MERGE – Presentation toEMF 21

Alan S. Manne, Stanford University

Richard G. Richels, EPRI

Stanford University

December 2003

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Features of MERGE

• Intertemporal computable general equilibrium model

• Perfect foresight

• 9 regions

• Time periods: decades from 2000 through 2150

• Bottom-up model of energy supplies; top-down model of electric and nonelectric energy demands

• Tradeables: oil, gas, carbon emission rights

• Technical progress: both learn-by-doing and exogenous

• Three greenhouse gases: co2, ch4 and n2o

• Tradeoffs between gases based on “efficiency” prices rather than gwp

• Website: www.stanford.edu/group/MERGE

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Features Added Specifically for EMF 21

• Second basket of gases: short- and long-lived f-gases (slf, llf)

• Baseline emissions of four non-co2 gases from EPA through 2020

• Extrapolated emissions growth: linear at rates projected between 2000 and 2020

• Marginal abatement cost curves of four non-co2 gases from EPA

• Extrapolated technical progress

• Carbon sinks – afforestation - cumulative quantities as well as annual growth and decline limits

• Reported the five long-term scenarios requested by EMF; mostly global rather than regional results

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Marginal Costs of Abatement – Technical Progress Multipliers for all Gases but CO2

0

50

100

150

200

250

0% 20% 40% 60% 80% 100%Percent abated

$/tce2010 2050 2100

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World Carbon Sinks: Cumulative Difference @ $100/ton

0

10

20

30

40

50

60

70

80

90

2000 2020 2040 2060 2080 2100

billion tons

LBL

RFF

MERGERIVM

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Regional Population Projections

0

2

4

6

8

10

12

2000 2020 2040 2060 2080 2100

row

mopec

india

china

eefsu

canz

japan

weur

usa

billions

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Per Capita GDP

0

20

40

60

80

100

120

2000 2020 2040 2060 2080 2100

usa

weur

japan

canz

eefsu

china

india

mopec

row

$ thousands

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GDP Projections

0

50

100

150

200

250

300

350

400

2000 2020 2040 2060 2080 2100

row

mopec

india

china

eefsu

canz

japan

weur

usa

$ trillions

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Carbon Emissions – Reference Case

0

5

10

15

20

25

30

2000 2020 2040 2060 2080 2100

row

mopec

india

china

eefsu

canz

japan

weur

usa

billion tons

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Global Radiative Forcing Percentages2000-2100 - reference case

n2o15%

ch48%

slf2%

llf~0%

co275%

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Control Cases

• In reference case, temperature increases by 3.2 degrees C between 2000 and 2100.

• Alternatively, limit the radiative forcing increase to 4.5 watts/square meter. Between 2000 and 2100, this leads to a temperature increase of about 2.5 degrees C.

• Limit temperature increase to 0.2 degrees C per decade from 2020 onward. This leads to an extremely high value for carbon emission rights during the early decades.

• Compare two abatement cases: energy-related CO2 only vs. all greenhouse gases plus afforestation.

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Temperature Increase from 2000

0

0.5

1

1.5

2

2.5

3

3.5

2000 2020 2040 2060 2080 2100

reference case

4.5 w/sq m - carbon only

degrees C

0.2 degrees C per decade

4.5 w/sq m - multigas

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Present value of control costs

0 5 10 15 20 25 30 35 40

$ trillions discounted from 2000 to 2100

4.5 w/sq m - multigas

4.5 w/sq m - carbon only

0.2 degrees C per decade - multigas

0.2 degrees C per decade - carbon only

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Efficiency price of carbon - 4.5 watts / square meter

0

100

200

300

400

500

2000 2020 2040 2060 2080 2100

carbon only

multigas

$ per ton of carbon

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Efficiency price of carbon – 0.2 degrees C per decade

0

200

400

600

800

1000

1200

1400

1600

2000 2020 2040 2060 2080 2100

carbon only

multigas

$ per ton of carbon

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Ratio of Efficiency Prices to GWP’s ( 4.5 watts/square meter – multigas )

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

2000 2020 2040 2060 2080 2100

ch4

n20

slf

llf