epri global climate change research seminar (may'08 ... › pdf ›...

PNNL-SA-51961

Alternative Scenarios for Developing Countries

Westin Grand, Washington, DC

Jae Edmonds & Leon ClarkeMay 21, 2008

EPRI Global Climate Change Research Seminar

2

AcknowledgementsAcknowledgements

Thanks to EPRI for research support.

Thanks to Rich Richels for the original research insight.

GTSP Sponsors – Phases 1,2, & 3

http://www.riotinto.com/

http://www.kyomecha.org/e/img/bnr_02.gif

3

What Scenarios Should We be Considering?

What Scenarios Should We be Considering?

Many long-term, global scenarios have assumed efficient carbon regimes: all countries participate fully in mitigation from the outset.Reality is unlikely meet this ideal.Considering less coordinated and efficient future emissions mitigation regimes.

What policy structures are possible or likely?What might these policy structures imply for the costs and burdens of stabilization?What might they imply for strategic decisions such as technologydevelopment and deployment?

4

The Pocantico ProcessThe Pocantico Process

A look at specific policy proposals.Year 2050 Policy Performance

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

0% 10% 20% 30% 40% 50% 60% 70%

% Mitigation

% G

DP

Loss

Zero Net Emissions Target

Auto Standard

Absolute Targets 1 (1% reductions)

Absolute Targets 2 (1/2% reductions)

Mixed Targets (1% reductions;

non-Annex I BAU)

Intensity Targets

Electricity Technology (IGCC/CCS)

Year 2095 Policy Performance

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

0% 10% 20% 30% 40% 50% 60% 70%

% Mitigation

% G

DP

Loss

Zero Net Emissions Target

Auto Standard Absolute Targets 1 (1%

reductions)Absolute Targets

2 (1/2% reductions)

Mixed Targets (1%

reductions; non-Annex I

BAU)

Intensity Targets

Electricity Technology (IGCC/CCS)

Electricity Intensity 1 (11/3%/yr)

5

Outline of this Research:Second-Best Paths to Stabilization

Outline of this Research:Second-Best Paths to Stabilization

Consider stabilization at four levels: 450 ppm, 550 ppm, 650 ppm, and 750 ppm.Consider four stabilization regimes:

Set 1:Idealized—perfect global where and when flexibility.Set 2:Add graduated accession—some countries wait to participate.Set 3:Add regionally differentiated regimes—participating countries face differentiated carbon prices.Set 4:Add sectorally differentiated regimes—sectors face differentiated carbon prices.

We will talk about the first three of these today.

6

The Reference Scenario

The Reference Scenario

7

The GTSP Reference ScenarioThe Importance of ParticipationThe GTSP Reference Scenario

The Importance of Participation

0

5

10

15

20

25

1990 2005 2020 2035 2050 2065 2080 2095

GtC

/yr

Africa India Southeast AsiaMiddle East Latin America ChinaKorea Australia_NZ CanadaEastern Europe Former Soviet Union JapanUSA Western Europe

Global Emissions in Reference & Stabilization

Global Emissions in Reference & Stabilization

Global ReferenceFossil & Industrial CO2 Emissions

Global ReferenceFossil & Industrial CO2 Emissions

0

5

10

15

20

25

2005 2020 2035 2050 2065 2080 2095

GtC

/yr

CCSP Reference450 ppm550 ppm650 ppm

8

Stabilization Set 1Full Participation

Stabilization Set 1Full Participation

9

Scenario Set 1: Full ParticipationScenario Set 1: Full Participation

Stabilize CO2 concentrations450 ppm, 550 ppm, 650 ppm.Sectoral carbon prices—All EQUAL.Regional carbon prices—All EQUAL.Time path of carbon prices—Peck-Wan-Hotelling.

Notes:We have chosen CO2 rather than radiative forcing for simplicity. We have further simplified the analysis by assuming a fixed agriculture-land-use emissions path. Unmanaged ecosystem extent and composition is fixed.This case sets an economically efficient benchmark for comparison with other cases.

10

Scenario Set 1The Global Carbon Price

Scenario Set 1The Global Carbon Price

$0

$100

$200

$300

$400

$500

$600

$700

2005 2020 2035 2050 2065 2080 2095

$/to

nne

C (2

000$

)

450 ppm550 ppm650 ppm The carbon price rises

at roughly the rate of interest until

stabilization is reached.

The carbon price rises at roughly the rate of

interest until stabilization is reached.

Today’s price depends on tomorrow’s

technology

Today’s price depends on tomorrow’s

technology

11

Scenario Set IFossil & Industrial CO2 Emissions

Scenario Set IFossil & Industrial CO2 Emissions

0

5

10

15

20

25

2005 2020 2035 2050 2065 2080 2095

GtC

/yr


0.0

0.5

1.0

1.5

2.0

2.5

2005 2020 2035 2050 2065 2080 2095

GtC

/yr


0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2005 2020 2035 2050 2065 2080 2095G

tC/y

r


Global USA India

450 ppm has fundamentally different near-term

implications than 550 ppm and above

450 ppm has fundamentally different near-term

implications than 550 ppm and above

12

Stabilization Set 2Graduated Accession


13

Stabilization Scenario Set 2Graduated Accession

Stabilization Scenario Set 2Graduated Accession

Stabilize CO2 concentrations450 ppm, 550 ppm, 650 ppm.Sectoral carbon prices—All EQUAL.Regional carbon prices—All EQUAL.Time path of carbon prices—Peck-Wan-Hotelling.Staggered accession based on per capita income.

Alternative accession cases—first group enters: 2020, 2035, 2050

Notes:We assume that all Annex 1 nations participate in an international protocol by 2012 and that others join at different times based on per capita income. Non-Annex 1 participation is keyed to China’s entry date.

Countries come in at the global market price

of carbon

Countries come in at the global market price

of carbon

14

2005-2020USA

Australia & NZCanada

W. EuropeE. Europe

JapanFSU

2020-2035 2035-2050 2050-2065 2065-2080 2080-2095USA USA USA USA USA

Australia & NZ Australia & NZ Australia & NZ Australia & NZ Australia & NZCanada Canada Canada Canada Canada

W. Europe W. Europe W. Europe W. Europe W. EuropeE. Europe E. Europe E. Europe E. Europe E. Europe

Japan Japan Japan Japan JapanFSU FSU FSU FSU FSU

Korea Korea Korea Korea KoreaChina China China China China

Latin America Latin America Latin America Latin America Latin AmericaMideast Mideast Mideast Mideast Mideast

Other SE Asia Other SE Asia Other SE Asia Other SE AsiaIndia India India India

Africa Africa Africa

Order of Regional Participation(1st NA1 Group Enters 2020-2035)


NA1 1Enters 2020-2035

st Group NA1 1Enters 2020-2035

st Group NA1 1st Group Enters 2020-2035NA1 1st Group

Enters 2020-2035

15



2005-2020 2020-2035 2035-2050 2050-2065 2065-2080 2080-2095USA USA USA USA USA USA

Australia & NZ Australia & NZ Australia & NZ Australia & NZ Australia & NZ Australia & NZCanada Canada Canada Canada Canada Canada

W. Europe W. Europe W. Europe W. Europe W. Europe W. EuropeE. Europe E. Europe E. Europe E. Europe E. Europe E. Europe

Japan Japan Japan Japan Japan JapanFSU FSU FSU FSU FSU FSU

Korea Korea Korea KoreaChina China China China

Latin America Latin America Latin America Latin AmericaMideast Mideast Mideast Mideast

Other SE Asia Other SE Asia Other SE AsiaIndia India India

Africa AfricaNA1 1st Group

Enters 2035-2050NA1 1st Group

Enters 2035-2050

16



2005-2020 2020-2035 2035-2050 2050-2065 2065-2080 2080-2095USA USA USA USA USA USA

Australia & NZ Australia & NZ Australia & NZ Australia & NZ Australia & NZ Australia & NZCanada Canada Canada Canada Canada Canada

W. Europe W. Europe W. Europe W. Europe W. Europe W. EuropeE. Europe E. Europe E. Europe E. Europe E. Europe E. Europe

Japan Japan Japan Japan Japan JapanFSU FSU FSU FSU FSU FSU

Korea Korea KoreaChina China China

Latin America Latin America Latin AmericaMideast Mideast Mideast

Other SE Asia Other SE AsiaIndia India

AfricaNA1 1st Group

Enters 2050-2065NA1 1st Group

Enters 2050-2065 Note that India comes in one period

after China

Note that India comes in one period

after China

17

Scenario Set 2, 550 ppmScenario Set 2, 550 ppm

18

Scenario Set 2, 550 ppmGlobal Carbon Price


$0

$100

$200

$300

$400

$500

$600

$700

$800

2005 2020 2035 2050 2065 2080 2095

$/to

nne

C (2

000$

)

Set 1: 550 ppmSet 2: 1st Accession 2020-35Set 2: 1st Accession 2035-50Set 2: 1st Accession 2050-65

Effect on carbon prices is not extreme in the 550 scenario

Effect on carbon prices is not extreme in the 550 scenario

19

Scenario Set 2, 550 ppmFossil & Industrial CO2 Emissions


0

5

10

15

20

25

2005 2020 2035 2050 2065 2080 2095

GtC

/yr

CCSP ReferenceSet 1: 550 ppmSet 2: 1st Accession 2020-35Set 2: 1st Accession 2035-50Set 2: 1st Accession 2050-65

0.0

0.5

1.0

1.5

2.0

2.5

2005 2020 2035 2050 2065 2080 2095

GtC

/yr


0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2005 2020 2035 2050 2065 2080 2095G

tC/y

r


USA IndiaGlobal

Carbon leakageCarbon leakage

Late accession means precipitous drop in

emissions

Late accession means precipitous drop in

emissions

20


21

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

2005 2020 2035 2050 2065 2080 2095

$/to

nne

C (2

000$

)

Set 1: 450 ppmSet 2: 1st Accession 2020-35Set 2: 1st Accession 2035-50



Set 2 1st

Accession beginning in

2050 is infeasible!

Maximum price just as Non-annex 1

accession begins between 2035 and

2050

Maximum price just as Non-annex 1

accession begins between 2035 and

2050

22



0

5

10

15

20

25

2005 2020 2035 2050 2065 2080 2095

GtC

/yr

CCSP ReferenceSet 1: 450 ppmSet 2: 1st Accession 2020-35Set 2: 1st Accession 2035-50

0.0

0.5

1.0

1.5

2.0

2.5

2005 2020 2035 2050 2065 2080 2095

GtC

/yr


-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2005 2020 2035 2050 2065 2080 2095G

tC/y

r


Global USA India

23



0

5

10

15

20

25

2005 2020 2035 2050 2065 2080 2095

GtC

/yr


0.0

0.5

1.0

1.5

2.0

2.5

2005 2020 2035 2050 2065 2080 2095

GtC

/yr


-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2005 2020 2035 2050 2065 2080 2095G

tC/y

r


Global USA India

Two periods of delay mean 2/3 reduction in US emissions by 2020.

Accession delay past 2050 is totally infeasible for 450 ppm.

24



0

5

10

15

20

25

2005 2020 2035 2050 2065 2080 2095

GtC

/yr


0.0

0.5

1.0

1.5

2.0

2.5

2005 2020 2035 2050 2065 2080 2095

GtC

/yr


-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2005 2020 2035 2050 2065 2080 2095G

tC/y

r


Global USA India

Negative emissions are the result of biomass energy being used indirectly with

CCS or in non-energy uses.

Negative emissions are the result of biomass energy being used indirectly with

CCS or in non-energy uses.

25

Carbon Prices in the Annex 1and Non-Annex I

Carbon Prices in the Annex 1and Non-Annex I

Graduated accession or differentiated regimes means different prices in different regions.

What does this imply for technology choice?

Annex I faces carbon prices of over $1000/tonne C with no abatement in non-Annex I countries.

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

2005 2020 2035 2050 2065 2080 2095

$/to

nne

C (2

000$

)


Global

26


+ Differentiated Prices


+ Differentiated Prices

27

Stabilization Scenario Set 3Graduated Accession + Differentiated Prices

Stabilization Scenario Set 3Graduated Accession + Differentiated Prices

Stabilize CO2 concentrations450 ppm, 550 ppm, 650 ppm.Sectoral carbon prices—All EQUAL.Regional carbon prices—each region separate.Time path of carbon prices

Annex 1 follows Peck-Wan-Hotelling.Other regions carbon price proportional to relative per capita income.

Staggered accession based on per capita income.Alternative accession cases—first group enters: 2020, 2035, 2050.

Difference with Set 2

Difference with Set 2

28


29

Scenario Set 3, 450 ppmCarbon Prices by RegionScenario Set 3, 450 ppmCarbon Prices by Region

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

2005 2020 2035 2050 2065 2080 2095

$/to

nne

C (2

000$

)


USA India

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

2005 2020 2035 2050 2065 2080 2095

$/to

nne

C (2

000$

)


Set 3 1st Accession 2050-65 is infeasible!

Highly differentiated pricing between

Annex I and non-Annex I

Highly differentiated pricing between

Annex I and non-Annex I

30



0

5

10

15

20

25

2005 2020 2035 2050 2065 2080 2095

GtC

/yr


-0.5

0.0

0.5

1.0

1.5

2.0

2.5

2005 2020 2035 2050 2065 2080 2095

GtC

/yr


-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2005 2020 2035 2050 2065 2080 209

GtC

/yr


Global USA India

There is little difference in the Set 3 global emissions path from Set 1, however USA emissions must be much lower with ANY delay in non-Annex 1 accession.

There is little difference in the Set 3 global emissions path from Set 1, however USA emissions must be much lower with ANY delay in non-Annex 1 accession.

31

The Costs of StabilizationThe Costs of Stabilization

32

Inefficient Participation and the Total Costs of Stabilization


$0

$5

$10

$15

$20

$25

$30

$35

$40

450 ppm

Trill

ion

Dol

lar (

2000

$)

Set 1: IdealizedSet 2 Graduated Accession 2020-35Set 2 Graduated Accession 2035-50Set 2 Graduated Accession 2050-65Set 3 Parallel Regimes 2020-35Set 3 Parallel Regimes 2035-50Set 3 Parallel Regimes 2050-65

$0

$5

$10

$15

$20

$25

$30

$35

$40

550 ppm

Trill

ion

Dol

lars

(200

0$)


$0

$5

$10

$15

$20

$25

$30

$35

$40

650 ppmTr

illio

n D

olla

rs (2

000$

)


The dominant determinant of cost is the stabilization level.

Post 2050 non-Annex 1 accession not possible under the reference assumptions

Post 2050 non-Annex 1 accession not possible under the reference assumptions

33



0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

450 ppm


0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

550 ppm


0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

650 ppm


The relative effect on cost increases as the stringency of the limitation rises.

All costs normalized to the idealized cost at the concentration.

34

Final ObservationsFinal Observations“Second best” is just that, second best.

Near-term prices of carbon depend on expectations about the future—among other things—the international emissions mitigation architecture and long-term stabilization goal.

Inefficiencies matter more for 450 ppm stabilization.

Prices could vary regionally.

epri global climate change research seminar (may'08 ... › pdf ›...

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