25 Apr 2013 ... International Energy Agency (IEA): Bottom-up approach o World Energy .... +
WEO 2013 climate change special report (early release 10 June).
FROM MODELING OUTPUTS TO INPUTS INTO POLICY DISCUSSIONS OECD / IEA APPROACH TO LOW EMISSIONS DEVELOPMENT
STRATEGY
Bertrand Magné OECD - Environment Directorate Expert meeting: Modelling for carbon pricing instruments 24-25 April 2013
IEA & OECD Key policy assessment tools Organisation for Economic Co-Operation and Development: Top-down approach o Environment Directorate Macro-economic model ENV-Linkages model
International Energy Agency (IEA): Bottom-up approach o World Energy Outlook World Energy Model o Time horizon: 2035 / Short term markets / Policy focus
o Energy Technology Perspectives Suite of models incl. TIMES (power optimisation) & MOMO (Transport) o Time horizon: 2050 / More technology oriented
Mid- to long-term energy projections help provide strategic direction for decision makers o Inform policy makers in government o Outline pathways forward for businesses to make appropriate investment decisions o Avoid the issue of short-term fluctuations and market swings
Complementary approaches between OECD and IEA, more and more integration across models
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OECD QUANTITATIVE POLICY ASSESSMENT: ENV-LINKAGES MODEL
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OECD ENV-Linkages Model Computable General Equilibrium (CGE) model o o o o
Simultaneous equilibrium on all markets Structural trends, no business cycle International trade Recursive, dynamic, with capital vintages
Main drivers: Primary factor supply, relative price changes, factor productivity, energy efficiency improvement
Link from economy to environment o o
Greenhouse gas emissions linked to economic activity Assessment of policy costs; climate impacts (and benefits of action) not factored in
Variety of policy instruments o Market-based: ETS, carbon taxes, baseline & crediting (offsets), … o Other : Regulatory policy, fiscal instruments (e.g. household income taxes, tax subsidies on production factors to producers, excise taxes on product sales by agents, tariffs and export taxes, government spending), …
Full where and how flexibility… but not when flexibility (exogenous policy time profile)
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Policy relevance / Outreach Analysis endorsed by member countries
Country representatives involved in: o Working Parties (e.g. on Climate, Investment & Development) o Task forces o Other ad-hoc working groups
Climate Change Expert Group (CCXG) www.oecd.org/env/cc/climatechangeexpertgroupccxg.htm Group aim: to promote dialogue on and enhance understanding of technical issues in the international climate change negotiations Policy message relayed by Office of the Secretary General, by OECD Public Affairs and Communication Office, access to the media 5
ENV-Linkages: Overview of main recent applications OECD Environment Directorate
‘OECD Environmental Outlook to 2030’ (2008) ‘OECD Environmental Outlook to 2050’ (2012) Several inputs to OECD Green Growth Strategy (2010) Working papers: baseline and model descriptions, carbon markets linking, Copenhagen pledges, labour market rigidities, competitiveness, nuclear phase-out, energy efficiency, distributional impacts with multiple households (planned work)…
Joint collaborations with other OECD departments ‘The economics of climate change mitigation: Policies and options for global action beyond 2012’ (2009) – with OECD Economics department Reform of fossil fuel subsidies (2010, 2011) – with IEA, OECD Trade & Agriculture, others + Joint report of the IEA, OPEC, the OECD and the World Bank as a G-20 contribution http://www.oecd.org/environment/fossilfuelsubsidies.htm Collaboration with IEA, incl. World Energy Outlook (2009-2013) 6
IEA QUANTITATIVE POLICY ASSESSMENT: WORLD ENERGY MODEL
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IEA World Energy Model Simulation model that allows scenario analysis o o o o
Detailed sectoral and regional energy demand balances Regional supply of all fuels and trade matrixes CO2 emissions from fuel combustion Investment needs in the supply and end-use technologies
Time horizon to 2035, with annual data o Key input: IEA statistics, energy balances o Complete update every year (e.g. in WEO 2012 the last data point was 2010)
Regional resolution: 25 regional models o of which 11 country models, including Brazil, China, India, Russia, South Africa, US, Japan…
Demand-side part of the model consists of eight main modules o Industry, Transport, Residential, Services, Agriculture, Power Generation, Heat Production, Other Transformation & Non-Energy Use
Production-side part of the model consists of three main modules o Coal, Oil, Gas and Biomass supply modules
www.worldenergyoutlook.org/weomodel/
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World Energy Outlook: Policy-oriented key topics Year
Country focus
WEO 2007
China and India
WEO 2008
Sub-saharan countries
Fuel Focus
Other Energy Poverty...
Oil & Gas major update (incl. Oil field-
• Energy use in cities • Climate policy (incl.
by-field analysis)
IEA 450 scenario)…
WEO 2009
South East Asia
Natural Gas
Climate policy…
WEO 2010
CASPIAN region
Renewables
Fossil-fuel subsidies
WEO 2011
Russia
Coal
• Implications of less nuclear power • Energy for all…
WEO 2012
Iraq
Energy Efficiency
Water for energy
Brazil
• Oil • Unconventional gas
• Energy and competitiveness • ASEAN countries
WEO 2013
+ WEO 2013 climate change special report (early release 10 June) - Pinpoints policy measures which can be implemented by 2020 at no economic cost (OECD input) - Risks and opportunities for the energy sector in a 2 °C world, incl. stranded assets
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Policy relevance / Outreach
Preparation of yearly special WEO focuses: Engagement with representatives of governments, international organisations, industry and finance sectors, academia during dedicated workshops Public-private sector dialogue Energy Business Council: A forum to enhance co-operation between the energy sector and energy policy makers www.iea.org/energybusinesscouncil/ Fatih Birol: Chairman of the World Economic Forum’s Energy Advisory Board, has served on UN Secretary-General’s ‘High-Level Group on Sustainable Energy for All’
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IEA Energy Training and Capacity Building Programme Seeks to support and benefit non-member countries
Methodologies, tools and techniques shared with relevant officials in central governments and to key national stakeholders (incl. large energy industry) Some training activities designed for experts (e.g. energy statistics), others are targeted at a diverse audience of middle- to senior-level managers and policy makers.
www.iea.org/training/
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THANK YOU! FOR FURTHER INFORMATION:
[email protected]
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EXAMPLE OF OECD/IEA COLLABORATION AND DATA EXCHANGE: ECONOMIC IMPLICATIONS OF THE IEA EFFICIENT WORLD SCENARIO
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Key elements Energy efficiency: Vital element to tackle long term climate challenges o Central role of energy efficiency investments in the policy package o Based on economically viable technologies only
Economic impacts of enhanced energy efficiency measures o o
GDP, consumption, sectoral and regional production and trade patterns Additional benefits in terms of non-CO2 emission abatement
Draws upon IEA Efficient World Scenario (WEO, 2012) Original linking of Bottom-Up to Top-Down models (resp. IEA Word Energy Model & OECD ENV-Linkages) o o
Consistent set of results across models Energy and economic details at the sectoral and country level 14
Energy-related CO2 emissions
Source: IEA World Energy Outlook (2012)
Energy efficiency alone contributes more than half of all emissions savings needed to achieve the IEA 450 Scenario objective, relative to the IEA central New Policies Scenario 15
Energy savings in the Efficient World Scenario
Source: IEA World Energy Outlook (2012)
Fossil fuels’ share of primary energy consumption falls from 81% in 2010 to 74% in 2035, as demand for both oil and coal peaks before 2020 and declines through 2035
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Key findings (1/2) Fundamental policy channels: Decomposition of effects o
Increased economic activity reflects a gradual reorientation of the global economy, encouraging production and consumption of less energyintensive goods and services
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Capital reallocation across sectors Gradual decrease in energy expenditures and production costs
Increased demand for cheaper goods and services Adjustments in regional, industrial competitiveness
Environmental benefits of enhanced energy efficiency policy o
18% drop in energy-related CO2 emissions in 2035
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Net cumulative methane emission abatement is 6.2 GtCO2eq over 20102035, equivalent to the amount of methane emitted globally by energy and agriculture sectors in 2010 17
Key findings (2/2) Economic impacts
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Cumulative boost to the global economy of almost USD 20 trillion over the projection period
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In 2035: Global GDP +1.1%, global consumption +1.2%
o
Contrasted outcomes across countries depend on current economic structure and potential for efficiency improvement (through targeted investments) Country profiles (GDP, household consumption, trade)
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Per cent change in sectoral activity (real value added) Efficient World Scenario relative to the New Policies Scenario Case of energy importer: JAPAN
Source: OECD ENV-Linkages model
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Per cent change in sectoral activity (real value added) Efficient World Scenario relative to the New Policies Scenario Case of energy exporter: The RUSSIAN FEDERATION
Source: OECD ENV-Linkages model
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Impact on consumption Efficient World Scenario relative to the New Policies Scenario To be completed
Source: OECD ENV-Linkages model
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OECD ENV-LINKAGES MODEL
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ENV-Linkages sectoral aggregation 4 primary energy related sectors o Crude oil, coal, gas, petroleum refineries
7 electricity related technologies (‘sectors’) o Fossil w/o CCS, coal w/ CCS, gas w/ CCS, hydro/geothermal, nuclear, solar/wind, biomass/waste
6 energy intensive industries o Non-ferrous metals, iron & steel, chemicals, fabricated metal products, paper and paper products, non-metallic minerals
7 other sectors o Food products, other mining, other manufacturing, transport services, transport equipment, services, construction & dwellings
5 agriculture related sectors o Rice cultivation, other crops, livestock, forestry, fisheries
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Linking emissions to economic activity CO2 emissions from fossil fuel combustion o Fixed emission coefficients directly linked to fossil fuels i. Mitigation options fully endogenous in the model: substitution between different fuel inputs ii. substitution away from energy to other inputs (capital, labour) iii. reduction of production/consumption volume iv. substitution between electricity technologies
Other greenhouse gases (CH4, N2O, PFCs, HFCs, SF6) and CO2 emissions from industrial processes o Fixed emission coefficients linked to production output o Mitigation options through specification of marginal abatement cost (MAC) curves
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ENV-Linkages: Representation of the production function of a typical sector
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An economic baseline projection Projecting future trends in socio-economic developments
Based on a “conditional convergence” methodology o Based on recent growth theory and specifically on methodology developed by the Economics Department o Countries further from their potential are expected to grow faster
o No direct convergence in levels of e.g. GDP, but convergence in drivers of growth: total factor productivity, labour productivity, …
Additional data used for baseline calibration o Energy production and demand from IEA WEO projections o US EPA non-CO2 GHG projections o ILO labour market feature projections o UN population projections o ….
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Shared Socio-Economic Pathways (SSP)
Source: O’Neill et al. (2012) 27
Illustrative long run convergence of per capita GDP
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Source: OECD ENV-Growth model
IEA WORLD ENERGY MODEL
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IEA World Energy Model Exogenous Assumptions
Regional Modules
Final Energy Demand
Power Generation, Refinery
Fossil Fuel Supply
Regional Energy Balances
CO2 Emissions
Investment
Final Energy Demand: the critical starting point
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IEA World Energy Model: The transport sector
The World Energy Model deploys a high resolution in terms of energy demand, sectors and technologies 31
IEA World Energy Model: The industry sector
The World Energy Model deploys a high resolution in terms of energy demand, sectors and technologies 32
IEA World Energy Model: The buildings sector
The World Energy Model deploys a high resolution in terms of energy demand, sectors and technologies 33
