1. Task 1: Energy Models in China Fei TENG Global Climate Change Institute, Tsinghua University BAS I C BASIC

2. Outline The Time Line of Energy Models Overview of Bottom-up Models Overview of Top-down Models Major Findings from The Task BASI C

3. Time Line of Energy Models BASI C 19801990 20002005 MARKALLEAP 3E IPAC YEsLiangs HE CNAGE PRCGEM DRCSC TEDCGE IPAC-SGM Bottom-up Top-down: Input-Output Computable General Equilibrium

4. Overview of Bottom-up Models BASI C NameObject Reference Scenario Base Year GDPEnergyEmission MARKAL optimization of energy system path, emissions forecasting 1995 1995-2030 6.45% 1995-2030 2.4% 1655MtC (2030 BAU) LEAP optimization of energy system path, emissions forecast 1999 1999-2030 6.6% 1999-2030 2.6% 1700 MtC (2030 BAU) AIM Based on the Asian center to describe the problem and policy analysis --- 3E optimization of energy system path, emissions forecasting 2000 2000-2050 6.2% (from MEM) 2000-2030 2.8% 1710 MtC (2030 BAU)

5. MARKAL Model Developed by BNL and KFA, a multi-periods LP model Minimize the cost of satisfying the energy demand China MARKAL-MACRO Model, Base Year: 1995. Period covered: 1995-2050, every 5 years. Sectors: 5 Sectors, Agriculture, Industry, Residence, Transport and Service, 30 sub-sectors in detail. Technology: 20 energy carriers; 36 reference technologies and 35 advanced technologies. Applications: INET: impacts of emission reductions on China s GDP with MARKAL-MACRO Model; Beijing s energy supply scenarios and possible impacts; SHESRI: responses of the energy system to energy structure adjustment policies in Shanghai BASI C

6. BASI C MARKAL Model BAU: 2000-2050 Population: 1.294 billion for 2000; 1.495 billion for 2020; 1.56 billion for 2030; 15.75 billion for 2050. Economy Growth: 1074.6 billion $ for 2000; 3710.5 billion $ for 2020; 6338.1 billion $ for 2030 (1995 Price) Economy Structure. Energy Service: 5 sectors. Resource constrain for primary energy: e.g. Coal, 1823Mt for 2010, 2512Mt for 2030. Energy Technologies: Reference technologies + Advanced technologies (CCS + polygeneration)

7. MARKAL Model Scenarios: ADV: considering advanced technologies. C20P, C30P and C40P: reduce emission from 2020. 2030 and 2040. N1 and N2: constrain on Nuclear capacity. Four reduction scenarios: 11%, 23%, 27.4% and 46.4%.

8. LEAP Model Base Year: 1999. Period covered: 1999-2030. Sectors: 5 Sectors, Agriculture, Industry, Residence, Transport and Service. Scenario-based model describing the production, transformation and consumption of energy No linkage between energy price and the economy Activity-based energy demand forecasting Used for environmental impact analysis in conjunction with Technology and Environmental Database Application NDRC Energy Research Institute (ERI), INET and SHESRI ERI: Sustainable Energy Development Scenarios in China INET: China s energy system under future Northeast Asia cooperation scenario

9. LEAP Model BASI C ScenariosResults ERI: S1: focus on the energy efficiency increment by economic development S2: focus on the optimistic sustainable development and energy development scenario S3: is the ideal scenario. In 2020, S1, S2 and S3 will reach 3100Mtce, 2761Mtce, 2318Mtce separately. The total carbon emissions for three scenarios will reach 1899.9Mtc 1659 Mtc 1265.3 Mtc separately. INET : BAU scenario H-E scenario (natural gas import) H-I scenario (nuclear, renewable energy) Calculation results show that the primary energy demand in three scenarios (BAU, H-E, H-I respectively) can reach 2967 2842 3119Mtce respectively, with import taking up 21% 31% 13% respectively of the total primary energy supply in these scenarios. CO2 emission will reach 6236 5568 5568Mt respectively and SO2, NOx emission will amount to 30.2 21.6 27Mt and 23 17 21Mt respectively.

10. AIM Model Detailed technical assessment model for evaluation of technical and GHG mitigation policies Suitable for short- and medium-term analysis Could be used to evaluate the effects of one single or several policies Application: ERI Insufficiencies: No linkage with economic model and exogenous setting of energy demand Social and other barriers not considered Not able to cover all technologies

11. Economy-Energy- Environment 3E Model Three components: macroeconomic model (MEM), end use forecasting model (EDFM), energy system optimization model (ESOM) MEM: to estimate the long-term economic development EDFM: to forecast end use energy demand with energy intensity index, elastic coefficient method and econometrics method ESOM: to optimize the energy system based on energy flow networks BASI C

12. Economy-Energy- Environment 3E Model Developed by INET, Tsinghua Application: China s CO2 abatement cost during 2015-2030 Relationship between China s CO2 abatement cost and energy strategies Responses of energy system to the mitigation policies Insufficiencies Outputs of ESOM are technology-based, not sector- based MEM model is a macro-econometric, not suitable for long-run forecasting Open-Loop, no feed back

13. Major Findings from Bottom- up Models Difficult to compare the result from different models because of different scenarios setting and period covered. A set of scenario should be developed Social economic scenario: population, GDP etc. Energy Service scenario: agriculture, industry, household, commerce and transport.

14. Overview of Top-down Models BASI C NameStructure Model Elements EconomyEmissionTechnologyClimate YE Dynamic input- output model IO tableYes IO coefficient and sub-sectors Yes Liang Input-output analysis + scenario analysis IO tableNoIO coefficientNo HEStatic CGECGEFossil fuel combustionCESYes PRCGEMStatic CGECGEFossil fuel combustionLeontief/CESYes DRCSC s Dynamic CGECGENoCESNo TEDCGEDynamic CGECGE Fossil fuel combustion and cement production CESYes CNAGEStatic CGECGEFossil fuel combustionCDYes IPAC-SGMSGM CGECGE--- Yes

15. YE s IO Model Developed by INET Multi-sectors, multi-period nonlinear input-output model Maximize the aggregated consumer utility while only the utility caused by consumption is considered There GHG emission sources considered: combustion of fossil fuel, production process and some by- products Application: impacts of different mitigation scenarios on the GDP BASI C

16. Liang s IO Model Application China s energy demand and GDP energy intensity during 2010-2020 Impacts of different socio-economic factors on energy demand and energy intensity Insufficiencies RAS adjustment method no suitable for a fast developing economy like China BASI C

17. Comparison between IO models DeveloperDescriiptionObjective YEData source: 1987 33*33 sectors input-output table. Maximize the utility function of a representative consumer. The consumers in INET are divided into urban residents and rural residents. Some sectors in input-output table is divided into more detailed sub-sectors to show the substitution and complementary among different factors according to the status of different technologies. To compare different abatement schemes and calculate the optimal reduction path under given reduction goal. LiangData source: 1997 40*40 sectors input-output table, other data came from National communiqué 1997 on national economic and social development in China Scenarios setting: 6 scenarios are considered Year 1997 is set as the base year in this model. Energy demand and energy intensity are predicted using this model. BASI C

18. HE Model A static model with 9 sectors Impacts of carbon tax on the economy Carbon tax imposed on the production and import of fossil energy, and thus no consideration of CO2 emission from other sources China s CDM potential: adjustment of economic structure, technological progress, adjustment of energy structure and energy efficiency improvement 1997 I-O table BASI C

19. PRCGEM Large-scale model with 118 sectors and 30 areas Mainly impacts of trade liberalization policies, but also of environmental policies Carbon tax imposed on the consumption of fossil fuel, and thus no consideration of CO2 emission from other sources Long-term and short-term mitigation cost, with different assumptions BASI C

20. DRCSC s CGE Model Multi-sector dynamic model Application the future trend of industry structure in China the environment impact of these trends impact of pollution limitation policy on the economic growth and industrial structure environment impact of trade liberalization and globalization in China No consideration of CO2 mitigation BASI C

21. TEDCGE Model 10 sectors Carbon tax on fossil fuel production and import, based on adjusted factors Emission from industrial process also considered Impacts of carbon tax under four scenarios: Only carbon tax Carbon tax and whole transfer payment Carbon tax and 50% transfer payment Carbon tax and tax reduction in other areas China s CO2 mitigation potential and cost

22. CNAGE Model Developed jointly by Chinese and Norwegian Statistic Bureaus Impacts of carbon tax of two levels on the short- and long-term GDP and productions of different sectors BASI C

23. IPAC-SGM Model Developed jointly by ERI and US Pacific Northwest Laboratory 20 sectors with 9 energy production and 11 energy consumptions sectors Application China s energy scenarios till 2050 Impacts of carbon tax, technology investment and technology cooperation on GHG emissions, the economy and different sectors BASI C

24. Comparing CGE models BASI C NameDescriiptionObjective HEStatic CGE model 9 sectors, CES production function with (K,L)E fashion. 1997 input-output table Unit carbon tax collected on the fossil fuel production. Armingtion assumption and small country assumption. To analyze the impacts of carbon tax on the national economy PRCGEMDynamic CGE model. 118 sectors version and 34 sectors version. CES production function with (K,L)E fashion, one representative consumer. Data basis: the 1992 input-output table. Only the emission caused by fossil fuel combustion is considered. A unit tax on the carbon content in fossil fuel instead of carbon dioxide emission. To analyze the impacts of trade liberalization. Carbon tax also can be analyzed when energy is included as a productive factor. DRCSCsTo analyze the impacts of globalization and trade liberalization on environmental pollutions.

25. Comparing CGE Models TEDCGEDynamic CGE model. 10 productive sectors, CES production function with (K,E)L fashion. Two reprehensive consumers: urban resident and rural resident. The Armington assumption and small country assumption. An eclectic treatment for emission based on the carbon content of fuel, the fraction of stored carbon, the fraction of carbon oxidized. The carbon tax is collected on the production and import of the primary energy. Also includes the carbon dioxide emission from the industrial process, especially the cement production. To analyze the impacts of carbon tax on the national economy CNAGEStatic CGE model. Constant return to scale Cobb-Douglas production function with the aggregation fashion of (L, E, K). 19 commercial energy products while 5 types for final consumption. The labor market is not clear for the unemployment and determined by the profit maximization behavior of producers. To analyze the impacts of carbon tax on the national economy IPAC- SGM The economy system includes residential sector, government sector, agriculture, energy and other sectors. Two kinds of labor: urban labor and rural labor to show the cost difference between these two labors. The investment for nuclear power and hydro power is under the control of central government. To analyze the impacts of carbon tax on the national economy and possible strategy for abatement.

26. Major Findings from CGE models Elasticity estimation to reduce uncertainties Model structure: competitive market Detailed expression of technology in the models Treatment of non-commercial energies BASI C

27. Suggestion Strengthened fundamental econometric research to complete the data basis and reduce the impacts of estimated parameters More comprehensive welfare analysis for different consumer groups More attention given to specific market conditions and price regulation, and thus some structural CGE models could be the future direction Non-commercial energies be considered More detailed description of technologies as technology plays an essential role in making relevant decisions BASI C

28. Future Works Compare not only the model structure but also the scenarios. Reorganize the material to account for different audiences.

29. Thank for your attention ! BASI C