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PNNL-SA-51961
Alternative Scenarios for Developing Countries
Westin Grand, Washington, DC
Jae Edmonds & Leon ClarkeMay 21, 2008
EPRI Global Climate Change Research Seminar
2
AcknowledgementsAcknowledgements
Thanks to EPRI for research support.
Thanks to Rich Richels for the original research insight.
GTSP Sponsors – Phases 1,2, & 3
3
What Scenarios Should We be Considering?
What Scenarios Should We be Considering?
Many long-term, global scenarios have assumed efficient carbon regimes: all countries participate fully in mitigation from the outset.Reality is unlikely meet this ideal.Considering less coordinated and efficient future emissions mitigation regimes.
What policy structures are possible or likely?What might these policy structures imply for the costs and burdens of stabilization?What might they imply for strategic decisions such as technologydevelopment and deployment?
4
The Pocantico ProcessThe Pocantico Process
A look at specific policy proposals.Year 2050 Policy Performance
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
0% 10% 20% 30% 40% 50% 60% 70%
% Mitigation
% G
DP
Loss
Zero Net Emissions Target
Auto Standard
Absolute Targets 1 (1% reductions)
Absolute Targets 2 (1/2% reductions)
Mixed Targets (1% reductions;
non-Annex I BAU)
Intensity Targets
Electricity Technology (IGCC/CCS)
Year 2095 Policy Performance
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
0% 10% 20% 30% 40% 50% 60% 70%
% Mitigation
% G
DP
Loss
Zero Net Emissions Target
Auto Standard Absolute Targets 1 (1%
reductions)Absolute Targets
2 (1/2% reductions)
Mixed Targets (1%
reductions; non-Annex I
BAU)
Intensity Targets
Electricity Technology (IGCC/CCS)
Electricity Intensity 1 (11/3%/yr)
5
Outline of this Research:Second-Best Paths to Stabilization
Outline of this Research:Second-Best Paths to Stabilization
Consider stabilization at four levels: 450 ppm, 550 ppm, 650 ppm, and 750 ppm.Consider four stabilization regimes:
Set 1:Idealized—perfect global where and when flexibility.Set 2:Add graduated accession—some countries wait to participate.Set 3:Add regionally differentiated regimes—participating countries face differentiated carbon prices.Set 4:Add sectorally differentiated regimes—sectors face differentiated carbon prices.
We will talk about the first three of these today.
6
The Reference Scenario
The Reference Scenario
7
The GTSP Reference ScenarioThe Importance of ParticipationThe GTSP Reference Scenario
The Importance of Participation
0
5
10
15
20
25
1990 2005 2020 2035 2050 2065 2080 2095
GtC
/yr
Africa India Southeast AsiaMiddle East Latin America ChinaKorea Australia_NZ CanadaEastern Europe Former Soviet Union JapanUSA Western Europe
Global Emissions in Reference & Stabilization
Global Emissions in Reference & Stabilization
Global ReferenceFossil & Industrial CO2 Emissions
Global ReferenceFossil & Industrial CO2 Emissions
0
5
10
15
20
25
2005 2020 2035 2050 2065 2080 2095
GtC
/yr
CCSP Reference450 ppm550 ppm650 ppm
8
Stabilization Set 1Full Participation
Stabilization Set 1Full Participation
9
Scenario Set 1: Full ParticipationScenario Set 1: Full Participation
Stabilize CO2 concentrations450 ppm, 550 ppm, 650 ppm.Sectoral carbon prices—All EQUAL.Regional carbon prices—All EQUAL.Time path of carbon prices—Peck-Wan-Hotelling.
Notes:We have chosen CO2 rather than radiative forcing for simplicity. We have further simplified the analysis by assuming a fixed agriculture-land-use emissions path. Unmanaged ecosystem extent and composition is fixed.This case sets an economically efficient benchmark for comparison with other cases.
10
Scenario Set 1The Global Carbon Price
Scenario Set 1The Global Carbon Price
$0
$100
$200
$300
$400
$500
$600
$700
2005 2020 2035 2050 2065 2080 2095
$/to
nne
C (2
000$
)
450 ppm550 ppm650 ppm The carbon price rises
at roughly the rate of interest until
stabilization is reached.
The carbon price rises at roughly the rate of
interest until stabilization is reached.
Today’s price depends on tomorrow’s
technology
Today’s price depends on tomorrow’s
technology
11
Scenario Set IFossil & Industrial CO2 Emissions
Scenario Set IFossil & Industrial CO2 Emissions
0
5
10
15
20
25
2005 2020 2035 2050 2065 2080 2095
GtC
/yr
CCSP Reference450 ppm550 ppm650 ppm
0.0
0.5
1.0
1.5
2.0
2.5
2005 2020 2035 2050 2065 2080 2095
GtC
/yr
CCSP Reference450 ppm550 ppm650 ppm
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2005 2020 2035 2050 2065 2080 2095G
tC/y
r
CCSP Reference450 ppm550 ppm650 ppm
Global USA India
450 ppm has fundamentally different near-term
implications than 550 ppm and above
450 ppm has fundamentally different near-term
implications than 550 ppm and above
12
Stabilization Set 2Graduated Accession
Stabilization Set 2Graduated Accession
13
Stabilization Scenario Set 2Graduated Accession
Stabilization Scenario Set 2Graduated Accession
Stabilize CO2 concentrations450 ppm, 550 ppm, 650 ppm.Sectoral carbon prices—All EQUAL.Regional carbon prices—All EQUAL.Time path of carbon prices—Peck-Wan-Hotelling.Staggered accession based on per capita income.
Alternative accession cases—first group enters: 2020, 2035, 2050
Notes:We assume that all Annex 1 nations participate in an international protocol by 2012 and that others join at different times based on per capita income. Non-Annex 1 participation is keyed to China’s entry date.
Countries come in at the global market price
of carbon
Countries come in at the global market price
of carbon
14
2005-2020USA
Australia & NZCanada
W. EuropeE. Europe
JapanFSU
2020-2035 2035-2050 2050-2065 2065-2080 2080-2095USA USA USA USA USA
Australia & NZ Australia & NZ Australia & NZ Australia & NZ Australia & NZCanada Canada Canada Canada Canada
W. Europe W. Europe W. Europe W. Europe W. EuropeE. Europe E. Europe E. Europe E. Europe E. Europe
Japan Japan Japan Japan JapanFSU FSU FSU FSU FSU
Korea Korea Korea Korea KoreaChina China China China China
Latin America Latin America Latin America Latin America Latin AmericaMideast Mideast Mideast Mideast Mideast
Other SE Asia Other SE Asia Other SE Asia Other SE AsiaIndia India India India
Africa Africa Africa
Order of Regional Participation(1st NA1 Group Enters 2020-2035)
Order of Regional Participation(1st NA1 Group Enters 2020-2035)
NA1 1Enters 2020-2035
st Group NA1 1Enters 2020-2035
st Group NA1 1st Group Enters 2020-2035NA1 1st Group
Enters 2020-2035
15
Order of Regional Participation(1st NA1 Group Enters 2035-2050)
Order of Regional Participation(1st NA1 Group Enters 2035-2050)
2005-2020 2020-2035 2035-2050 2050-2065 2065-2080 2080-2095USA USA USA USA USA USA
Australia & NZ Australia & NZ Australia & NZ Australia & NZ Australia & NZ Australia & NZCanada Canada Canada Canada Canada Canada
W. Europe W. Europe W. Europe W. Europe W. Europe W. EuropeE. Europe E. Europe E. Europe E. Europe E. Europe E. Europe
Japan Japan Japan Japan Japan JapanFSU FSU FSU FSU FSU FSU
Korea Korea Korea KoreaChina China China China
Latin America Latin America Latin America Latin AmericaMideast Mideast Mideast Mideast
Other SE Asia Other SE Asia Other SE AsiaIndia India India
Africa AfricaNA1 1st Group
Enters 2035-2050NA1 1st Group
Enters 2035-2050
16
Order of Regional Participation(1st NA1 Group Enters 2050-2065)
Order of Regional Participation(1st NA1 Group Enters 2050-2065)
2005-2020 2020-2035 2035-2050 2050-2065 2065-2080 2080-2095USA USA USA USA USA USA
Australia & NZ Australia & NZ Australia & NZ Australia & NZ Australia & NZ Australia & NZCanada Canada Canada Canada Canada Canada
W. Europe W. Europe W. Europe W. Europe W. Europe W. EuropeE. Europe E. Europe E. Europe E. Europe E. Europe E. Europe
Japan Japan Japan Japan Japan JapanFSU FSU FSU FSU FSU FSU
Korea Korea KoreaChina China China
Latin America Latin America Latin AmericaMideast Mideast Mideast
Other SE Asia Other SE AsiaIndia India
AfricaNA1 1st Group
Enters 2050-2065NA1 1st Group
Enters 2050-2065 Note that India comes in one period
after China
Note that India comes in one period
after China
17
Scenario Set 2, 550 ppmScenario Set 2, 550 ppm
18
Scenario Set 2, 550 ppmGlobal Carbon Price
Scenario Set 2, 550 ppmGlobal Carbon Price
$0
$100
$200
$300
$400
$500
$600
$700
$800
2005 2020 2035 2050 2065 2080 2095
$/to
nne
C (2
000$
)
Set 1: 550 ppmSet 2: 1st Accession 2020-35Set 2: 1st Accession 2035-50Set 2: 1st Accession 2050-65
Effect on carbon prices is not extreme in the 550 scenario
Effect on carbon prices is not extreme in the 550 scenario
19
Scenario Set 2, 550 ppmFossil & Industrial CO2 Emissions
Scenario Set 2, 550 ppmFossil & Industrial CO2 Emissions
0
5
10
15
20
25
2005 2020 2035 2050 2065 2080 2095
GtC
/yr
CCSP ReferenceSet 1: 550 ppmSet 2: 1st Accession 2020-35Set 2: 1st Accession 2035-50Set 2: 1st Accession 2050-65
0.0
0.5
1.0
1.5
2.0
2.5
2005 2020 2035 2050 2065 2080 2095
GtC
/yr
CCSP ReferenceSet 1: 550 ppmSet 2: 1st Accession 2020-35Set 2: 1st Accession 2035-50Set 2: 1st Accession 2050-65
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2005 2020 2035 2050 2065 2080 2095G
tC/y
r
CCSP ReferenceSet 1: 550 ppmSet 2: 1st Accession 2020-35Set 2: 1st Accession 2035-50Set 2: 1st Accession 2050-65
USA IndiaGlobal
Carbon leakageCarbon leakage
Late accession means precipitous drop in
emissions
Late accession means precipitous drop in
emissions
20
Scenario Set 2, 450 ppmScenario Set 2, 450 ppm
21
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
2005 2020 2035 2050 2065 2080 2095
$/to
nne
C (2
000$
)
Set 1: 450 ppmSet 2: 1st Accession 2020-35Set 2: 1st Accession 2035-50
Scenario Set 2, 450 ppmGlobal Carbon Price
Scenario Set 2, 450 ppmGlobal Carbon Price
Set 2 1st
Accession beginning in
2050 is infeasible!
Maximum price just as Non-annex 1
accession begins between 2035 and
2050
Maximum price just as Non-annex 1
accession begins between 2035 and
2050
22
Scenario Set 2, 450 ppmFossil & Industrial CO2 Emissions
Scenario Set 2, 450 ppmFossil & Industrial CO2 Emissions
0
5
10
15
20
25
2005 2020 2035 2050 2065 2080 2095
GtC
/yr
CCSP ReferenceSet 1: 450 ppmSet 2: 1st Accession 2020-35Set 2: 1st Accession 2035-50
0.0
0.5
1.0
1.5
2.0
2.5
2005 2020 2035 2050 2065 2080 2095
GtC
/yr
CCSP ReferenceSet 1: 450 ppmSet 2: 1st Accession 2020-35Set 2: 1st Accession 2035-50
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2005 2020 2035 2050 2065 2080 2095G
tC/y
r
CCSP ReferenceSet 1: 450 ppmSet 2: 1st Accession 2020-35Set 2: 1st Accession 2035-50
Global USA India
23
Scenario Set 2, 450 ppmFossil & Industrial CO2 Emissions
Scenario Set 2, 450 ppmFossil & Industrial CO2 Emissions
0
5
10
15
20
25
2005 2020 2035 2050 2065 2080 2095
GtC
/yr
CCSP ReferenceSet 1: 450 ppmSet 2: 1st Accession 2020-35Set 2: 1st Accession 2035-50
0.0
0.5
1.0
1.5
2.0
2.5
2005 2020 2035 2050 2065 2080 2095
GtC
/yr
CCSP ReferenceSet 1: 450 ppmSet 2: 1st Accession 2020-35Set 2: 1st Accession 2035-50
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2005 2020 2035 2050 2065 2080 2095G
tC/y
r
CCSP ReferenceSet 1: 450 ppmSet 2: 1st Accession 2020-35Set 2: 1st Accession 2035-50
Global USA India
Two periods of delay mean 2/3 reduction in US emissions by 2020.
Accession delay past 2050 is totally infeasible for 450 ppm.
24
Scenario Set 2, 450 ppmFossil & Industrial CO2 Emissions
Scenario Set 2, 450 ppmFossil & Industrial CO2 Emissions
0
5
10
15
20
25
2005 2020 2035 2050 2065 2080 2095
GtC
/yr
CCSP ReferenceSet 1: 450 ppmSet 2: 1st Accession 2020-35Set 2: 1st Accession 2035-50
0.0
0.5
1.0
1.5
2.0
2.5
2005 2020 2035 2050 2065 2080 2095
GtC
/yr
CCSP ReferenceSet 1: 450 ppmSet 2: 1st Accession 2020-35Set 2: 1st Accession 2035-50
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2005 2020 2035 2050 2065 2080 2095G
tC/y
r
CCSP ReferenceSet 1: 450 ppmSet 2: 1st Accession 2020-35Set 2: 1st Accession 2035-50
Global USA India
Negative emissions are the result of biomass energy being used indirectly with
CCS or in non-energy uses.
Negative emissions are the result of biomass energy being used indirectly with
CCS or in non-energy uses.
25
Carbon Prices in the Annex 1and Non-Annex I
Carbon Prices in the Annex 1and Non-Annex I
Graduated accession or differentiated regimes means different prices in different regions.
What does this imply for technology choice?
Annex I faces carbon prices of over $1000/tonne C with no abatement in non-Annex I countries.
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
2005 2020 2035 2050 2065 2080 2095
$/to
nne
C (2
000$
)
Set 1: 450 ppmSet 2: 1st Accession 2020-35Set 2: 1st Accession 2035-50
Global
26
Stabilization Set 3Graduated Accession
+ Differentiated Prices
Stabilization Set 3Graduated Accession
+ Differentiated Prices
27
Stabilization Scenario Set 3Graduated Accession + Differentiated Prices
Stabilization Scenario Set 3Graduated Accession + Differentiated Prices
Stabilize CO2 concentrations450 ppm, 550 ppm, 650 ppm.Sectoral carbon prices—All EQUAL.Regional carbon prices—each region separate.Time path of carbon prices
Annex 1 follows Peck-Wan-Hotelling.Other regions carbon price proportional to relative per capita income.
Staggered accession based on per capita income.Alternative accession cases—first group enters: 2020, 2035, 2050.
Difference with Set 2
Difference with Set 2
28
Scenario Set 3, 450 ppmScenario Set 3, 450 ppm
29
Scenario Set 3, 450 ppmCarbon Prices by RegionScenario Set 3, 450 ppmCarbon Prices by Region
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
2005 2020 2035 2050 2065 2080 2095
$/to
nne
C (2
000$
)
Set 1: 450 ppmSet 3: 1st Accession 2020-35Set 3: 1st Accession 2035-50
USA India
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
2005 2020 2035 2050 2065 2080 2095
$/to
nne
C (2
000$
)
Set 1: 450 ppmSet 3: 1st Accession 2020-35Set 3: 1st Accession 2035-50
Set 3 1st Accession 2050-65 is infeasible!
Highly differentiated pricing between
Annex I and non-Annex I
Highly differentiated pricing between
Annex I and non-Annex I
30
Scenario Set 3, 450 ppmFossil & Industrial CO2 Emissions
Scenario Set 3, 450 ppmFossil & Industrial CO2 Emissions
0
5
10
15
20
25
2005 2020 2035 2050 2065 2080 2095
GtC
/yr
CCSP ReferenceSet 1: 450 ppmSet 3: 1st Accession 2020-35Set 3: 1st Accession 2035-50
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
2005 2020 2035 2050 2065 2080 2095
GtC
/yr
CCSP ReferenceSet 1: 450 ppmSet 3: 1st Accession 2020-35Set 3: 1st Accession 2035-50
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2005 2020 2035 2050 2065 2080 209
GtC
/yr
CCSP ReferenceSet 1: 450 ppmSet 3: 1st Accession 2020-35Set 3: 1st Accession 2035-50
Global USA India
There is little difference in the Set 3 global emissions path from Set 1, however USA emissions must be much lower with ANY delay in non-Annex 1 accession.
There is little difference in the Set 3 global emissions path from Set 1, however USA emissions must be much lower with ANY delay in non-Annex 1 accession.
31
The Costs of StabilizationThe Costs of Stabilization
32
Inefficient Participation and the Total Costs of Stabilization
Inefficient Participation and the Total Costs of Stabilization
$0
$5
$10
$15
$20
$25
$30
$35
$40
450 ppm
Trill
ion
Dol
lar (
2000
$)
Set 1: IdealizedSet 2 Graduated Accession 2020-35Set 2 Graduated Accession 2035-50Set 2 Graduated Accession 2050-65Set 3 Parallel Regimes 2020-35Set 3 Parallel Regimes 2035-50Set 3 Parallel Regimes 2050-65
$0
$5
$10
$15
$20
$25
$30
$35
$40
550 ppm
Trill
ion
Dol
lars
(200
0$)
Set 1: IdealizedSet 2 Graduated Accession 2020-35Set 2 Graduated Accession 2035-50Set 2 Graduated Accession 2050-65Set 3 Parallel Regimes 2020-35Set 3 Parallel Regimes 2035-50Set 3 Parallel Regimes 2050-65
$0
$5
$10
$15
$20
$25
$30
$35
$40
650 ppmTr
illio
n D
olla
rs (2
000$
)
Set 1: IdealizedSet 2 Graduated Accession 2020-35Set 2 Graduated Accession 2035-50Set 2 Graduated Accession 2050-65Set 3 Parallel Regimes 2020-35Set 3 Parallel Regimes 2035-50Set 3 Parallel Regimes 2050-65
The dominant determinant of cost is the stabilization level.
Post 2050 non-Annex 1 accession not possible under the reference assumptions
Post 2050 non-Annex 1 accession not possible under the reference assumptions
33
Inefficient Participation and the Total Costs of Stabilization
Inefficient Participation and the Total Costs of Stabilization
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
450 ppm
Set 1: IdealizedSet 2 Graduated Accession 2020-35Set 2 Graduated Accession 2035-50Set 2 Graduated Accession 2050-65Set 3 Parallel Regimes 2020-35Set 3 Parallel Regimes 2035-50Set 3 Parallel Regimes 2050-65
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
550 ppm
Set 1: IdealizedSet 2 Graduated Accession 2020-35Set 2 Graduated Accession 2035-50Set 2 Graduated Accession 2050-65Set 3 Parallel Regimes 2020-35Set 3 Parallel Regimes 2035-50Set 3 Parallel Regimes 2050-65
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
650 ppm
Set 1: IdealizedSet 2 Graduated Accession 2020-35Set 2 Graduated Accession 2035-50Set 2 Graduated Accession 2050-65Set 3 Parallel Regimes 2020-35Set 3 Parallel Regimes 2035-50Set 3 Parallel Regimes 2050-65
The relative effect on cost increases as the stringency of the limitation rises.
All costs normalized to the idealized cost at the concentration.
34
Final ObservationsFinal Observations“Second best” is just that, second best.
Near-term prices of carbon depend on expectations about the future—among other things—the international emissions mitigation architecture and long-term stabilization goal.
Inefficiencies matter more for 450 ppm stabilization.
Prices could vary regionally.
35
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