Download King`s College London - International Energy Workshop

Business as Unusual (BAuU)
The role of existing policies in energy and emissions baselines
Dr. Neil Strachan
King’s College London, UK
[email protected]
International Energy Workshop
Venice, June 17th – 19th, 2009
Motivation
•
All modelling exercises of long-term energy policy require a counter factual
energy and emissions scenario
• A reference or baseline or business-as-usual case
• Range of descriptions reflect the difficulty in assigning a “without policy" case
•
Key model drivers of long term costs
• Baselines, (co) benefits, model structure, flexibility in meeting targets
• Overwhelming focus has been on latter two (see Repetto and Austin, 1997 ; Weyant and
Hill, 1999 ; Fischer and Morgenstern, 2006 ; Das et al., 2007)
•
Historical reviews of modelling studies (Craig et al., 2002 ; Pilavachi et al., 2008 ;
EIA, 2007)
• Over complexity, non transparency and continuation of existing trends
• Large sectoral and technological divergences owning to policy mechanisms
•
Existing energy and emissions policies are an integral part of any baseline
• For CO2 mitigation this already represent a business-as-UNUSUAL (BAuU) case
• Note reliance on projections of existing policy impact and iterative nature of policy process
Outline
• Exploratory analysis of BAuU issue
• Near-term (to 2020) assessment of existing UK CO2 policies
• Series of UK updated emission projections (UEP), from DECC energy model
• Focus on explicit role of policy in projections, fossil fuel price assumptions
• Comparison of emissions projection
• Long term (to 2050) assessment of existing UK CO2 policies
• Via the UK MARKAL MED energy systems optimisation model
• Inclusion of near-term policy in BAuU projections
• Four base cases:
• Current policies – BAuU ; BAuU and high fossil prices
• No current policies – BAU ; BAU and high fossil prices
• Comparison of CO2 mitigation scenarios (-26% in 2020, -80% in 2050)
• Role of current policy
• Role of high fossil (HF) prices
• No CCS technology (-C)
UK UEP
• UK Government energy model (DTI-DETR-BERR-DECC)
• Increasing frequency: DTI (1992, 1995, 2000, 2003, 2004, 2006a, 2006b,
2008a, 2008b, 2008c, 2009...)
• Fast moving policy landscape
• Important role in UK government energy policy making
• Econometric sectoral demand estimation
• Electricity sector optimisation module
• Explicit inclusion of current policy impacts
• No emphasis on technological change
• Post 2020 government projections via IAG scenarios
• Major uncertainties in projections
• model structure, policy assumptions, fossil prices, GDP growth, land use
change & EU-ETS purchases
• Note little empirical evidence for fossil prices and GDP correlation (JimenezRodriguez, 2000x)
4
Key UEP characteristics
Date
Name
Purpose
Policies included
1992
EP 59
General energy sector analysis
Energy efficiency office (EEO)
Input into UNFCCC negotiations,
EEO,
review of energy markets for
1994 Climate Change Plan (includes Energy savings trust
1995
EP 65
possible nuclear power
(EST), VAT on fuels)
Climate Change Programme Energy efficiency best practice, Home efficiency scheme, EST,
and UNFCCC Third National
VAT, renewable obligation (RO) at 10%, climate change levy
2000
EP 68
Communication
(CCL)
EUETS National allocation plan - Energy efficiency commitment (EEC), buildings regulations,
phase I, and Climate Change
product standards, UK-ETS, CCL, RO, Climate change
2004
UEP 2004
Programme review
agreements, Carbon Trust, Transport voluntary agreements
Energy Review, and EUETS
EEC 1 and 2, Home efficiency scheme, Warm front, building
National allocation plan - phase regulations, community energy, RO, UK-ETS, CCL, CCAs,
2006
UEP 26
II
Transport voluntary agreements, RTFO, Public sector
EEC 1 and 2, CERT, Home efficiency scheme, Warm front,
building regulations, community energy, RO, Carbon trust, UKETS, CCL, CCAs, Transport voluntary agreements, RTFO, 10
2007
URN 07/947(X)
Energy White Paper
year plan, fuel duty escalator, Public sector
As Above
Plus: EUETS of €25/tCO2, CCS demonstration, higher RO,
Climate Change Committee
Carbon reduction commitment (CRC), product policy,
2008
URN 08/1358
report
residential supplier obligation, zero carbon homes
As above, plus:
2009
Implementation of Climate
Climate Change Bill, EU renewable 2020 targets, EU industry
(summer)
Change Act
directive, Renewables consultation
5
UEP: 2005 oil price assumptions
2005 oil price projections
60
(2005) $/bbl
50
40
actual
30
high
20
central
10
low
0
1992
1995
2000
Projection date
6
2004
Actual
UEP: 2020 oil price assumptions
2020 oil price projections
140
(2005) $/bbl
120
100
80
very high
60
high
40
central
low
20
0
1992 1995 2000 2004 2006 2007 2008
Projection date
7
UEP policy impact
(all in MTCO2)
Years 2000 and 1992 not broken out explicitly
Projection year
2008
2010
2020
Energy Supply &
Existing
other
New
0.7
3.7
Existing
18.7
22.8
Industry / Business
New
1.1
8.0
Existing
16.8
23.1
Transport
New
0.4
7.3
Existing
16.5
23.1
Residential
New
1.1
22.8
Existing
2.9
2.9
Agriculture
New
Public sector &
Existing
2.2
2.2
services
New
0.0
3.3
Existing
57.1
74.1
All
New
3.3
45.1
TOTAL
60.4
119.3
8
2007
2010
2020
0.7
18.3
1.1
17.2
0.4
16.5
1.1
2.9
4.8
22.4
8.4
23.1
7.3
22.7
22.7
2.9
2.2
0.0
57.2
3.3
60.5
2.2
3.3
73.3
46.6
119.9
2006
2010
2020
2004
2010
4.9
1995
2000
17.3
1.1
11.9
6.2
12.1
4.0
0.0
0.4
1.0
2.6
42.2
14.3
56.5
17.9
9.2
16.2
9.2
11.0
14.7
17.5
1.1
16.6
11.4
13.2
4.0
0.0
0.4
1.0
2.6
48.3
19.4
67.8
1.7
3.3
55.0
33.0
55.0
33.0
UEP CO2 projection comparison
Category/
Publication
Actual
Targets
Description
/Notes
1900 = 592 ; 2000 = 551 ; 2005 = 553
2006 = 551 ; 2007 = 543 ; 2008 = 532
Domestic 2010
Kyoto (all GHG)
CCC interim (all GHG)
CCC intended (all GHG)
1992
1995
2000
2004
2006
2007
favour gas
favour coal
Fossil
prices
EUETS
purchases
2010
2020
473.6
518.0
Low
High
Low
High
Low
High
Central
Central
Central
Low
High
Low
Central
High
Low
Central
High
Low
Central
High
2008
Low
High
9
Policy
effectiveness
No
No
No
No
No
No
No
No
No
No
No
No
No
No
21.3
17.6
15.8
46.0
41.0
33.3
41.0
41.0
699.6
659.3
593.3
589.6
540.8
545.2
519.9
524.0
527.6
525.4
522.5
538.6
537.2
534.6
499.0
497.6
495.7
504.0
504.0
499.0
508.0
502.0
390.7
343.4
796.4
752.8
675.4
688.6
576.8
569.1
531.3
534.6
537.2
524.0
538.6
547.1
554.4
551.8
472.3
463.8
437.1
443.0
440.0
432.0
446.0
436.0
MARKAL (MED) modelling
•
Long-term energy systems optimisation modelling (Anandarajah et al., 2009)
•
Remove near-term policy for “true” BAU projections
• Remove EU-ETS (€20/tCO2), Climate Change Levy (CCL)
• Remove electricity renewable obligation (15% by 2015), anticipated wind farms projects
• Remove renewable transport fuel obligation (5% by 2010)
• 10 year delay in transport efficiency improvements (no voluntary agreements)
• Moderate appliance efficiency regulation (Band C now permitted)
• Remove all efficiency programme implementation in residential, service &industrial sectors
•
Four base cases:
• BAuU; BAuU and high fossil prices
• BAU with no current policy ; BAU and high fossil prices
•
Comparison of policy impact to high fossil prices (HF) and no CCS
technology (-C) cases
•
Six CO2 (-80%) mitigation cases
• [BAuU] - C80 ; C80-HF ; C80-C
• [BAU] - C80-NP ; C80-NP-HF ; C80-NP-C
10
Long-term fossil fuel prices
Source: BERR (2008), IEA (2008)
11
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
Oil-Ref
2005$
/bbl
31.4
50.6
57.5
55.0
55.0
57.5
60.0
65.0
70.0
70.0
70.0
Oil-Hi
2005$
/bbl
31.4
50.6
94.3
94.3
103.7 109.4 115.1 115.1 115.1 115.1 115.1
GasRef
2005$/
MMBTU
4.8
7.5
6.8
6.8
7.0
7.3
7.6
8.3
8.9
8.9
8.9
2005$
Gas-Hi /MMBTU
4.8
7.5
10.5
10.9
12.0
12.7
13.4
13.4
13.4
13.4
13.4
CoalRef
2005$/
tonne
35.9
60.5
55.0
55.0
57.0
59.6
62.2
67.4
72.6
72.6
72.6
2005$/
Coal-Hi tonne
35.9
60.5
113.2 113.2 110.0 106.9 103.7 103.7 103.7 103.7 103.7
MED baseline: Final energy
2000
BAuU
12
2025
BAuUBAU
HF
BAU-HF BAuU
2050
BAuUBAU
HF
BAU-HF
Agriculture
51
58
58
58
58
67
67
67
67
Industry
1,472
1,493
1,495
1,496
1,497
1,537
1,553
1,540
1,545
Residential 1,962
1,777
1,824
1,780
1,815
1,944
1,958
1,939
1,928
Services
850
766
766
766
766
794
793
793
793
Transport
1,855
1,745
1,960
1,485
1,600
1,380
1,453
1,360
1,364
Total
6,190
5,839
6,104
5,585
5,735
5,722
5,824
5,700
5,697
MED baseline: CO2 emissions
Base case CO2 emissions
600
500
MtCO2
400
BAuU
BAU
300
BAuU-HF
200
BAU-HF
100
0
2000
13
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
MED policy cases:
CO2 prices and Welfare change
£/tCO2
2020
2050
2020
2050
[BAuU]
C80
0.0
182.4
C80
-0.1
-28.3
[BAU]
C80-NP
9.1
218.1
C80-NP
-1.2
-26.0
[BAuU]
C80-HF
0.0
154.8
C80-HF
0.6
-16.4
[BAU] C80-NPHF
14.8
173.6
C80-NPHF
-0.4
-19.6
[BAuU]
0.0
181.6
C80-C
-1.6
-23.3
23.6
198.0
C80-NP-C
-1.6
-30.1
C80-C
[BAU] C80-NP-C
14
(2000) £B
Conclusions
• Existing baseline projections with policies already
represent a business-as-unusual (BAuU) case
• But valid given iterative future policy-making?
• Underestimate true mitigation costs
• Current policy impact comparable to other major assumptions
(e.g., fossil fuel prices, technology)
• Suggests need for three core scenarios
1. Current-policy reference case (BAuU)
2. No-policy reference case (BAU)
3. Long-term mitigation case
• Ongoing analytical work on BAuU
15
References
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Anandarajah G., N. Strachan, P. Ekins, R. Kannan and N. Hughes (2009) Pathways to a
Low Carbon Economy: Energy systems modelling, UKERC Energy 2050 research report 1,
www.ukerc.ac.uk
Craig P., A. Gadgil and J. Koomey (2002), What can History teach Us? A Retrospective
Examination of Long-Term Energy Forecasts for the United States, Annual Review of
Energy Environment, 27: 83-18
Das A., D. di Valdalbero, M. Virdis (2007), ACROPOLIS: An example of international
collaboration in the field of energy modelling to support greenhouse gases mitigation
policies, Energy Policy, 35: 763–771.
DTI (various years), Updated Energy Projections (UEP) for the UK, Department for Trade
and Industry, London, www.berr.gov.uk/energy/environment/projections/index.html
EIA (2007), AEO Retrospective Review, DOE/EIA 0640 (2006), Energy Information
Administration, Washington DC.
Fischer C. and R. Morgenstern (2006), Carbon Abatement Costs: Why the Wide Range of
Estimates?, The Energy Journal, 27 (2): 73-86.
Jimenez-Rodriguez R. (2009), Oil Price Shocks and Real GDP Growth: Testing for Nonlinearity, The Energy Journal, 30(1): 1-24
Pilavachi P., T. Dalamaga, D. di Valdalbero, and J. Guilmot (2008), Ex-post evaluation of
European energy models, Energy Policy, 36: 1726–1735
Repetto R. and D. Austin (1997), The costs of climate protection: A guide for the perplexed.
World Resources Institute, Washington, D.C.
Weyant J. and J. Hill (1999), Introduction and overview. The costs of the Kyoto Protocol: A
multi-model evaluation ,The Energy Journal, 20: vii-xliv.