Introducing external costs for Local Atmospheric Pollution in TIAM-MACRO to study synergies and...

WIR SCHAFFEN WISSEN – HEUTE FÜR MORGEN

Introducing external costs for Local Atmospheric Pollution in TIAM-MACRO to study synergies and co-benefits of climate change mitigation

Socrates Kypreos1, Evangelos Panos1, George Giannidakis2, James Glynn3, and Kathrin Volkart1

1Energy Economics group, Laboratory for Energy Systems Analysis, PSI, Switzerland,2ETSAP Project Leader, 3University College Cork, Ireland

Semi-Annual ETSAP meeting in Cork Ireland, May 2016

• Quantification of synergies and co-benefits of LAP while solving for GCC

(The present assessment of climate change gives unbalanced C/B results

excluding the benefits of LAP contol).

• Improvement of the global model TIAM-MACRO including LAP databases

• Selection of the proper modeling approach for LAP in TIAM-MACRO

• Develop ETSAP software for Post Optimal Analysis (POA) for Burden Sharing (BS)

following different rules

Scope of the IEA-ETSAP Project on Local Atmospheric pollution (LAP) andGlobal Climate Change (GCC)

Project Stucture

• After a period of time making some experiments with the MERGE version of

Johannes Bollen, I concluded that this option is not convenient for TIAM MACRO.

• The main reason being the strong non-linearities of the method to address

PM2.5 (only). One of the basic requirements for TIAM-MACRO to converge is to

solve a linear energy problem in TIAM, with linear constraints.

• Non-liner relations for LAP sould have been included in the MACRO part.

• Such an approach is not sure that converges and requires experimentation and

heuristic methods, but there was not time available for such experiments.

Net-benefits of LAP control could have been defined in the welfare function, but…

• One could compensate for negative externalities due to LAP by introducing taxes

per unit of pollution such that the marginal cost of LAP control is equal to the

marginal benefits of avoided pollution (emissions)

• TIAM has the structure (option) to consider directly any taxes per unit of

pollutants in the objective function without any code modification.

• Such taxes have been defined in the past for the Pan-European TIMES model for

the EU NEEDS project and are based on LCA and ExternE results.

• Thus, I had no to reinvent the weel

Explicit treatment of emissions and externalities

• PSI has developed an approach to extend the NEEDS Externality taxes for EU2010

to the 15 world regions and up to the time horizon of analysis

• CRES was able to specify specific emission data for existing and new technologies

following either energy flows in a sector or technology specific activities

• SK (PSI) has developed a GAMS code for Burden Sharing and 4 rules with and

without externalities

• JG (UCC) has extented the approach for two more rules of BS in the direction of

the Brazilian approach

• The final project report is in preparation

Explicit treatment of emissions and externalities

Adjustment factors for externalities based on PSI methodology(WTP,GDP, Population, Urbanization)

0

1

2

3

4

5

6

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

AFR

AUS

CAN

CHI

CSA

EEU

FSU

IND

JPN

MEA

MEX

ODA

SKO

USA

WEU

Figure 1: Total (combined) adjustment factors fr,t [-] for the 15 regions in the TIAM model and the time periods 2010-2100. 1 = WEU in 2010.

Externality taxes are defined as follows: EX-TAX(rg,yr) = EX-TAX(rg,2010)*f(rg,yr)

BS for 2 oC with 66% prob. w/o externalities

Efficient solution Global GDP losses of 5.1% with strong regional differences

Eqalitarian rule I: Picture good for LDCs in the first half, bad in the second one

Equal relative GDP losses II: Balanced but not quite fine for LDCs

Full GDP compensation for LDCs III: Balanced but industrialised countries pay high costs

Full EC compensation for LDCs IV: Cheap while LCDs get the needed investments for energy

-20

-15

-10

-5

0

5

10

15

20

AFR AUS CAN CHI CSA EEU FSU IND JPN MEA MEX ODA SKO USA WEU World

GDP Losses and gains (negative) per rule in %

eff rule I Rule II Rule III RuleIV

Grandfathuring in 2020 moving to equalemissions per capita in 2050

-5

0

5

10

15

20

25

2020 2030 2040 2050 2060 2070 2080 2090 2100

Per Capita emissions (t CO2/(capXyear): Rule I

AFR AUS CAN CHI CSA EEU FSU IND

JPN MEA MEX ODA SKO USA WEU

From grandfathering to eqalitarian

-6

-4

-2

0

2

4

6

2020 2030 2040 2050 2060 2070 2080 2090 2100

Rule I: GtC/yr Carbon trade transfers

AFR AUS CAN CHI CSA EEU FSU IND JPN MEA MEX ODA SKO USA WEU

-20

-15

-10

-5

0

5

10

15

20

2020 2030 2040 2050 2060 2070 2080 2090 2100

Rule I: trillion USD/yr /Capital transfers


Global Emissions BASE and 2°C cases; Accounting only not optimization

0

50

100

150

200

250

300

2020 2020 2050 2050 2080 2080 2100 2100

BASE 2DS BASE 2DS BASE 2DS BASE 2DS

Mill

ion

To

nn

es/

yr

NH3 NOX PM10 PM25 SO2 VOX

Co-Benefits of LAP Control (POA simulation)

0

0.5

1

1.5

2

2.5

3

3.5

4

2020 2030 2040 2050 2060 2070 2080 2090 2100

Tl U

SD/y

r


Co-Benefits of LAP Control (POA simulation)

0

0.5

1

1.5

2

2.5

3

3.5


Mean global benefits are 1.05 % of GDP

2020 2030 2040 2050 2060 2070 2080 2090 2100

• Market damages are assumed to be proportional to temperature change

• Non market damages are assumed to be quadratic or higher in temperature rise

• The avoided market and non-market damages become apparent in the 2nd half of 21st century

• Benefits of CO2 emission control and those of improved LAP are about 1.76%/yr and

may change the picture of winners and losers by region can motivate for policy actions

Damages due to climate change and benefits ofLAP emissions control

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

2020 2030 2040 2050 2060 2070 2080 2090 2100

pe

rce

nt

BASE 2DS NETBenefit

Even at zero discount rate the global GDP losses of GCC policies are reduced from 5.14%

to 3.38%; that means the costs of GCC control remains higher than benefits.

Burden sharing for 2oC_66% net of benefits

-20

-15

-10

-5

0

5

10

15

20


GDP Losses and Gains (negative) per rule in %

eff rule I Rule II Rule III Rule IV

Reduced relative GDP losses by region = GCC Benefits and LAP-Co-Benefits

0

0.5

1

1.5

2

2.5

3

3.5


per

cen

t o

f G

DP

BA

SE

eff rule I Rule II Rule III RuleIV

• The 2oC is technically feasible and if we choose the proper burden sharing rule it can

also be equitable while the mean GDP gains due to LAP control are about 1% originated

mostly in China followed by Africa.

• Equal relative GDP losses is a balanced burden sharing allocation:

Full compensation of the energy cost for the South is less expensive for the

industrialised countries.

Perhaps a combination of both could convince DCs to participate but it must be clear

they will not go beyond the INDC commitments without compensation

• The climate change mitigation costs can be reduced if benefits of climate change

mitigation (avoided damages) and the co-benefits of LAP control are considered

but control costs are not fully balanced and remain high

• Key technologies for power generation and LAP reduction are wind, solar PV, Nuclear,

coal and gas with CCS; BECCS, synfuel and H2 from biomass while good for CO2

reduction, generate PM

Conclusions

Wir schaffen Wissen – heute für morgen

Thank you for your attention !

Introducing external costs for Local Atmospheric Pollution in TIAM-MACRO to study synergies and...

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