1. Mitigating Environmental Emissions from the Power Sector: Analysis of Technical and Policy Options in Selected Asian Countries Ram M. Shrestha S. C. Bhattacharya Asian Regional Research Programme in Energy, Environment and Climate (ARRPEEC) Asian Institute of Technology, Thailand

2. AIT COP 8, 01 November 2002, New Delhi, India 2 Overview of presentation ARRPEEC power sector project Status of power sector Least cost generation options under CO 2 emission targets Identification of some CDM projects Conclusions

3. AIT COP 8, 01 November 2002, New Delhi, India 3 Share of the power sector in total national CO 2 emissions (1990 and 1999) Power sector’s share in CO 2 emission in 1999: 12% in Sri Lanka to over 42% in China and India The sector’s share increasing in China, India, Indonesia and Sri Lanka. Decreasing share in Thailand and Vietnam

4. AIT COP 8, 01 November 2002, New Delhi, India 4 The ARRPEEC Power Sector Project Network AIT = Asian Institute of Technology SPPERC= State Power Economic Research Center, China IIT-K = Indian Institute of Technology, Kanpur CEA = Central Electricity Authority, India FIIEE= The Foundation of Indonesian Institute of Energy Economics SLEMA= Sri Lanka Energy Managers Association SIIT= Sirindhorn International Institute of Technology, Thailand IE= Institute of Energy, Vietnam

5. AIT COP 8, 01 November 2002, New Delhi, India 5 The ARRPEEC Power Sector Project: Specific Objectives l Determination of least cost supply-side options for GHG and other harmful emissions mitigation subject to CO 2 emission targets, l Identification of some CDM projects and assessment of their GHG and other harmful emissions mitigation potential l Assessment of environmental implications of Independent Power Producers (IPPs) and Distributed Power Generation (DPG)

6. AIT COP 8, 01 November 2002, New Delhi, India 6 Power systems and countries covered a=1999

7. AIT COP 8, 01 November 2002, New Delhi, India 7 Research approach & planning horizon Least cost power generation planning model Planning horizon: 2003 to 2017

8. AIT COP 8, 01 November 2002, New Delhi, India 8 Candidate generation technologies Note: BIGCC = Biomass Gasification Combined Cycle, PFBC = Pressurized Fluidized Bed Combustion, CFBC = Circulating Fluidized Bed Combustion, IGCC = Integrated Gasification Combined Cycle Generation Technology Options Region/ Countries Conventional Thermal Cleaner and EfficientRenewable Yunnan – ChinaConventional Coal CFBCHydro, Geothermal, Solar PV, Wind NREB – IndiaConventional CoalCombined Cycle, IGCC, PFBC, Nuclear Hydro, BIGCC, Wind, Solar PV IndonesiaConventional Coal, Oil and gas turbine IGCC, PFBC, Combined Cycle Geothermal, Hydro Sri LankaConventional Coal, Diesel generator, Oil based gas turbine IGCC, PFBC, Oil based CC Wind, Dendro-thermal, Hydro ThailandConventional Coal and Oil-fired plants Combined Cycle, IGCC, PFBC BIGCC, wind, Solar PV VietnamConventional Coal, Oil based gas turbine PFBC, Combined CycleHydro

9. AIT COP 8, 01 November 2002, New Delhi, India 9 Least cost electricity generation technologies under the BAU case during 2003-2017 Region/Country Generation Technologies Yunnan -- ChinaConventional Coal, Hydro NREB -- IndiaConventional Coal, IGCC, PFBC, Combined Cycle, Nuclear, Hydro, Wind IndonesiaConventional Coal, PFBC, Combined Cycle, Gas turbine, Hydro, Geothermal Sri LankaConventional Coal, Diesel generator, oil-bases gas turbine ThailandConventional Coal, IGCC, Combined Cycle, Biomass VietnamConventional Coal, Combined Cycle, Hydro l In the BAU case (i.e.without a CO 2 emission reduction target), clean coal and non-hydro renewable options are found cost effective only in NREB-India, Indonesia and Thailand.

10. AIT COP 8, 01 November 2002, New Delhi, India 10 Cleaner thermal generation technologies selected under least cost planning in the BAU and emission reduction cases during 2003-17 Annual CO 2 Emission Reduction Targets Technology0%5%10%15%20%30% CFBC Yunnan -China - - IGCCNREB-India, Thailand Thailand PFBCIndonesia, NREB-India Indonesia - CC (gas based) Indonesia, NREB-India, Thailand, Vietnam Indonesia, Thailand, Vietnam Thailand, Vietnam CC (Oil- based) --Sri Lanka Clean coal power generation technologies cost effective in Yunnan-China, NREB- India, Indonesia and Thailand and generation share to decrease under reduction cases Combined cycle plants selected in all countries (except Sri Lanka) and its generation share to increase under emission reduction cases

11. AIT COP 8, 01 November 2002, New Delhi, India 11 Renewable technologies selected under least cost planning in the BAU and CO 2 emission reduction cases during 2003-17 Annual CO 2 Emission Reduction Targets Technology0%5%10%15%20%30% WindNREB-IndiaYunnan-China, NREB-India Yunnan, NREB- India, Thailand, Sri Lanka Yunnan-China, NREB-India, Thailand, Thailand, Sri Lanka Thailand, Sri Lanka GeothermalIndonesiaIndonesia, Yunnan-China Indonesia, Yunnan-China Indonesia, Yunnan-China Indonesia - Solar PVYunnan-China - - BIGCC *ThailandNREB-India, Thailand Thailand HydroYunnan-China, NREB-India, Indonesia, Vietnam Yunnan-China, NREB-India, Indonesia, Sri Lanka, Vietnam Yunnan-China, NREB-India, Indonesia, Vietnam Indonesia, Vietnam, Sri Lanka Indonesia, Vietnam * Dendro thermal cost effective in Sri Lanka at 20% reduction target Wind: cost effective at 5% in Yunnan-China, and at 10% and more % in Thailand and Sri Lanka Geothermal and solar PV: cost effective at 5% and more in Yunnan-China BIGCC: cost effective at 5% in NREB-India and dendro-thermal at 20% in Sri Lanka

12. AIT COP 8, 01 November 2002, New Delhi, India 12 Trends of generation share in total generation under CO 2 emission reduction cases Share of gas-fired combined cycle (CC) generation to increase in Indonesia, NREB-India, Thailand and VietnamShare of gas-fired combined cycle (CC) generation Share of hydro generation to increase in NREB-India, Sri Lanka, Vietnam and Yunnan-China Share of biomass (BIGCC) increase in NREB-India and Thailand Share of conventional coal-fired generation to decrease in NREB- India, Sri Lanka, Thailand, Vietnam and Yunnan-China (shift to CC and hydro)Share of conventional coal-fired generation Share of clean coal generation (PFBC) to decrease in Indonesia (shift to CC)

13. AIT COP 8, 01 November 2002, New Delhi, India 13 CO 2 Emission-mix by type of generation technology during 2003- 17 under BAU and 15% CO 2 emission reduction cases Emission share of coal plants to decrease and that of CC (gas-based) to increase in NREB- India and Indonesia

14. AIT COP 8, 01 November 2002, New Delhi, India 14 CO 2 Emission-mix by type of generation technology during 2003- 2017 under BAU and 15% CO 2 emission reduction cases Emission share of coal plants to decrease and that of CC (gas-based) to increase in Thailand and Vietnam

15. AIT COP 8, 01 November 2002, New Delhi, India 15 Effect on total cost of power generation under CO 2 emission reduction targets Total generation cost increase by: 0.2% (Indonesia) to 1.8% (Yunnan-China) at 5% reduction target compared to BAU case 1.0% (Indonesia) to 7.3% (Yunnan-China) at 15% reduction target

16. AIT COP 8, 01 November 2002, New Delhi, India 16 Marginal Abatement Costs, $/tonne of CO 2 at 1998 prices MAC range from: 1.0 to 2.5 $/tonne of CO 2 at 5% reduction target 2.9 to 12.5 $/tonne of CO 2 at 10% reduction target 3.1 to 7.3 $/tonne of CO 2 at 15% reduction target

17. AIT COP 8, 01 November 2002, New Delhi, India 17 CO 2 Mitigation (“Supply”) Curves during 2003-2017 Cost of CO 2 reduction relatively high in Sri Lanka Cumulative CO 2 emission reduction during 2003-2017, 215 million tons at MAC of 2 $/tonne CO 2 1,110 million tons at MAC of 3 $/tonne CO 2 2,192 million tons at MAC of 5 $/ton CO 2

18. AIT COP 8, 01 November 2002, New Delhi, India 18 Effects on SO 2 Emissions under CO 2 reduction targets SO 2 emissions to increase in Indonesia under CO 2 reduction targets >5% Disproportionately large % reduction in SO 2 emission At 15% CO 2 emission reduction target, SO 2 emissions to reduce by over 30% in Yunnan (China), NREB (India) and Thailand and by over 20% in Vietnam.

19. AIT COP 8, 01 November 2002, New Delhi, India 19 Effects on NO x Emissions under CO 2 reduction targets Relatively higher NO x reduction in Yunnan (China) At 15% reduction target, NO 2 reduction by over 15% in NREB-India, Vietnam and Yunnan-China

20. AIT COP 8, 01 November 2002, New Delhi, India 20 Identification of CDM Projects in the Power Sector

21. AIT COP 8, 01 November 2002, New Delhi, India 21 Project/Options considered for CDM

22. AIT COP 8, 01 November 2002, New Delhi, India 22 CO 2 reductions and MAC of the candidate cleaner thermal CDM projects during 2003-17 at 1998 prices Wide variations in MAC for CTTs: IGCC: 12 $/tonne (Thailand) to 83 $/tonne of CO 2 (Sri Lanka) PFBC: 5 $/tonne (Vietnam) to 115 $/tonne CO 2 (Sri Lanka) CC-LNG: 31 $/tonne $/tonne CO 2 (Sri Lanka)

23. AIT COP 8, 01 November 2002, New Delhi, India 23 CO 2 reductions and MAC of the candidate RETs based CDM Projects during 2003-17 at 1998 prices Wide variations in MAC for RETs : Solar PV: 12 $/tonne (Yunnan-China) to 364 $/tonne of CO2 (NREB-India) Wind: 11 $/tonne (Yunnan-China) to 36 $/tonne of CO2 (Sri Lanka) Geothermal: 5 $/tonne (Yunnan-China) to 73 $/tonne of CO2 (Vietnam) BIGCC: 3 $/tonne (Thailand) to 94 $/tonne of CO2 (NREB-India) Mini-Hydro: 2.2 $/tonne of CO2 (Thailand)

24. AIT COP 8, 01 November 2002, New Delhi, India 24 Conclusions At present costs, clean coal options (i.e., IGCC in NREB-India and Thailand and PFBC in Indonesia and NREB-India) and renewable options (geothermal in Indonesia, wind power in NREB-India and BIGCC in Thailand) are cost effective under the BAU case. Clean coal technologies would be cost effective at 5% CO 2 reduction target in Yunnan (China) Marginal abatement cost ranges from: 1.0 to 2.5 $/tonne of CO 2 at 5% CO 2 emission reduction target and from 2.8 to 12.5 $/tonne of CO 2 at 10% CO 2 emission reduction target Disproportionately large percentage reduction in SO 2 emission would take place at the selected CO 2 emission reduction targets except in Indonesia and Sri Lanka.

25. AIT COP 8, 01 November 2002, New Delhi, India 25 Conclusions Some renewable power generation projects (e.g., BIGCC and mini-hydro in Thailand and geothermal in Indonesia and Yunnan-China) are found promising at present as possible CDM projects due to their low marginal abatement cost (2.2 to 5.8 $/tonne CO 2 ). Other renewable options (i.e., solar PV in Indonesia and Vietnam and wind power in Yunnan-China) would be promising as a CDM project if the price for CER is to reach above 16.5 $/tonne CO 2 (=> “larger demand for CERs”).

26. AIT COP 8, 01 November 2002, New Delhi, India 26 Thank You

27. AIT COP 8, 01 November 2002, New Delhi, India 27 CO 2 Emission from the Power Sector (1980-1997), 10 6 tons

28. AIT COP 8, 01 November 2002, New Delhi, India 28 Power Sector Project: Collaborating Research Institutes

29. AIT COP 8, 01 November 2002, New Delhi, India 29 Least-cost Generation Planning Model Minimize: Total System Costs (capital + O&M +Fuel + DSM Cost) Subject to: Power demand constraints Annual energy constraints Hydro-energy constraints Reliability constraints Fuel or resource availability constraints Emission constraints Capacity Mix Optimal expansion plan Generation Mix/Fuel Mix Emission Factors Total Cost CO 2, SO 2 and NO x Emissions Electricity Generation Planning Model Demand-side Data Electricity Demand Emissions constraints Supply-side Data

30. AIT COP 8, 01 November 2002, New Delhi, India 30 Generation share of technologies in total generation under BAU and CO 2 emission reduction cases Share of gas-fired combined cycle generation to increase in Indonesia, NREB-India, Thailand and VietnamShare of gas-fired combined cycle generation Share of hydro generation to increase in NREB-India, Sri Lanka, Vietnam and Yunnan-China Share of biomass (BIGCC) increase in NREB-India and Thailand Share of conventional coal-fired generation to decrease in NREB- India, Sri Lanka, Thailand, Vietnam and Yunnan-ChinaShare of conventional coal-fired generation Share of clean coal generation (PFBC) to decrease in Indonesia

31. AIT COP 8, 01 November 2002, New Delhi, India 31 Share of gas-fired combined cycle generation technologies in total generation under BAU and CO 2 emission reduction cases Share of hydro generation to increase in NREB-India, Sri Lanka, Vietnam and Yunnan Share of BIGCC to increase in NREB- India and Thailand

32. AIT COP 8, 01 November 2002, New Delhi, India 32 Share of coal-fired technologies in total generation under BAU and CO 2 emission reduction cases

33. AIT COP 8, 01 November 2002, New Delhi, India 33 Generation share of technologies in total generation under BAU and CO 2 emission reduction cases NREB-India Indonesia

34. AIT COP 8, 01 November 2002, New Delhi, India 34 Generation share by technologies in total generation under BAU and CO 2 emission reduction cases Thailand Vietnam

35. AIT COP 8, 01 November 2002, New Delhi, India 35 Generation share of technologies in total generation under BAU and CO 2 emission reduction cases Yunnan-China Sri Lanka

36. AIT COP 8, 01 November 2002, New Delhi, India 36 CDM Projects Selection Emission Amount in Base Case (E 0 ) Total Cost in Base Case (*) (C 0 ) Total Cost with the candidate CDM project as a committed plant (Case 1) Test Cost Criterion C 1 >C 0 Emission Amount in Case 1 (E 1 ) Env. Additionality Criterion E 1( GHG) <E 0 (GHG) E 1 (others)  E 0 (others) Abatement Cost Criterion I < MAC No CDM Project No Yes No Potential CDM Incremental Costs Assessment Implications of CDM Additional Emission Mitigation Incremental Cost of CDM (I) Marginal Abatement Cost in Investing Country (MAC) (*) The Candidate CDM project not selected in the Baseline.

37. AIT COP 8, 01 November 2002, New Delhi, India 37 Marginal Abatement Costs, $/tonne of C at 1998 prices Note: Marginal abatement costs are expressed in 1998 US $. Ranges of MAC values: 3.5 to 9.0 $/tonne of Carbon at 5% reduction target 10.3 to 46.0 $/tonne of Carbon at 10% reduction target 12.8 to 57.0 $/tonne of Carbon at 20% reduction target