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Research Methodology (Session 2)

Research Methodology (Session 2). State-of-the-art Energy-Environment Models and their Applications for Policy Formulation. P. R. Shukla Indian Institute of Management, Ahmedabad. Presented in: Tianjin University of Finance and Economics, Tianjin May 2013.

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Research Methodology (Session 2)

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  1. Research Methodology (Session 2)

  2. State-of-the-art Energy-Environment Models and their Applications for Policy Formulation P. R. Shukla Indian Institute of Management, Ahmedabad Presented in: Tianjin University of Finance and Economics, Tianjin May 2013 Indian Institute of Management, Ahmedabad

  3. Presentation Agenda • Energy Models: Introduction and Model Architecture • Bottom-up (Techno-economic) Models (e.g. MARKAL) • Top-down (Macro-economic) Models (e.g. ERB/MINICAM) • Integrated Assessment Models • Soft-Linked Model Systems (AIM, IPAC, SLIM) • Global Integrated Assessment Models • Model Inputs: Socio-economic Scenarios & Databases • Global Scenarios • National/Sector-level Scenarios • Model Database • Conclusions

  4. Bottom-up (Techno-economic) Models • MARKet ALlocation Model:MARKAL

  5. MARKet ALlocation Model:MARKAL • Multi-period linear programming formulation • Decision variables in different time periods (e.g.): • Energy consumption • Electricity generation • Capacity utilization • Investment in technologies • Emissions

  6. MARKetALlocation (MARKAL) Model: Overall Model Architecture Techno-economic Database Economic Scenario Emission Scenario MARKAL • Consumption and production of energy • Marginal ‘values’ of energy resources & technologies • Shadow price of external constraints (e.g. emissions) • Introduction and retirement of technologies

  7. ECONOMY SECTORS TECHNOLOGY CAPITAL AGRICULTURE ENERGY ENDUSE DEVICES ELECTRICITY PRODUCTION PUMP INDUSTRY COAL GAS TRACTOR MINING HYDRO FURNACE IMPORT NUCLEAR 67 COLLECTION MOTOR SOLAR RENEWABLE ENERGY BUS 75 EXPORT TRANSPORT TRAIN COAL FUEL N. GAS CFL TV OVEN AC COMMERCIAL PROCESSING OIL BIOMASS PETROLEUM NUCLEAR REFINERY GAS RESIDENTIAL 235 RENEWABLE PROCESSING EMISSIONS 45 ENVIRONMENT Bottom-up 3E (Energy-Economy-Environment) Model System Agr Ind Tran Bldg

  8. Technology Resource Secondary Energy End-Use Lighting Coal Light Bulb Cooking Electricity Generation Car Gas Transport Heater Crude Oil Heating Stove Drive Renewable Oil Refinery Motor Irrigation Nuclear Pump Water Supply Reference Energy System: B/U Model

  9. Model Formulation(Linear Programming) Objective Function To minimize the discounted sum, over up to 100 years, of investment, operating and maintenance cost of all technologies plus the cost of energy imports and carbon tax

  10. Objective Function (cntd) Subject to • Demand Constraints (one for each end use demand) • Where • DMD…end-use demand technology • GRD…set of grades technologies/energy sources • DM….class of all end use demands • T…..set of time periods • Cig(t)…capacity of technology i of grade G in period t

  11. Model Constraints 1. Capacity transfer constraints (to account for technology vintage carry over time periods) 2.Energy carrier balance constraints (supply >= demand of fuel) 3.Cumulative reserve constraints (fuel extraction <= total reserves) 4. Electricity balance constraints (day and night time modeling for electricity system)

  12. Model Constraints (cntd.) 5. Process technology capacity utilization constraints (process activity <= available capacity) 6. Electricity production capacity constraints (electricity generation <= available capacity) 7. Electricity peaking constraints (extra capacity to meet peak demand) 8. Total emissions constraints (Carbon, SO2 etc)

  13. Top-down (Macro-economic) Models • SGM (Second Generation Model) • CGE: Computational General Equilibrium Model • ERB/MINICAM • PE: Partial Equilibrium Model

  14. Computational General Equilibrium (CGE) Model SGM: Second GenerationModel is a Global CGE Model (PNL, USA)

  15. ERB Model: Core Elements of Energy Markets ERB: Edmonds, Reilly, Barnes, Pacific Northwest Lab, USA ERB Model is a global energy partial equilibrium model Regional Fertility & Survival Rates Regional Labor Force Regional GDP Regional Energy Demand Energy Technologies Regional Labor Productivity World Prices and Quantities GHG Emissions Regional Prices Regional Resource Bases Regional Energy Supply Regional Energy Supply Technologies

  16. Energy Markets: Regional Supply and Conversion Oil Production Liquids Refining Liquids Market Biomass Production Synfuel Conversion Solids Market Solids Coal Production Synfuel Conversion Natural Gas Market N. Gas Production Gas Processing Hydrogen Market Hydrogen Nuclear/Fusion Hydro Electricity Market Electric Power Generation Solar

  17. Energy Markets: Regional End Uses Liquids Market Residential Technologies Residential Sector Solids Market Commercial Technologies Commercial Sector Natural Gas Market Industrial Technologies Industrial Sector Hydrogen Market Transport Technologies Transport Sector Electricity Market

  18. Residential Service Demands:Indexing to floor space Price of Heating Service Heat Transfer Coefficient Building Shell Area Heating Degree Days Internal Gains Calibration Parameter Heating Thermal Energy Cooling Thermal Energy Residential Buildings Lighting Lumens - daylighting Hot Water Thermal Energy Building Design Appliances & Other Unitless Saturation Factor

  19. Energy Markets: Transport Sector ICE Automobile Hybrid Bus Passenger Transport H2 Rail Diesel Air Electric Natural Gas Transport Technologies Primary input variables by fuel, mode and sector: Truck Rail Freight Transport • 1990 Energy used • Intensity / Efficiency • Load factor • Speed Air Water Pipeline

  20. Agriculture, Land-use and Energy Demand Regional GDP • Crops Commercial Biomass • Livestock and fish Energy • Forests products • Urban land Module Regional Production demographics • Crops • Livestock and fish Demand for • Forests products Demand for Biomass Commercial • Biomass energy Energy Biomass Markets • Land rent Technology Land Use • Crop prices • Crops • Livestock prices • Livestock and fish • Forest product prices • Forests products Water • Biomass prices • Urban • Unmanaged Supply • Crops Fertilizer • Livestock and fish Land Use Change • Forests products Emissions • Urban land Policies CO • Taxes 2 • Subsidies • Parks • Regulation Climate

  21. CO2Capture & Storage Oil Production Liquids Refining Liquids Market Biomass Production Synfuel Conversion Solids Market Solids Coal Production Synfuel Conversion Natural Gas Market N. Gas Production Gas Processing Hydrogen Market Hydrogen Nuclear/Fusion Hydro Electricity Market Electric Power Generation Solar

  22. AIM Family of Models • AIM: Asia-Pacific Integrated Model

  23. AIM Family: Typology & Examples AIM: Asia-Pacific Integrated Model is a family of models

  24. Top-down and Bottom-up Approach

  25. Strengths/Weaknesses of MAC Curvese.g. AIM/End-use [MAC], McKinsey's ACC MAC Curves: Marginal Abatement Cost Curves (e.g. cost of abating CO2 emissions)

  26. Strengths/Weaknesses of B/U models e.g. AIM/End-use, AIM/AFOLU, MARKAL, MESSAGE Inputs Outputs Structure of the AIM/End-Use Model • “Energy technology” refers to a device that provides a useful service by consuming energy • “Energy service” refers to a measurable need that must be satisfied.

  27. End-use approach Energy Service Demand Conversion to Energy demand AIM/Enduse model puts much focus on this part World energy assessment: energy and the challenge of sustainability, 2000,UNDP

  28. Correspondence between Issues & models Roadmap Economic analysis Design of target society and Reduction potential Not all of them are applied. Depending on the situation, some are intensively applied. Design social, physical LCD’s details based on more physically realistic mechanisms Design target year’s social/economic/ energy vision quantitatively Major outputs of models are Policy portfolio, GHG emissions inventory, Energy balance table, IO table, Labor/population balance table, Transport demand and supply table, Household account, Macro economic account, Price, etc. • Quantitative design of basic mechanisms by element models • Energy enduse models (AIM/enduse) • Energy supply model (ESM) • Traffic demand model (TDM) • Econometric type macro-economy model (EME) • Population and household model (PHM) • House and building dynamics model (BDM) • Material stock dynamics model (MSFM) • Household production and lifestyle model (HPLM) • AFOLU model (AFOLU) • LCD visions • and • LCD • Policies • Economic instruments • Regulation • Education • Public investments • etc. Design target year’s societies by ExSS One/multi- regional multi-sectoral analysis Check and analyze quantitative consistency of future societies Backcasting analysis by BCM/BCT Design roadmaps towards future designed societies Economic analysis by AIM/CGE One/multi- regional multi-sectoral CGE analysis Check and analyze quantitative economical consistency of future societies

  29. Strengths/Weaknesses of T/D(input-output)Models e.g. ExSS Framework of Extended Snapshot Tool (ExSS)

  30. ① production function ② commodity market ③ capital market ④ labor market ⑤ calculation of GDE ⑥ expenditure and income in production sector ⑦ expenditure and income in household and government ⑧ assumption of import and export ⑨ fixed capital stock matrix ⑩ investment goods market ⑪ capital stock ⑫ CO2 emissions Strengths/Weaknesses of (CGE) models e.g. AIM/CGE, SGM, ENVISAGE Framework of AIM/CGE

  31. IPAC: Integrated Policy Model for China

  32. Framework of Integrated Policy Model for China (IPAC) Energy demand and supply Price/investment Economic impact Medium/long-term analysis Environment industry Pollutant emission Medium/long-term analysis IPAC-SGM IPAC-AIM/MATERIAL Energy demand and supply Full range emission Price, resource, technology Medium-long term analysis Economic impact Energy demand and supply Price/investment Medium/long-term analysis IPAC-TIMER IPAC-Emission Short term forecast/ energy early warning IPAC/Tech(Power/Transport) IPAC/SE, IPAC/EAlarm Technology development Environment impact Technology policy IPAC/AIM-Local IPAC-AIM/tech Medium/short term analysis Technology assessment Detailed technology flow IPAC/Gains-Asia Region analysis Medium/short analysis Energy demand and supply Technology policy AIM-air IPAC-health Climate Model ERI, China ERI, China

  33. Linked Economy-Energy Models (Global-China) Global Model IPAC-Emission Global energy demand and supply Global GHG Emission Global Target Burden sharing Energy import/export Energy Price Reduction cost China energy and emission scenarios Energy demand by sectors Energy supply Reduction cost Future economic sector detail Energy intensive industry Reduction cost Energy technology model IPAC-AIM/technology Energy economic model IPAC-CGE

  34. Investment by industrial sectors (Example)

  35. DATABASES Socio - - Economic, Technologies, Energy Resources, Environmental Constrai nts Sustainable Transport Indicators Database AIM CGE Model MARKAL ANSWER - Model AIM Strategic Database (SDB) Model End Use Demand AIM SNAPSHOT Model Transport Model Transport Demand Model Transport Database Soft-Linked Integrated Model System Soft-Linked Integrated Model System (SLIM) DATABASES Socio-Economic, Technologies, Energy Resources, Environment AIM CGE/GCAM-IIM ANSWER-MARKAL Model End-Use Demand Model Scenario Database Model End Use Demand AIM ExSS AIM SNAPSHOT Model

  36. ATMOSPHERIC COMPOSITION CLIMATE & SEA LEVEL MAGICC MAGICC Atmospheric Chemistry Climate MAGICC MAGICC--Ocean Ocean Carbon · temperature Cycle · sea level HUMAN ACTIVITIES ECOSYSTEMS ERB ERB MAGICC Un-managed Energy Other Human Terrestrial Eco-system System Systems Carbon Cyc. & Animals ALU (none) ALU ALU Ag., L'stock Coastal Crops & Hydrology & Forestry System Forestry GCAM: Integrated Modeling Framework GCAM: Global Change Assessment Model (Application for Climate Change)

  37. Integrated Assessment Model: GCAM Economy-Energy-Agriculture Market Equilibrium (Edmonds et al., 2004) 14 Global Regions Fully Integrated Explicit Representation of Energy Technologies Tracks 15 greenhouse gases Dynamic-recursive model Typically runs to 2095 in 5-year time steps Used extensively for energy and climate policy analyses conducted for DOE, EPA, IPCC, etc. (Clarke et al., 2007)

  38. GCAM: Human & Natural System Integration Energy System • Energy Supply • Coal, Gas, Oil • Renewables • Electricity • Hydrogen Resource Bases • Energy Markets • Fossil fuel prices • Electricity prices • Hydrogen prices Energy Conversion Technologies Fossil and Industrial Emissions Ocean Carbon Cycle • Energy Demand • Transportation • Buildings • Industry Energy Demand Technologies Labor Force Atmospheric Composition, Radiative Forcing, & Climate • Other Markets • Emissions Permits • Portfolio Standards Regional GDP • Agricultural Demand • Crops • Livestock • Forest Products Labor Productivity Land Use and Land Use Change Emissions Terrestrial Carbon Cycle • Agricultural Markets • Crops prices • Livestock prices • Forest Product prices • Bioenergy prices Economy Agricultural Technologies • Agricultural Supply • Crops • Livestock • Forest Products • Bioenergy Climate System Land Characteristics Agriculture /Land Use Land Use & Land Cover

  39. 3. Model Inputs: Socio-economic Scenarios & Databases • Global Scenarios • National/Sector-level Scenarios • Indicators • Model Database

  40. Global Scenarios • SRES: Non-climate intervention Scenarios • Representative Concentration Pathways (RCPs)

  41. (A1T) A1B Economy A1: high growth A2: cultural pluralism (A1FI) Globalism Regionalism B2: regional coexistence B1: recycle-based Environment population Agriculture(land use) Economic growth energy technology Driving Forces IPCC Scenarios: SRES Architecture

  42. Scenario Analysis • Scenarios: Images of future or alternate futures. • Scenarios are not Predictions or Forecasts. • Used as a methodology in energy & environmental analysis: Account for future uncertainties in energy planning and to study likely implications of current policy pathways.

  43. SRES Scenario Families

  44. 5 4 A1FI A2 3 A1B CO2 Index (1990=1) 2 B2 A1T B1 1 0 1990 2010 2030 2050 2070 2090 Year CO2 Emission Scenarios

  45. IPCC Representative Concentration Pathways (RCPs) Emission Paths for RCPs Ref. Krieger et. al. 2010 Ref. Edmonds, 2010 Representative Concentration Pathways Papers Available online (August 2011) in ‘Climatic Change’, Springer

  46. National Scenario Architecture

  47. Sector Scenarios: E.g. Trasnsport Changes due to targeted strategies + a carbon budget equivalent to conventional scenario Changes due to price of carbon Passenger Passenger & Freight Freight

  48. Outputs Outputs Outputs AIM-Trend AIM-Top-down AIM-Energy Monitoring & Processing Data from IEM Common Database Policy making Statistics AIM-Ecosystem AIM-Material Outputs Outputs Strategic Model Database: AIM System

  49. Conclusions • A variety of Energy Models are available • Choice of model depends on the purpose or the key questions to be addressed by the model (Horses for Courses) • Purposive modeling need strategic scenario databases. • Global Integrated Assessment Models (IAMs) are vital tools to assess log-term trends in energy and technology markets • Scenarios Assessments project, but not predictthe future • Consistent geographic downscalingof scenarios is vital for policy assessment Thank you

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