Energy-economy Models Research Articles

The Role of Carbon Capture and Storage Electricity in Attaining 1.5 and 22C

The climate targets defined under the Paris agreement of limiting global temperature increase below 1.5 or 2°C require massive deployment of low-carbon options in the energy mix, which is currently dominated by fossil fuels. Scenarios suggest that Carbon Capture and Storage (CCS) might play a central role in this transformation, but CCS deployment is stagnating and doubts remain about its techno-economic feasibility. In this article, we carry out a throughout assessment of the role of CCS electricity for a variety of temperature targets, from 1.5 to above 4°C, with particular attention to the lower end of this range. We collect the latest data on CCS economic and technological future prospects to accurately represent several types of CCS plants in the WITCH energy-economy model, We capture uncertainties by means of extensive sensitivity analysis in parameters regarding plants technical aspects, as well as costs and technological progress. Our research suggests that stringent temperature scenarios constrain fossil fuel CCS based deployment, which is maximum for medium policy targets. On the other hand, Biomass CCS, along with renewables, increases with the temperature stringency. Moreover, the relative importance of cost and performance parameters change with the climate target. Cost uncertainty matters in less stringent policy cases, whereas performance matters for lower temperature targets.

A multi-paradigm framework to assess the impacts of climate change on end-use energy demand.

Projecting the long-term trends in energy demand is an increasingly complex endeavor due to the uncertain emerging changes in factors such as climate and policy. The existing energy-economy paradigms used to characterize the long-term trends in the energy sector do not adequately account for climate variability and change. In this paper, we propose a multi-paradigm framework for estimating the climate sensitivity of end-use energy demand that can easily be integrated with the existing energy-economy models. To illustrate the applicability of our proposed framework, we used the energy demand and climate data in the state of Indiana to train a Bayesian predictive model. We then leveraged the end-use demand trends as well as downscaled future climate scenarios to generate probabilistic estimates of the future end-use demand for space cooling, space heating and water heating, at the individual household and building level, in the residential and commercial sectors. Our results indicated that the residential load is much more sensitive to climate variability and change than the commercial load. Moreover, since the largest fraction of the residential energy demand in Indiana is attributed to heating, future warming scenarios could lead to reduced end-use demand due to lower space heating and water heating needs. In the commercial sector, the overall energy demand is expected to increase under the future warming scenarios. This is because the increased cooling load during hotter summer months will likely outpace the reduced heating load during the more temperate winter months.

Socioeconomic burden of air pollution in China: Province-level analysis based on energy economic model

In this study, we apply to China the China Regional Energy Model, developed as part of the Regional Emissions Air-Quality Climate Health (REACH) assessment framework, and estimate PM2.5-associated health costs. We estimate that, in 2015, exposure to PM2.5 caused a nationwide welfare loss of US$248 billion (3.6% of the baseline welfare level). Over half the cost is from mortalities associated with chronic exposure, followed by broader economic loss (38%) and direct loss from short-term exposure (9%). The cost varies among provinces (0.5%–5.8% of the baseline welfare level), due to subnational heterogeneity in air quality, population density, and income levels. The cost in absolute terms is large in populous, coastal provinces, such as Shandong, Jiangsu, Zhejiang, and Guangdong, but when the local economy size is controlled for, the Greater Beijing area and central inland provinces also suffer large welfare losses in relative terms.

Cost-based feasibility study and sensitivity analysis of a new draw solution assisted reverse osmosis (DSARO) process for seawater desalination

In this study, a newly devised seawater desalination process, namely, the draw solution assisted reverse osmosis (DSARO) process, is proposed. A mathematical model for the DSARO process was developed and energy consumption and economic evaluation models were constructed to assess the feasibility of the DSARO process compared to the conventional reverse osmosis (RO) process. This work presents a characterization of important variables and the research on the effects of these variables. Compared to the conventional RO process, the DSARO process could have a 10% lower specific water production cost. The operating pressures required to reach 40% of overall recovery were approximately 35bar in the 1st RO process, and 30bar in the 2nd RO process. Due to its operating pressure being lower than the conventional RO process, the capital and membrane replacement costs could be reduced. The required conditions in the 1st RO membrane to drive the DSARO process were that the membrane structure parameter must be lower than 0.13mm, and the maximum operating pressure should be higher than 35bar. Even though these conditions are not available commercially at present, they could be attained based on the best available membrane technology in the literature.

Locating Multi Energy Systems for A Neighborhood In Geneva Using K-Means Clustering

To determine the optimum location for non dispatchable renewable energy systems, this study comes up with an integrated tool to place energy systems considering distributed energy demand and renewable energy potential.The Citysim urban energy planning software is used to compute the hourly heating demand of 371 buildings in Jonction, a neighborhood in Geneva. Hourly solar irradiation on the roof tops of each building is computed using the Citysim model. The electricity demand profile for each building is generated using the hourly profile for Geneva using the databases of Swissgrid and Swiss building database. Subsequently, k-means algorithm is used to cluster the buildings based on spatial distribution. An energy economic model is used to evaluate the losses in the thermal and electrical distribution networks and initial investment. Sensitivity of cluster size is evaluated using the energy economic model to obtain an optimum number of clusters and the locations for the energy systems.

Banking on banking: does “when” flexibility mask the costs of stringent climate policy?

Banking and borrowing emission allowances provide temporal flexibility in cap-and-trade systems, which can enhance the economic efficiency of environmental policy while adhering to the same cumulative emission budget. This paper investigates the role of temporal (“when”) flexibility from emission banking provisions under an economy-wide cap-and-trade policy in the USA. The current literature on meeting deep decarbonization targets almost exclusively assumes unlimited banking, which may bias policy recommendations and have important consequences for R&D prioritization and model development. Numerical experiments using the energy-economic model US Regional Energy, GHG, and Economy (US-REGEN) indicate that assumptions about banking materially impact cost and emission pathways in meeting long-term targets like 80% reductions by 2050 relative to 2005 levels. Given the stringency of long-run targets and convexity of marginal abatement costs, the cost-minimizing time path for mitigation with banking suggests that 2025 abatement should exceed the pledged level under the Paris Agreement (42% instead of 26–28%) to reduce future costs. Total policy costs are approximately 30% higher when banking is excluded; however, political economy barriers and uncertainty may limit the use of banking provisions despite their appeal on economic efficiency grounds. Banking on policy implementation with unlimited temporal flexibility may distort insights about the pace, extent, and economic impacts of future energy transitions associated with long-term abatement targets, especially for more stringent climate policies.

A synthetical evaluation of developing low-carbonized coal-fired power technologies in China

This study is attempted to analyze the integrated effects of low-carbonized developments for Chinese coal-fired power industry in two cases by extending a hybrid energy-economic model. The first case is energy efficiency improvement without CCS introduction. The second case is direct carbon removal with CCS technology, while coal controlling policy scenario is set as a baseline for comparison. Here oxy-fuel combustion has been selected as the only carbon capture technology due to its great potential in commercialization. Then the ecological co-benefits, environmental benefits, macroeconomic impacts and water saving effects of CO2 abatement from Chinese coal-fired power industry are analyzed. Simulation results show that energy saving and coal controlling policy can create huge ecological, environmental and water saving benefits. However, coal controlling policy also will cause great macroeconomic losses. But due to extra energy consumption, the large-scale commercialization of oxy-fuel CCS technology if without CO2 reuse will cause certain decrease of GDP growth rate and increase water consumption in China. Only when combined with resource usage of the captured CO2, oxy-fuel CCS introduction in China can have some practical application value.

Economic Effects of Renewable Energy Technologies

AbstractRapid economic development has resulted in the more frequent use of renewable energy technologies. On the other hand, the production and use of renewables fosters the development of new technologies, creating many new opportunities for entrepreneurial-minded individuals and, consequently, the economy in general. Renewable energy technologies have a multiplier effect in spurring the economy and the development of not only the energy sector but also all the supporting activities related to such industry. The purpose of this research is to analyse both the positive and the negative economic effects of investing in various renewable technologies, as well as to confirm, by means of the energy-economy model, the benefit of such technologies in boosting the economy.

Biospheric feedback effects in a synchronously coupled model of human and Earth systems

Significant feedbacks in energy, agriculture, land use and the carbon cycle are identified for the twenty-first century when climate impacts on land are factored into climate projections so as to allow for two-way interactions between human and Earth systems. Fossil fuel combustion and land-use change are the two largest contributors to industrial-era increases in atmospheric CO2 concentration1. Projections of these are thus fundamental inputs for coupled Earth system models (ESMs) used to estimate the physical and biological consequences of future climate system forcing2,3. While historical data sets are available to inform past and current climate analyses4,5, assessments of future climate change have relied on projections of energy and land use from energy–economic models, constrained by assumptions about future policy, land-use patterns and socio-economic development trajectories6. Here we show that the climatic impacts on land ecosystems drive significant feedbacks in energy, agriculture, land use and carbon cycle projections for the twenty-first century. We find that exposure of human-appropriated land ecosystem productivity to biospheric change results in reductions of land area used for crops; increases in managed forest area and carbon stocks; decreases in global crop prices; and reduction in fossil fuel emissions for a low–mid-range forcing scenario7. The feedbacks between climate-induced biospheric change and human system forcings to the climate system—demonstrated here—are handled inconsistently, or excluded altogether, in the one-way asynchronous coupling of energy–economic models to ESMs used to date1,8,9.

The impact of coordinated policies on air pollution emissions from road transportation in China

Improving air quality across mainland China is an urgent policy challenge. While much of the problem is linked to China’s broader reliance on coal and other fossil fuels across the energy system, road transportation is an important and growing source of air pollution. Here we use an energy-economic model, embedded in a Regional Emissions Air Quality Climate and Health (REACH) integrated assessment framework, to analyze the impacts of implementing vehicle emissions standards (ES) together with a broader economy-wide climate policy on total air pollution in five species and 30 Chinese provinces. We find that full and immediate implementation of existing vehicle ES at China 3/III level or tighter will significantly reduce the contribution of transportation to degraded air quality by 2030. We further show that road transport ES function as an important complement to an economy-wide price on CO2, which delivers significant co-benefits for air pollution reduction that are concentrated primarily in non-transportation sectors. Going forward, vehicle emissions standards and an economy-wide carbon price form a highly effective coordinated policy package that supports China’s air quality and climate change mitigation goals.

Water for electricity in India: A multi-model study of future challenges and linkages to climate change mitigation

This paper provides projections of water withdrawals and consumption for electricity generation in India through 2050. Based on the results from five energy-economic modeling teams, the paper explores the implications of economic growth, power plant cooling policies, and electricity CO2 emissions reductions on water withdrawals and consumption. To understand how different modeling approaches derive different results for energy-water interactions, the five teams used harmonized assumptions regarding economic and population growth, the distribution of power plants by cooling technologies, and withdrawals and consumption intensities. The multi-model study provides robust results regarding the different but potentially complementary implications of cooling technology policies and efforts to reduce CO2 emissions. The water implications of CO2 emissions reductions depend critically on the approach to these reductions. Focusing on wind and solar power reduces consumption and withdrawals, a focus on nuclear power increases both, and a focus on hydroelectric power could increase consumptive losses through evaporation. Policies focused specifically on cooling water can have substantial and complementary impacts.

The role of money and the financial sector in energy-economy models used for assessing climate and energy policy

ABSTRACTThis article outlines a critical gap in the assessment methodology used to estimate the macroeconomic costs and benefits of climate and energy policy, which could lead to misleading information being used for policy-making. We show that the Computable General Equilibrium (CGE) models that are typically used for assessing climate policy use assumptions about the financial system that sit at odds with the observed reality. These assumptions lead to ‘crowding out’ of capital and, because of the way the models are constructed, negative economic impacts (in terms of gross domestic product (GDP) and welfare) from climate policy in virtually all cases.In contrast, macro-econometric models, which follow non-equilibrium economic theory and adopt a more empirical approach, apply a treatment of the financial system that is more consistent with reality. Although these models also have major limitations, they show that green investment need not crowd out investment in other parts of the economy – and may therefore offer an economic stimulus. Our conclusion is that improvements in both modelling approaches should be sought with some urgency – both to provide a better assessment of potential climate and energy policy and to improve understanding of the dynamics of the global financial system more generally.POLICY RELEVANCEThis article discusses the treatment of the financial system in the macroeconomic models that are used in assessments of climate and energy policy. It shows major limitations in approach that could result in misleading information being provided to policy-makers.

Energy-Extended CES Aggregate Production: Current Aspects of Their Specification and Econometric Estimation

Capital–labour–energy Constant Elasticity of Substitution (CES) production functions and their estimated parameters now form a key part of energy–economy models which inform energy and emissions policy. However, the collation and guidance as to the specification and estimation choices involved with such energy-extended CES functions is disparate. This risks poorly specified and estimated CES functions, with knock-on implications for downstream energy–economic models and climate policy. In response, as a first step, this paper assembles in one place the major considerations involved in the empirical estimation of these CES functions. Discussions of the choices and their implications lead to recommendations for CES empiricists. The extensive bibliography allows those interested to dig deeper into any aspect of the CES parameter estimation process.

Modeling sustainable long-term electricity supply-demand in Africa

This paper develops a scenario-based model to identify and provide an array of electricity demand in Africa, and to derive them from the African power system of development. A system-based approach is performed by applying the scenario methodology developed by Schwartz in the context of the energy-economic modeling platform ‘Long-range Energy Alternative Planning’. Four scenarios are investigated. The Business as Usual scenario (BAU) replicates the regional and national Master Plans. The renewable-promotion scenario increases the share of renewable energy in the electricity mix. The demand and supply side efficiency scenarios investigate the impact of energy efficiency measures on the power system. The results show an increase in electricity demand by 4% by 2040, supply shortages and high emissions of Greenhouse Gases. Contrary to expectations, the renewable energy scenario did not emerge as the best solution to a sustainable electrification of the region. The energy efficiency scenarios have allowed us to draw a sustainable pathway for electrification.

Energy Rebound as a Potential Threat to a Low-Carbon Future: Findings from a New Exergy-Based National-Level Rebound Approach

150 years ago, Stanley Jevons introduced the concept of energy rebound: that anticipated energy efficiency savings may be “taken back” by behavioural responses. This is an important issue today because, if energy rebound is significant, this would hamper the effectiveness of energy efficiency policies aimed at reducing energy use and associated carbon emissions. However, empirical studies which estimate national energy rebound are rare and, perhaps as a result, rebound is largely ignored in energy-economy models and associated policy. A significant difficulty lies in the components of energy rebound assessed in empirical studies: most examine direct and indirect rebound in the static economy, excluding potentially significant rebound of the longer term structural response of the national economy. In response, we develop a novel exergy-based approach to estimate national energy rebound for the UK and US (1980–2010) and China (1981–2010). Exergy—as “available energy”—allows a consistent, thermodynamic-based metric for national-level energy efficiency. We find large energy rebound in China, suggesting that improvements in China’s energy efficiency may be associated with increased energy consumption (“backfire”). Conversely, we find much lower (partial) energy rebound for the case of the UK and US. These findings support the hypothesis that producer-sided economies (such as China) may exhibit large energy rebound, reducing the effectiveness of energy efficiency, unless other policy measures (e.g., carbon taxes) are implemented. It also raises the prospect we need to deploy renewable energy sources faster than currently planned, if (due to rebound) energy efficiency policies cannot deliver the scale of energy reduction envisaged to meet climate targets.

Near future of Polish energy system – COP21 and BAT conclusions

Next years will be very important for the development of the Polish energy system. Substantial part of the existing capacities are obsolete and need to be replaced or at least deeply modernised to fulfil expected emissions regulations. A hybrid of TIMES-PL and TIMES-MACRO energy-economic models was used to analyse the possible changes in the power generation mix and economic impact of different scenarios that combine the climate and air pollution regulations. The results show that to maintain the CO2 emission reduction trend a combination of measures is needed including the use of renewables, nuclear, natural gas and clean coal technologies. However, such transition in the energy sector will lead to a cumulative GDP loss in the near future once the possible GDP gains could happen after 2045 in which the economic, technical and legislative conditions are very difficult to foresee.

Prospects for the use of SMR and IGCC technologies for power generation in Poland

This study is a preliminary assessment of prospects for new power generation technologies that are of particular interest in Poland. We analysed the economic competitiveness of small size integrated gasification combined cycle units (IGCC) and small modular reactors (SMR). For comparison we used one of the most widely applied and universal metric i.e. Levelized Cost of Electricity (LCOE). The LCOE results were complemented with the results of energy-economic model TIMES-PL in order to analyse the economic viability of these technologies under operation regime of the entire power system. The results show that with techno-economic assumptions presented in the paper SMRs are more competitive option as compared to small IGCC units.

Investment appraisal of cost-optimal and near-optimal pathways for the UK electricity sector transition to 2050

Deep decarbonisation of the electricity sector is central to achieving the United Kingdom’s (UK) climate policy targets for 2050 and meeting its international commitments under the Paris Agreement. While the overall strategy for decarbonising the energy system has been well established in previous studies, there remain deep uncertainties around the total investment cost requirements for the power system. The future of the power system is of critical importance because low carbon electricity may create significant opportunities for emissions reduction in buildings and transport. A key policy application of quantitative analysis using models is to explore how much investment needs to be mobilised for the energy transition. However, past estimates of energy transition costs for the UK power sector have focused only on 2030 rather than 2050 and consider a relatively narrow range of uncertainties. This paper addresses this important research gap. The UK government's main whole system energy economy model is linked to a power system model that employs an advanced approach to uncertainty analysis, combining Monte Carlo simulation with Modelling-to-Generate Alternatives (MGA), producing 800 different scenario pathways. These pathways simultaneously consider uncertainties in policy, technology and costs. The results show that with No Climate Policy, installed generation capacities in 2050 are found in the range 60–75GW, while under an 80% Reduction in GHG Emissions, between 100GW and 130GW of plant are required. Meeting climate targets for 2050 is also found to increase the investment requirements for new electricity generation. The interquartile range for cumulative investments in new generation under the No Climate Policy scenario ranges from £60bn to £75bn, while under an 80% Reduction in GHG Emissions, investment requirements approximately double to £110bn - £140bn. The exercise demonstrates the importance of uncertainty analysis to policy evaluation, yielding insights for future research practice both in the UK and internationally.

Robust strategies of climate change mitigation in interacting energy, economy and land use systems

Purpose Bioenergy is a key component of climate change mitigation strategies aiming at low stabilization. Its versatility and capacity to generate negative emissions when combined with carbon capture and storage add degrees of freedom to the timing of emission reductions. This paper aims to explore the robustness of a bioenergy-based mitigation strategy by addressing several dimensions of uncertainty on biomass potential, bioenergy use and induced land use change emissions. Design/methodology/approach Different mitigation scenarios were explored by two different energy-economy optimization models coupled to the same land use model, which provides a common basis for the second generation bioenergy dynamics in the two energy-economy models. Findings Using bioenergy is found to be a robust mitigation strategy as demonstrated by high biomass shares in primary energy demand in both models and in all mitigation scenarios. Practical implications A variety of possible storylines about future uses of biomass exist. The comparison of the technology choices preferred by the applied models helps understand how future emission reductions can be achieved under alternative storylines. Originality/value The presented comparison-based assessment goes beyond other comparison studies because both energy-economy models are coupled to the same land use model.

THE FUTURE OF NATURAL GAS IN CHINA: EFFECTS OF PRICING REFORM AND CLIMATE POLICY

China is currently attempting to reduce greenhouse gas emissions and increase natural gas consumption as a part of broader national strategies to reduce the air pollution impacts of the nation’s energy system. To assess the scenarios of natural gas development up to 2050, we employ a global energy-economic model — the MIT Economic Projection and Policy Analysis (EPPA) model. The results show that a cap-and-trade policy will enable China to achieve its climate mitigation goals, but will also reduce natural gas consumption. An integrated policy that uses a part of the carbon revenue obtained from the cap-and-trade system to subsidize natural gas use promotes natural gas consumption, resulting in a further reduction in coal use relative to the cap-and-trade policy case. The integrated policy has a very moderate welfare cost; however, it reduces air pollution and allows China to achieve both the climate objective and the natural gas promotion objective.