Transcript Policy Portfolios

SGM
P.R. Shukla
Second Generation
Model
Top-Down Economic Models
Project baseline carbon emissions over time
for a country or group of countries
 Find the least-cost way to meet any
particular emissions constraint
 Provide a measure of the carbon price, in
dollars per metric ton
 Provide some measure of the overall cost of
meeting an emissions target
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Key SGM Characteristics
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Computable General Equilibrium
12 Global Regions (Developed in
International Collaborations)
Multiple Greenhouse Gases
Internally Generated Demographics
Vintaged Capital Stocks
Explicit Energy Technology
Land Resource Constraints
SGM 2000: Structure and Sectors
AGRICULTURE
grains and oil seeds
animal products
forestry
food processing
other agricultural services
PRIMARY FACTORS
OF PRODUCTION
land surface
subsurface resources
labor
capital
ENERGY
oil production
gas production
petroleum refining
gas distribution
coke and coal products
biomass production
uranium production
hydro and solar electric power
electricity production
EVERYTHING ELSE
paper and pulp manufacture
chemical manufacture
cement manufacture
primary iron and steel
primary non-ferrous metals
other manufacturing
passenger transport
freight stransport
other services
HOUSEHOLDS
demographics
labor supply
land supply
household savings
final product demands
GOVERNMENT
general government
national defense
education
Computable General Equilibrium
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Based on Economic Principles.
All economic activities are included in
some sector of the model.
Market equilibrium -- ALL markets must
clear simultaneously.
Maximization Behavior -- consumers,
utility; producers, net worth.
SGM Regions
 Annex
I
United States
Canada
Western Europe
Japan
Australia
Former Soviet Union
Eastern Europe
 Non Annex
I
China
India
Middle East
Mexico
South Korea
Rest of World
Multiple Greenhouse Gases
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CO2
CH4
CO
N2O
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NOx
SOx
NMHC
Internal Demographics
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Age structure & gender of the
population is developed internally
using:
 fertility rates
 survival rates
 net migration rates
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Labor force participation rates can be
age & gender specific.
SGM Inputs & Outputs
Factors of Production
 Capital,
 Labor,
 Land,
 Agriculture,
 Energy, &
 Materials.
Model Outputs
 Agriculture,
 Energy,
 Materials,
 Savings,
 Consumption &
 GDP.
Energy Focus
8 Energy Sectors
Resources and Reserves of Energy Resources
 Vintaged Energy Using Technologies
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SGM Is Part of GCAM
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SGM is part of the Global Change
Assessment Modeling (GCAM) System, an
integrated assessment model
 computes concentrations of greenhouse bases
such as CO2,
 can compute DT and sea level rise.
Production Decisions
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Production occurs out of existing capacity
and its vintage
 limited by previous investments, &
 then current technologies
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Retirement of old capacity occurs when
 Cannot cover operating expenses
 Old age -- fixed life, or
 Policy -- forced retirement
Production Functions
Qt = f ( K t , Lt , Et , M t ; a Kt , a Lt , a Et , aMt )
 Technical
coefficients control change in
input-output ratios over time.
 Energy coefficient is similar to AEEI
(Autonomous Energy Efficiency
Improvement).
New Capacity
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Investment is based on expected
profitability.
 available technology
 price expectations, &
 policy expectations
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Price & Policy Expectations can be
either forward or backward looking.
Investment
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Capital market balances supply and
demand of loanable funds.
Investment resources distributed among
investments with positive expected net
profitability
 no resources flow to expected losers
 the higher the expected rate of return, the greater
the share of the investment pool
Energy Production
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Energy production out of reserves.
Additions to reserves from the resource
base.
 additions depend on expected profitability
 resource availability.
Energy Technology
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Hierarchical model.
 sectors,
 sub-sectors, &
 technologies.
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Explicit energy technologies can be
introduced into the model.
 e.g. natural gas combined cycle turbines
for power generation.
Issues the SGM Can Address
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Assessing impacts of greenhouse gas
emissions mitigation policies on GDP,
consumption and energy.
Value of emissions rights trading.
Value of “when” flexibility.
Relative costs and benefits to regions of the
world of alternative protocol formulations.
SGM Strengths
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Built specifically for climate policy analysis.
Multiple greenhouse gases.
Part of an Integrated Assessment model -e.g. can compute CO2 concentrations or DT.
General equilibrium -- all markets clear.
Detailed energy supply sector.
Can be run in alternative foresight modes.
Internal demographics.
International Collaborations.
SGM Limitations
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Not a business cycle model -- does not
estimate inflation or unemployment
policy impacts.
Limited energy end-use detail.
Provides no sub-national
disaggregation for the United States.
SGM Data Requirements
Original Data
Derived Data for SGM
1990 Input-Output Table
Hybrid Input-Output Table
1990 Energy Balances
Annual Investment Data by Sector
Capital Stocks by Sector
Data on Fossil Fuel Resources
Resource Grades
Electricity Supply: generation, installed
Input-output representation of
capacity, energy consumption, capital costs,
electricity generation by fuel
operating costs
National Income Accounts
tax rates, savings rates
Model Integration
Top-Down Economic Model (integration tool)
Region A
Bottom-Up
Energy Technology
international trade
Region B
Ecosystem
Impacts
Climate Scenarios
India Results
Rs. Thousand Cr. (1990 Prices)
Real GNP and components
6000
Reference Scenario
5000
4000
3000
2000
1000
0
1990 1995 2000 2005 2010 2015 2020 2025 2030
Real GNP
C
I
G
Energy Consumption
Reference Scenario
45
Exajoules
40
35
30
25
20
15
10
5
0
1990 1995 2000 2005 2010 2015 2020 2025 2030
C.Oil
N.Gas
Coal
Nuclear
Hydro
Solar
Electricity by sub-sector
Reference Scenario
6
Exajoules
5
4
3
2
1
0
1990 1995 2000 2005 2010 2015 2020 2025 2030
Coal
Gas
Oil
Nuclear
Hydro
Solar
CO2 Emissions
Teragrams carbon
Reference Scenario
1000
900
800
700
600
500
400
300
200
100
0
1990 1995 2000 2005 2010 2015 2020 2025 2030
Base
Policy scenarios
 Alternate
Low
High
growth scenarios
5%
7%
 Alternate
tax scenarios
Fixed tax: $25, $50, $100 per tC
Increasing tax
Policy scenarios
 Advanced
technology scenarios
High Solar
Medium Solar with $5 tax
Medium Solar with $25 tax
Real GNP
Rs. Thousand Crore (1990 prices)
8000
7000
6000
5000
4000
3000
2000
1000
0
1990
1995
Base
2000
2005
2010
High Growth
2015
2020
2025
Low Growth
2030
Energy consumption
50
Exajoules
40
30
20
10
0
1990 1995 2000 2005 2010 2015 2020 2025 2030
Base
High Growth
Low Growth
Energy Mix: Low Growth
40
Exajoules
35
30
25
20
15
10
5
0
1990 1995 2000 2005 2010 2015 2020 2025 2030
C.Oil
N.Gas
Coal
Nuclear
Hydro
Solar
Energy Mix: High Growth
Exajoules
50
40
30
20
10
0
1990 1995 2000 2005 2010 2015 2020 2025 2030
C.Oil
N.Gas
Coal
Nuclear
Hydro
Solar
Results
Tax Scenarios
Energy Consumption
Tax Scenarios
45
40
35
Exajoules
30
25
20
15
10
5
0
1990
1995
2000
Base
2005
$25 Tax
2010
2015
$50 Tax
2020
2025
$100 Tax
2030
Energy Consumption: Fuel-wise
Tax Scenarios
OIL
GAS
16
7
14
6
COAL
20
18
16
12
5
14
10
12
4
10
8
3
8
4
2
6
2
1
6
4
0
1990
1995
2000
2005
2010
2015
2020
2025
2030
2
0
1990
1995
2005
2010
2015
2020
2025
2030
0
1990
HYDRO
NUCLEAR
2
2000
1995
2000
2005
2010
2015
2020
2025
2030
SOLAR
2.5
0.6
2
0.5
1.5
0.4
1
0.3
0.5
0.2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
1990 1995 2000 2005 2010 2015 2020 2025 2030
0
1990 1995 2000 2005 2010 2015 2020 2025 2030
Base
$25 Tax
$50 Tax
$100 Tax
0.1
0
1990 1995 2000 2005 2010 2015 2020 2025 2030
Energy Consumption: $100 Tax
30
Compare Ref.
25
20
15
10
5
0
1990 1995 2000 2005 2010 2015 2020 2025 2030
C.Oil
N.Gas
Coal
Nuclear
Hydro
Solar
CO2 Emissions
Tergrams carbon
Tax Scenarios
1000
900
800
700
600
500
400
300
200
100
0
1990 1995 2000 2005 2010 2015 2020 2025 2030
Base
$25 Tax
$50 Tax
$100 Tax
Change in GNP over base case
Tax Scenarios
0.00%
-0.50%
-1.00%
-1.50%
-2.00%
-2.50%
-3.00%
-3.50%
1990 1995 2000 2005 2010 2015 2020 2025 2030
Change in GNP over base case
Tax Scenarios
0.00%
-0.50%
-1.00%
-1.50%
-2.00%
-2.50%
-3.00%
-3.50%
1990 1995 2000 2005 2010 2015 2020 2025 2030
CO2 Emissions: Cumulative
Tax Scenarios
25
BtC
20
15
10
5
0
Base
$25 Tax
$50 Tax
$100 Tax
Results
Advance Technology Scenarios
Tergrams carbon
CO2 Emissions
1000
900
800
700
600
500
400
300
200
100
0
1990 1995 2000 2005 2010 2015 2020 2025 2030
Base
Med Solar + $5 Tax
$25 Tax
Med Solar + $25 Tax
High Solar
CO2 Emissions
25
BtC
20
15
10
5
0
Base
High Solar
Med Solar + $5 Med Solar +
Tax
$25 Tax
Solar in Electricity
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
1990
1995
2000
2005
2010
Base
$25 Tax
Med Solar + $25 Tax
2015
2020
2025
High Solar
Med Solar + $5 Tax
2030
Change in GNP over base case
0.8%
0.6%
0.4%
0.2%
0.0%
1990
-0.2%
1995
2000
2005
2010
2015
2020
2025
-0.4%
-0.6%
-0.8%
High Solar
$25 Tax
Med Solar + $5 Tax
Med Solar + $25 Tax
2030
Change in GNP over base case
35
30
Rs. Thousand Cr.
25
20
15
10
5
0
-51990
1995
2000
2005
2010
2015
2020
2025
-10
-15
-20
High Solar
$25 Tax
Med Solar + $5 Tax
Med Solar + $25 Tax
2030