Overview Of Energy Modeling Forum Process And Studies

Overview of Energy Modeling Forum Process and Studies 4th Sino-Korea-U.S. Economic and Environmental Modeling Workshop Beijing, China

John P. Weyant 23-25 May 2001

Outline • • • • • • •

EMF Objectives EMF Design Principles EMF Process EMF Studies EMF Study Examples EMF Contributions and Challenges Other Groups That Have Tried the EMF Approach

Energy Modeling Forum Objectives • Understand Model Differences • Understand Strengths and Weaknesses of Existing Models/Methodologies • Identify Useful Information and Insights for Corporate Planning and Government Policy Making • Identify High Priority Areas for Development of New Data, Analyses, and Modeling Methodologies • Ventilation: Communication of all the Above

EMF Design Principles • • • • •

Broad Participation Focus on Model Comparisons Policy Relevance Decentralized Analysis Wide Dissemination of Results

Structure of EMF Process Revolves Around Working Groups Experts Modelers

EMF Working Group on Topic

Corporate & Policy Advisors

Intergovernmental Panel on Climate Change Council of Economic Advisors

Stanford EMF Staff

Corporate Affiliates & Government Sponsors

Core EMF Process • Meeting #1 – Identify Key Issues – Design Initial Scenarios – Organize Study Groups • Meeting #2,…,#N-2 – Interpret Results – Revise Issues/Scenarios/Study Groups • Meeting #N-1 – Interpret Results – Outline Final Report • Meeting #N – Review Draft Report – Review Modeler & Study Group Reports

EMF Studies EMF EMF EMF EMF EMF EMF EMF EMF EMF EMF

0: 1: 2: 3: 4: 5: 6: 7: 8: 9:

CONAES Modeling Group Energy and the Economy Coal in Transition Electric Load Forecasting Elasticity of Energy Demand U.S. Oil and Gas Supply World Oil Macroecon. Impacts of Energy Shocks Industrial energy Demand North American Natural Gas

EMF Studies (Continued) EMF 10: Electric Markets and Planning EMF 11: International Oil EMF 12: Carbon Emission Reductions EMF 13: Markets for Energy Efficiency EMF 14: Integrated Assessment of Climate Change EMF 15: Markets for Power EMF 16: IA of Climate Change: Post-Kyoto EMF 17: Prices/Emissions in Restructured Elec. Mkts. EMF 18: Trade Dimensions of Climate Policy EMF 19: Technology and Climate Policies

Specific Objectives for EMF 19: Technology and Climate Change Policy • Understand How Technology/Technological Change is Represented in the Models – Production Functions – Process Analyses

• Assess How These Assumptions Influence the Results Obtained – Model Comparisons – Implications for Policy

• Help Improve This Dimension of the Models – Coverage – Numbers – Formulations

EMF 19 Study Groups • Scenarios – GDP & Economic Growth/Composition – Energy Resources/Prices – Technologies

• Technology Characterizations – Comprehensiveness & Consistency – Levels of Aggregation & Transfer Potential – Uncertainty & Timing

• Modeling Technological Change – Invention – Innovation – Diffusion

Reference Case Primary Energy in 2100

1600

1400

1200

Exajoules

1000 Non-Fossil Coal

800

Gas Oil

600

400

200

0 MERGE

AIM

DNE2100

GRAPE Model

MARIA

MiniCAM

EPPA

Primary Energy in 550 ppm Case in 2100

1600

1400

1200

Exajoules

1000 Non-Fossil Coal

800

Gas Oil 600

400

200

0 MERGE

AIM

DNE2100

GRAPE Model

MARIA

MIniCAM

EMF 19 Modelers Reference ---- China

Carbon Generated (in million metric tons)

7000

6000

5000

4000

3000

2000

1000

0 2000

2010

2020

2030

2040

2050

2060

2070

2080

2090

Year SGM

AIM

EPPA

GTEM

DNE21

GRAPE

MARIA

MINICAM

2100

Year 2010 Carbon Tax Comparision for the United States

450

350 300 250 200 150 100

No Trading

Model Annex I Trading

Double Bubble

Global Trading

G-Cubed

WorldScan

RICE

AIM

CETA

SGM

MIT-EPPA

MS-MRT

ABARE-GTEM

0

MERGE3

50 Oxford

Carbon Tax (1990$US/metric ton)

400

EMF-16 Cost of Carbon Emission Reductions in United States

Carbon Tax (1990 $US/metric ton)

450 400 350

Why Higher?

What do these estimates mean for corporate strategies and public policy?

300 250

Why Similar?

200 150 100 50

Why Lower?

0 0

5

10

15

20

25

30

35

40

% Reduction in Carbon Emissions wrt Reference

45

50

Conclusions From Mitigation Cost Model Comparisons

• Five key factors help explain cost projections of greenhouse gas emissions mitigation ? Three are external to the economic forecast -

baseline emissions, the policy regime considered, and the benefits of emissions reductions

? While two factors are internal to the economic forecast - economic substitution and technological change

• Assumptions can influence costs considerably

within individual models and amongst many models ? Implementation will affect the degree to which these costs are over or underestimated.

Some Things Left Out of Virtually all of These Models • • • • • •

Economic Dis-Equilibrium Costs Costs of “Imperfect” Policies Market Power Rather Than Competitive Realities Value of Movements Toward the Efficient Frontier Induced Technological Change Richness in Representing Technology/Tech. Change

Key EMF Roles • Repository of Information About Models/Modeling/Policy&Modeling • Honest Broker – – – –

Policy Developers Model Users Model Developers Model Funders

• Soft Model Assessment • Spokesmen for Modeling Community

Key EMF Challenges • Model Comparison vs. Policy Analysis – 30 Modeling teams – 30 Sponsors – 30 Experts

• Being Truly Interdisciplinary • Avoiding Political Manipulation • Degree of Ventilation vs. Model Assessment

Other Entities That Have Tried or Considered the EMF Approach • • • • • • •

UN Global Modeling Forum EU Environment Division Canada Germany IPCC Japan France