Resource) Backup low 20
Removal of CPP results in greater emissions in the U.S. change in U.S. energy-related carbon dioxide emissions from removal of CPP billion metric tons of carbon dioxide 2016 0,8 high 0,6 reference 0,4 low 0,2 high U.S. 0,0 low U.S. 1990 2000 2010 2020 2030 2040 2050-0,2-0,4-0,6 Backup Source: EIA, WEPS runs with CPP: 2017.05.22_160052 (Reference), 2017.0606_103604 (High Macro), 2017.0606_103614 (Low Macro), 2017.0607_165905 (High Resource), 2017.0607_165913 (Low Resource); WEPS runs without CPP: 2017.0522_160120 (Reference), 2017.0606_103607 (High Macro), 2017.0606_103620 (Low Macro), 2017.0607_135603 (High Resource), 2017.0607_135552 (Low Resource) 21
For more information U.S. Energy Information Administration home page www.eia.gov Annual Energy Outlook www.eia.gov/aeo Short-Term Energy Outlook www.eia.gov/steo International Energy Outlook www.eia.gov/ieo Monthly Energy Review www.eia.gov/mer Today in Energy www.eia.gov/todayinenergy State Energy Profiles www.eia.gov/state Drilling Productivity Report www.eia.gov/petroleum/drilling/ International Energy Portal www.eia.gov/beta/international/?src=home-b1 22
Figure 1 Figure 1a: U.S. energy consumption, with and without CPP quadrillion British thermal units 2016 45 40 35 30 25 20 15 10 5 CPP No CPP 0 1990 2000 2010 2020 2030 2040 2050 liquids natural gas renewables coal nuclear Figure 1b: change in global energy-related carbon dioxide emissions from removal of CPP, billion metric tons 0,8 2015 0,0 1990 2000 2010 2020 2030 2040 2050-0,2 non-u.s. Source: EIA Annual Energy Outlook 2017 (Reference case with, without CPP), WEPS runs 2017.05.22_160052 (Reference), 2017.05.22_160120 (nocpp) 0,6 0,4 0,2-0,4-0,6-0,8 U.S. world 23
Figure 1 Figure 1: Change in world energy-related carbon dioxide emissions from removal of CPP, billion metric tons. a) U.S. and non-u.s. emissions in the reference case b) world emissions across various side cases 0,8 2015 0,8 2015 0,6 0,4 0,2 0,0 1990 2000 2010 2020 2030 2040 2050-0,2 non-u.s. -0,4-0,6 U.S. world high 0,6 0,4 reference low 0,2 0,0 high U.S. 1990 2000 2010 2020 2030 2040 2050-0,2 low U.S. -0,4-0,8-0,6 24