Workshop on the Criteria to establish projections scenarios Sectoral projection guidance: energy industries; combustion in manufacturing and construction; fugitive emissions from production and transport of fuels Mario Contaldi, TASK-GHG Emanuele Peschi, TASK-GHG Ankara, March 2016

Reporting requirements Sectoral projection guidance: (i) 1.A.1 energy industries (ii) 1.A.2 combustion in manufacturing and construction (iii) 1.B fugitive emissions from production and transport of fuels 2

Outline of presentation Source description Economic assumptions and activity data Technology assumptions and emission factors EU ETS / non ETS sources Links with other CRF categories Policies and measures GHG projection indicators Source specific QA/QC Discussion 3

1.A.1 energy industries 4

1.A.1 Energy Industries Comprises emissions from fuels combusted by the fuel extraction or energy-producing industries:: – 1A1a Electricity and heat production, including Electricity generation, Combined heat and power (CHP), Heat plants – 1A1b Petroleum refining – 1A1c Manufacture of solid fuels and other energy industries, including Manufacture of solid fuels Other energy industries 5

Activity data projections: energy industries 6 Wide variety of different modeling approaches and datasets are available and in use at an EU level and by individual MS. Depending on the available information, the proposed approach to projecting future activity data is as follows: – If an appropriate national-level energy model is available, use Tier 3 – f some MS level information is available, use Tier 2 – Otherwise, use Tier 1 Share of activity accounted for by sources covered by the EU ETS and ESD should be separated out

Activity data projections: energy industries Where MS level information is considered to be insufficient to develop robust projections of future energy use, Tier 1 approach would be to use results of EU or international energy models that provide information on projected fuel use by Member State e.g. PRIMES, IEA. Should be linked to / checked against MS level information on energy consumption from the emissions inventory, in order to ensure consistency Where data from such models are not provided at the required level of disaggregation for reporting purposes, it may be necessary to apportion emissions using a simplified approach e.g. pro-rata using historical inventory data 7

Activity data projections: energy industries Possible options for a Tier 2 approach include taking national level data on projections of key parameters (such as GDP, fuel prices, population) and using these to make adjustments to international/EU models that are available. To be discussed – possible issues over access/availability and ease of use of models. 8

Activity data projections: energy industries Tier 3 approach is to use a detailed MS specific model of fuel use, covering either all of the relevant sectors and fuels, or specific models for individual sources. Types of models typically available for modelling of energy demand for this sector include: – Econometric models – Optimisation models – Simulation models Engineering models Guidance to include summary of different types of models including inputs and outputs and relative pros and cons Specific issues to consider include split between ETS and non-ETS sources, import/export of electricity 9

Emission factor projections: energy industries Tier 1: where no data are available on emission factors at the MS level, the default values in the 2006 IPCC Inventory Guidelines can be used. Tier 2: as with the Inventory Guidelines, use MS specific emission factors derived from measurement (or calculation) – may include national and/or regional emission factors. Tier 3: approach includes technology-specific emission factors – such factors are generally more appropriate where non-CO2 greenhouse gas emissions are concerned. 10

ETS / non-ETS sources: energy industries Possible options for estimating share of emissions for sources covered by the EU ETS include the following: – Option 1: using information from latest historical inventory and Registries, estimate share of emissions within the sector that arise from sources covered by the EU ETS – if no better data are available, assume that % share will remain constant in the future. – Alternatively assume that emissions from traded sectors will decline at same rate as decline in the EU level cap. Option 2: More detailed approach considering likely changes at a MS level based on level of emissions covered by free allocation, estimated share of emissions to be covered by the New Entrant Reserve in the MS and expected levels of emissions from sources where credits will be obtained by auctioning. 11

(ETS –nonETS, continued) Option 3: Split fuel consumption for ETS and non-ETS sources and use energy model to generate GHG projections separately. Linking with other CRF categories - Overlaps with industrial processes – ensure consistency in activity data and other relevant assumptions Examples include: – Coal consumption activity data – relevant for emissions from FGD – Oil consumption activity data – relevant for fugitive emissions (1.B.2) 12

1.A.2 Combustion in Manufacturing Industries & Construction 13

Source description: 1.A.2 Combustion in Manufacturing Industries & Construction 14 Comprises primarily CO2 emissions from fuels combusted by the manufacturing industries & construction sector: – 1A2a Iron and steel – 1A2b Non-ferrous metals – 1A2c Chemicals – 1A2d Pulp, paper and print – 1A2e Food processing, beverages and tobacco – 1A2f Other (include cement-bricks-glass-tiles) Detailed definitions of the above are provided in the 2006 IPCC Guidelines.

Activity data projections: 1.A.2 Combustion in Manufacturing Industries & Construction Wide variety of different modeling approaches and datasets are available and in use at an EU level and by individual Member States Depending on the available information, the proposed approach to projecting future activity data is as follows: – If a projection of future fuel consumption or production activities in the individual sub-sector is available for the MS, use Tier 3. – If an appropriate national-level energy model which includes fuel consumption activities from the manufacturing industries & construction is available, use Tier 2. – Otherwise, use Tier 1. 15

Activity data projections: 1.A.2 Combustion in Manufacturing Industries & Construction Where the MS-level energy model or existing database is insufficient to project robust future fuel consumption data in the individual sub-sectors, the tier 1 approach is to use the results of EU or international energy models e.g. PRIMES, IEA World Energy Outlook Activity data projections from these sources should be checked against MS level information in the historical inventory in order to ensure consistency.. If the historical data are inconsistent, a simple approach would be to take the percentage changes from the EU/international models and apply these to the data used in the national inventory. 16

Activity data projections: 1.A.2 Combustion in Manufacturing Industries & Construction if a national-level energy model can project an adequate level of fuel consumption and production activities data for the manufacturing industries & construction sub-sectors, the projection from the model should be used (tier 2 approach) For a tier 3 approach, projection of MS specific future fuel consumption at the individual sub-sector level should be used. If projection of future production activities in the individual sub-sector is available at the MS level, then the growth rate from this projection can be applied to the most recent year’s fuel consumption data to project future fuel consumption for the sector. 17

Emission factor projections: 1.A.2 Combustion in Manufacturing Industries & Construction Tier 1: where no data are available on emission factors at the MS level, the default values in the IPCC Inventory Guidelines can be used. Tier 2: as with the Inventory Guidelines, use MS specific emission factors derived from measurement (or calculation) – may include national and/or regional emission factors taken from inventory. Tier 3: technology-specific emission factors? 18

ETS / non-ETS sources: manufacturing As with 1.A.1, many of the emission sources in this sector will be covered by the EU ETS. Same options as for 1.A.1: – Option 1: using information from latest historical inventory and Registries, estimate share of emissions within the sector that arise from sources covered by the EU ETS – if no better data are available, assume that % share will remain constant in the future. – Alternatively assume that emissions from traded sectors will decline at same rate as decline in the EU level cap. 19

ETS / non-ETS sources: manufacturing Option 2: More detailed approach considering likely changes at a MS level based on level of emissions covered by free allocation, estimated share of emissions to be covered by the New Entrant Reserve in the MS and expected levels of emissions from sources where credits will be obtained by auctioning. Option 3: Split fuel consumption for ETS and non- ETS sources and use energy model to generate GHG projections separately. 20

Linking with other CRF categories: 1.A.2 Combustion in Manufacturing Industries & Construction Overlaps with industrial processes – ensure consistency in activity data and other relevant assumptions Examples include: – Oil consumption activity data – relevant for emissions from catalytic burning and conversion loss of refineries (2.B.5) – Activity data for industrial combustion should be used for industrial processes (2.A-2.D, e.g. cement and steel production ) 21

1.B Fugitive emissions from production and transport of fuels 22

Source description: 1.B Fugitive emissions from production and transport of fuels Comprises of fugitive emissions, including CH4 and CO2, from fuel extraction, processing, storage and transport to the point of final use. The 2006 IPCC guidelines subdivide the sector using the International Standard Industrial Classification as follows: – 1B1 Solid fuels (i.e. coal) – 1B2 Oil and natural gas Primary sources of fugitive emissions from coal mining and handling process include ventilation air and degasification systems for underground mines, surface mining area, abandoned mines and flaring of drained methane. Closed or abandoned mines continue to emit GHGs for some time after the mine has been decommissioned. Primary sources of fugitive emissions from oil and natural gas systems include equipment leaks, evaporation losses, venting, flaring and accidental releases. 23

Activity data projections: 1.B.1 Coal mines 1B1 Coal mines – in operation: – If future projection of the coal production activities and CH4 recovery and utilisation information for individual mines within the MS is available, use Tier 3. – If future projection of the coal production activities information at the national level is available, use Tier 2 – Otherwise, use Tier 1. 1B1 Coal mines – post mining: – If future projection of the mine closures, gas reserve, flooding expectations, and CH4 recovery and utilisation information for individual mines and mine areas within the MS is available, use Tier 3. – If future projection of the mine closure information at the national level is available, use Tier 2 – Otherwise, use Tier 1. 24

Activity data projections: 1.B.2 Oil and gas Overall proposed approach: – If future projection of the oil & gas production volume in the MS level is available, use Tier 2 – Otherwise, use Tier 1. Tier 1: If fugitive emissions from national GHG inventory and historical oil & gas production data do not show considerable changes in recent years, most recent emissions should be used and held constant. Tier 2: For each source, reported fugitive emissions should be compared to historical production data in order to determine a correlation. This relationship should be applied to a projection of oil & gas production at the national level for future years to derive emissions. 25

Emission factor projections: 1.B.1 Coal mines Coal mines – in operation: – Tier 1: use the default emissions factors from 2006 IPCC Guidelines. – Tier 2: use the emission factor reported in the most recent MS GHG inventory. Coal mines – post mining: – If mine-specific emission factor and decline curves based on measured historic emissions is known, use Tier 3 – If a MS-specific emission factor is available, use Tier 2. – Otherwise, use Tier 1 (IPCC Guidelines). 26

Emission factor projections: 1.B.2 Oil and gas Tier 1: Use default emission factors from 2006 IPCC Inventory Guidelines. Tier 2: Using the historical oil & gas production activities and fugitive emissions from the sector at the MS level, emissions factor expressed in units of mass emissions per unit volume of oil or gas throughput can be calculated. This is held constant for the future years. Tier 3: If there are known policies and programmes specifically targeted at reducing fugitive emissions from this sector and data on potential impacts is available at the MS-level, this can be taken into account. 27

Linking with other CRF categories: 1.B Fugitive emissions from production and transport of fuels Overlaps with energy industries – ensure consistency in activity data and other relevant assumptions Examples include: – Oil and gas production volumes – Coal production volumes – Estimated imports / exports 28

Source specific QA/QC First step is general QA/QC (TCCCA) Checking input and output data against those data in international models/outputs, and accounting for any divergences. Checking for consistency with relevant data on process emissions. Checking against the historical time series for activity data and emission factors as well as overall emissions. Projections developed should be checked against legislative and other limits on emissions. These include EU-level commitments (such as the EU ETS and ESD) as well as national and/or regional targets (such as carbon budgets/caps for countries, regions or sectors). 29

Discussion points Level of source disagregation versus guidance detail Level of detail on characteristics and relative pros and cons of different energy models Options for separating out ETS and non-ETS sources Taking into account electricity imports/ exports Taking into account CCS ? 30