Download Carbon Emissions and Petroleum Resource

Carbon Emissions and Petroleum
Resource Assessments
Alan S. Manne
Stanford University
This presentation is based upon joint work with Richard Richels. Helpful comments have
been received from Vello Kuuskraa. For research assistance, the author is indebted to
Charles Ng. Funding was provided by EPRI. The individual author is solely responsible
for the results presented here.
For presentation at International Energy Workshop, IIASA, Laxenburg, Austria, June 19,
2001.
Abstract
This paper demonstrates how oil and gas resource assumptions affect MERGE (a model for
evaluating regional and global effects of greenhouse gas reduction policies). Undiscovered
resources are based upon the U.S. Geological Survey "World Petroleum Assessment 2000".
Guesstimated oil and gas supply curves with ten steps within each region. Instead of OPEC
behavioral functions, there are maximum production/reserve ratios and maximum resource
depletion factors. To allow for resource depletion without a long-term rising price trend, the
reference case includes annual cost reduction factors of 0.5% in each energy category.
There are backstops for both electric and nonelectric energy.
Results are reported at a global level for: oil and gas production, fuel shares, carbon prices, oil
prices and carbon emissions under alternative scenarios. If no energy cost reductions are
assumed, there are higher energy prices and lower carbon emissions than in the reference
case. If both oil and gas resources are low, there are demands for greater synthetic fuels
production and higher carbon emissions. If gas resources are unlimited, emissions are
lower during the early years, but higher later on. During the later periods, there is an
incentive for electricity production based on gas rather than a carbon-free backstop. This
leads to higher carbon emissions than in the reference case.
Million Barrels Per Day (Cumulative)
Figure 1. Crude oil production in lower 48 states
and Alaska, 1954-1999
10
8
Alaska
6
4
Lower 48 States
2
0
1954 1959 1964 1969 1974 1979 1984 1989 1994 1999
From Executive Summary, pp. ES-1 and ES-2:
The U.S. Geological Survey (USGS)
World Petroleum Assessment 2000
provides estimates of the quantities of
conventional oil, gas, and natural gas
liquids outside the United States that
have the potential to be added to
reserves in the next 30 years (1995 to
2025) . . .
This assessment is based on extensive
geologic studies as opposed to statistical
analysis. A team of more than 40
geoscientists and additional supporting
staff conducted the study over a five-year
period from 1995 to 2000.
Figure 2. Mean USGS estimates of oil, gas, and NGL
– billion barrels of oil equivalent – world,
excluding USA
3000
2500
Undiscovered
Conventional
2000
Reserve Growth
( Conventional )
1500
1000
Remaining
Reserves
500
Cumulative
Production
0
oil
gas
NGL
Figure 3. World reserve and resource/production
ratios - static index (years)
175
150
125
100
rsc/prod
rsv/prod
75
50
25
0
oil
gas
• MERGE: A model for evaluating regional and
global effects of greenhouse gas reduction
policies
• Website: www.stanford.edu/group/MERGE
• Provides details on this intertemporal general
equilibrium model. MERGE is a top-down
model of electric and nonelectric energy
demands; a bottom-up model of energy
supplies.
Nine regions: USA, OECD Europe,
Japan, CANZ (Canada, Australia and
New Zealand), EEFSU (eastern Europe
and former Soviet Union), China, India,
MOPEC (Mexico and OPEC), and ROW
(rest of world).
Converting USGS World Petroleum Assessment
2000 into inputs for MERGE:
To allow for post-2030 discoveries, took
F5(optimistic) as ultimate resources.
Guesstimated oil and gas supply curves with ten
steps – linearly rising marginal costs. Instead of
OPEC behavioral functions, employed maximum
production/ reserve ratios and maximum resource
depletion factors.
Figure 4. Production of an exhaustible resource –
initial reserves = 20; undiscovered resources = 80
1.4
1.2
Production-reserve ratio = 5%
Resource depletion factor = 2%
1
0.8
0.6
0.4
0.2
0
0
20
40
60
80
100
Conclusions of Michael Lynch, WEFA
“No mineral has ever shown long-term
rising price trend.”
Implemented in MERGE by assuming
that there is a 0.5% annual cost
reduction in each energy category.
Implies 40% reduction in 100 years.
Figure 5. World oil and gas production – reference
case
250
exajoules
oil
200
150
gas
100
50
0
2000
2020
2040
2060
2080
2100
Low resource case
As an alternative, have considered a low resource case (50% of
the undiscovered resources in the reference case). This is
roughly the mean USGS projection. Implications:
Oil production peaks in 2020 rather than 2040.
Oil prices rise to $29 per barrel rather than $24 in 2010.
Because of synthetic fuels, carbon emissions rise
post-2050.
Figure 6. Total primary energy – fuel shares –
reference case
100%
carbon-free
80%
gas
60%
oil
40%
20%
coal (+ shale oil + tar sands)
0%
2000
2020
2040
2060
2080
2100
Figure 7. Carbon emissions – reference case and
550 ppmv concentration limit
25
billion tons
20
reference
15
10
5
550 ppmv
0
2000
2020
2040
2060
2080
2100
Figure 8. International price of carbon emission
rights – 550 ppmv concentration limit
350
300
250
$ per ton
200
150
100
50
0
2000
2020
2040
2060
2080
2100
Figure 9. International oil prices – reference case
vs. no energy cost reductions
70
60
no cost reductions
$ per barrel
50
40
30
reference
20
10
0
2000
2020
2040
2060
2080
2100
Figure 10. Carbon emissions – reference case vs.
low oil and gas resources vs. no energy cost
reductions
25
billion tons
low oil and gas
20
reference
15
no cost reductions
10
5
0
2000
2020
2040
2060
2080
2100
Figure 11. Carbon emissions – reference case vs.
unlimited gas resources
25
billion tons
20
reference
15
unlimited gas
10
5
0
2000
2020
2040
2060
2080
2100