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

Task 1:Energy Models in China

Fei TENGGlobal Climate Change

Institute, Tsinghua University

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Outline

The Time Line of Energy Models Overview of Bottom-up Models Overview of Top-down Models Major Findings from The Task

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Time Line of Energy Models

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1980 1990 2000 2005

MARKAL LEAP 3EIPAC

YE’s Liang’s

HE

CNAGE

PRCGEM

DRCSC’

TEDCGE

IPAC-SGM

Bottom-up

Top-down: Input-Output

Computable General Equilibrium

Overview of Bottom-up Models

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Name ObjectReference Scenario

Base Year

GDP Energy Emission

MARKAL

optimization of energy system path, emissions forecasting

19951995-20306.45%

1995-20302.4%

1655MtC(2030 BAU)

LEAP

optimization of energy system path, emissions forecast

19991999-20306.6%

1999-20302.6%

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

2000-20506.2% (from MEM)

2000-20302.8%

1710 MtC(2030 BAU)

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

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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 billio

n $ for 2020; 6338.1 billion $ for 2030 (1995 Price)• Economy Structure.• Energy Service: 5 sectors.• Resource constrain for primary energy: e.g. Coal, 1823M

t for 2010, 2512Mt for 2030.• Energy Technologies: Reference technologies + Advanc

ed technologies (CCS + polygeneration)

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%.

LEAP Model Base Year: 1999. Period covered: 1999-2030. Sectors: 5 Sectors, Agriculture, Industry, Residence, Transport and Servic

e. Scenario-based model describing the production, transformation and co

nsumption 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 cooperatio

n scenario

LEAP Model

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Scenarios Results

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.

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

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

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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

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.

Overview of Top-down Models

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Name StructureModel Elements

Economy Emission Technology Climate

YEDynamic input-output model

IO table YesIO coefficient and sub-sectors

Yes

LiangInput-output analysis + scenario analysis

IO table No IO coefficient No

HE Static CGE CGE Fossil fuel combustion CES Yes

PRCGEM Static CGE CGE Fossil fuel combustion Leontief/CES Yes

DRCSC’s Dynamic CGE CGE No CES No

TEDCGE Dynamic CGE CGEFossil fuel combustion and cement production

CES Yes

CNAGE Static CGE CGE Fossil fuel combustion CD Yes

IPAC-SGM SGM CGE CGE --- --- Yes

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 B A S I C

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

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Comparison between IO models

Developer Descriiption Objective

YE Data 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.

Liang Data 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.

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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 B A S I C

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

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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

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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

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

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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

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Comparing CGE models

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Name Descriiption Objective

HE Static CGE model9 sectors, CES production function with (K,L)E fashion.1997 input-output tableUnit 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

PRCGEM Dynamic 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.

DRCSC’s To analyze the impacts of globalization and trade liberalization on environmental pollutions.

Comparing CGE ModelsTEDCGE Dynamic 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

CNAGE Static 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.

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

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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 B A S I C

Future Works

Compare not only the model structure but also the scenarios.

Reorganize the material to account for different audiences.

Thank for your attention !

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