Global Climate Policy Scenarios for 2030 and beyond

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Global Climate Policy Scenarios for 2030 and
beyond
Juan Carlos Ciscar, Peter RussEuropean
Commission, JRC, IPTS IX Bled Forum on Europe7
March 2008, Bled
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The Institute for Prospective Technological
Studies (IPTS)

• The IPTS, based in Seville, is one of the 7
  scientific institutes of the European
  Commission's Joint Research Centre (JRC)
• IPTS mission
• to provide support to the EU policy-making
  process
• by researching science-based responses to policy
  challenges,
• with both a socio-economic and a scientific or
  technological dimension
• Energy and climate change group, CS Unit of IPTS

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Overview

• 1. Policy framework
• Objectives of the modelling/foresight exercise
• 2. The POLES model
• Assumptions and Outcome
• 3. The GEM E3 model
• Assumptions and Outcome
• 4. Conclusions

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1. Policy Framework
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Multilateral negotiations on climate change policy

• 1992 United Nations Framework Convention on
  Climate Change (UNFCCC)
• 1997 Kyoto Protocol targets for industrialised
  countries (EU15 minus 8 in 2008-2012 compared
  to 1990)
• 2001 US withdraws from Kyoto Protocol
  Gothenburg summit
• 2002 all Member States Community ratified the
  Kyoto Protocol
• 2005 Kyoto Protocol into force

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Question of Interest

• March 2004 European Council request
• analyse costs and benefits of EU post-2012
  climate policy
• IPTS made part of the analysis of scenarios using
  numerical models
• Winning the battle against climate change EC
  Communication (2005)
• Limiting Global Climate Change to 2 degrees
  Celsius. The way ahead for 2020 and beyond EC
  Communication (2007)
• March 2007 European Council decision 20 GHG
  emission reduction in 2020 (compared to 1990)
  30 if international agreement
• Bali COP of UNFCCC

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The scenarios are described in the report
http//ftp.jrc.es/eur23032en.pdf
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Modelling Approaches
POLES
GEM-E3
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2. The POLES Model Assessment
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The POLES Modelling system

• Partial equilibrium model of the world energy
  system
• Recursive dynamic simulation up to the year 2050
• Endogenous energy demand and prices
• 47 world regions / countries
• Explicit technology modelling for many sectors
• 30 power generation technologies
• 8 industry sectors transport sector
  residential and services agriculture

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Assessing the mitigation potential objectives

• Technically feasible vision on how to reach the 2
  degrees target, an ambitious emission
  development, for the EU and rest of the world
• Global cost/technology estimates for mitigation
  scenarios until 2030
• Options for viable long-term technology paths
  identified beyond 2030 up to 2050
• Realistic role of the carbon market and the use
  of flexible mechanisms defined.
• Identify options for policy instruments that
  engage all key players on the basis of their
  responsibilities and capabilities

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POLES Model Scenario assumptions

• Global GHG emissions peak before 2020 and reduce
  to 10 above 1990 levels by 2030.
• Global GHG emissions continue to decrease up to
  2050

• Multi-gas and introduction of Carbon Capture and
  Storage
• Global Emission trading market develops
  gradually in power and energy intensive sectors
• Non Trading sectors experience policies that
  lead to emission reductions

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Results Global Participation

• Emissions in developed countries on a continues
  descending path.
• Internal emissions should be at -20 by 2020 and
  60 by 2050 compared to 1990

• Developing countries emissions may grow but at
  lower rate than baseline.
• Need to peak also between 2020 and 2025

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Results, cost of action role of the global
carbon market

• Carbon market decreases investment costs by a
  factor of 3.

• Carbon price is substantial but evolves gradual

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Result, cost of action How to bring in
developing countries?

• The economic impact of internal effort and trade
  seem to be equitable
• Size of bubble corresponds to the amount traded

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Sectoral contribution to global emission
reductions (POLES)
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Technologies that can reduce emissions from
energy (POLES)
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3. The GEM-E3 Model Assessment
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Motivation of CGE modelling

• Market economies
• Prices as fundamental signals for agent decisions
• Interrelations between all markets/sectors
• Quantitative tools for the assessment of the
  effects (through price changes) on the economy of
  
• Policies e.g. trade, sectoral (energy,
  environment, agriculture) affecting market prices
• Shocks e.g. oil price change
• Quantification of direct and indirect abatement
  costs
• Costs within energy sector
• Costs in rest of the sectors
• Effects through trade flows

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The GEM-E3 World Model (1/2)

• GEM-E3 World is a multi-sector, multi-country CGE
  model
• Calibrated to 2001 (GTAP 6 data)
• Dynamic model (recursive dynamics)
• Extensive environmental dimension (GHG and local
  pollutants)
• Wide variety of policy instruments (standards,
  taxes, permits, at World and regional level,
  different allowance scheme)

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The GEM-E3 World model (2/2)

• 18 World regions EU27, Other European countries,
  Former Soviet Union, Mediterranean countries,
  USA, Canada, Australia and New Zealand, Japan,
  China, India, rapid growing Asian countries, Rest
  of Asia, Mexico and Venezuela, Brazil, Rest of
  Latin America, Middle East, South Africa, Rest of
  the World)
• 18 sectors agriculture, 4 energy branches, 9
  industrial branches, 4 market and non market
  services
• Baseline scenario calibrated with POLES
  baseline

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GEM E3 scenario assumptions

• Grouping of the countries/regions
• Developed countries (group 1)
• AUZ, JPN, CAN, USA, EU27, Other EUR, FSU
• High income developing countries (group 2)
• Mexico and Venezuela, Mediterranean and middle
  east, Rapid growing Asian Countries
• Developing countries (group 3)

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GEM E3 scenario assumptions

• Targets calibrated to ensure similar emission
  trajectory as in POLES model runs.
• Emission change targets compared to 1990

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GEM E3 scenario assumptions

• Allocation of the target
• Allocation within a group by grandfathering
• Policy instrument emission trading
• Energy intensive sectors a World ETS, i.e. an
  international emission trading system for these
  sectors between all groups contributing to the
  target
• Other sectors a domestic trading system for
  household and sectors not included in the World
  ETS
• Use of flexible mechanisms is possible depending
  on the scenarios but limited to the energy
  intensive sectors
• The Kyoto target are respected for participating
  countries

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GDP Change Results Cost of action is consistent
with global economic development
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Welfare Change Results household welfare
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Conclusions

• Quantitative modelling of abatement costs to meet
  2 degrees target
• Global participation of countries in the GHG
  reduction effort is indispensable for realising
  the 2 degrees target pathway
• Energy savings throughout all sectors are one of
  the key elements in the reduction scenario
• The use of flexible mechanisms is central for
  limiting the cost of an ambitious climate change
  policy
• There is a feasible pathway for limiting the
  global temperature increase to 2 degrees (e.g.
  annualised change in world GDP in 2030 of -0.19 )

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Ongoing work

• GEM-E3 and POLES are continuously updated
• Linking POLES with a LULUCF model
• Detailed emissions from agriculture
• Link GHG mitigation models with air pollution
  models. For instance the Asia GAINS project.

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All documents athttp//ec.europa.eu/environment
/climat/future_action.htm