1 Co-benefits of CO 2 Reduction in a Developing Country: Case of Thailand Ram M. Shrestha and Shreekar Pradhan Asian Institute of Technology Thailand INTERNATIONAL ENERGY WORKSHOP June 2009, Fondazione Giorgio Cini, Venice, Italy

2 Outline Introduction. Local environmental effects of CO 2 reduction targets (ERT). Effect on energy efficiency. Effect on total primary energy requirements. Effect on use of cleaner fuels. Effect on energy security. Conclusions and final remarks.

Brief Background on Thailand Location: –Area of 513,115 km 2 and extends about 1,620 km from north to south and 775 kilometres from east to west. Population: Million (2008) Population Density: 129 people/km 2 GDP: US$ 272 billion in 2008 (MER) GDP per capita: US $ 4,098 (year 2008) 2 nd largest economy in the ASEAN

4 CO 2, TPES, GDP and Population Growth during Source: DEDE, 2006 and 2007, IMF, 2008 IEA, 2007 and 2008 AAGR ( ): CO 2 : 3.9% Population: 1.1% TPES: 5.7% GDP: 5.1%

5 Scenario Description Base case and three emission reduction target scenarios as follows: 1)Base case 2)10% cumulative emission reduction target from the base case emissions (ERT10) 3)20% cumulative emission reduction target from the base case emissions (ERT20) 4)30% cumulative emission reduction target from the base case emissions (ERT30) MARKAL based least cost optimization model used for the analysis. All costs are given in US$ at prices of year 2000.

GDP and Population in the Base Case ( ) CAGR ( ): Population: 0.4%GDP: 5.6% Sources: TDRI, 2004; UN, 2006

7 Assumptions in the Base Case No greenhouse gas (GHG) mitigation policy intervention. Nuclear power generation would be introduced from 2020 onwards (nuclear generation capacity of 2000 MW is proposed to be installed in 2020 and similarly another 2000 MW in 2021 (EGAT, 2007)). Minimum of 3 million liters of ethanol per day and 4 million liters of biodiesel per day would be used by 2015 in the transport sector. 64,000 thousands tons of feedstock (e.g., cassava, molasses, sugarcane and others) for ethanol production and 2,550 thousands tons of oil seed (palm oil and coconuts) for biodiesel production would be available from 2015 onward during the planning horizon. Emerging technologies like hybrid vehicles are considered to be available from 2015 onward; fuel cell vehicles and power generation with carbon capture and storage technology are considered to be available from 2020 onward.

8 How much CO 2 would be emitted in the base case? Total CO 2 emission in 2050 = 9 x Total 2005 emission 223 Mt in 2005 nd 2,006 Mt in (AAGR 4%) 37% 34% 23% 6% 33% 32% 31% 4%

9 How would the primary energy supply mix change in the base case?  TPES would grow by over 5 folds during the planning horizon.  In the base case, the shares of natural gas, oil and biomass would decrease and that of coal would increase. - natural gas and oil share would decrease from 72% to 47% - coal share would increase from 14% to 46%. - biomass share would decrease from 11% in 2005 to 3% in nuclear share would be 3% in 2050.

10 How would the final energy consumption change in the base case? Final energy consumption (FEC) in 2050 > 8x FEC in  transport sector share increase from 40% to 43%.  Industry sector share increase from 36% to 39%.  commercial sector share increase from 5% to 10%.  residential sector share decrease from 14% to 7%.  agriculture sector share decrease from 5% to 1%.

11 How would different sectors contribute to the CO 2 emission reduction targets during ?  Highest CO 2 emission reduction in the power sector, followed by the industrial and transport sectors.  The power sector accounts for over 84%, 74% and 60% of the total CO 2 emission reduction in ERT10, ERT20 and ERT30 cases respectively.  Mainly use of natural gas based advanced combined cycle power generation and nuclear based power generation play the major role in CO 2 emission reduction.  Maximum possible reduction target: Up to 52% of the cumulative emission during in the base case.

CO 2 intensity of energy use (CO 2 /TPES) during  In the base case CO2 intensity of energy use would increase from 51 kg/GJ in 2005 to 75 kg/GJ in It decreases to 65, 57 and 55 kg/GJ in 2050 under ERT10, ERT20 and ERT30 cases respectively.  Significant reduction in CO2 intensity of energy use begins around 2025 under ERT10 and ERT20, while it starts much earlier (i.e., before 2015) under ERT30.

13 What would be the CO 2 abatement cost ($/tCO 2 ) under different ERTs?  Possible to cost effectively reduce cumulative CO2 emission by up to 20% from that in the base case in Thailand at the carbon price that grows exponentially from $1.4/tCO2 to $102.4/tCO2 during  CO2 abatement cost in 2050 under ERT20 is similar to the carbon price of $100/tCO 2 in 2050 as has been reported to be necessary for the stabilization target of 550 ppmv CO 2 e by some studies (Edmond et al. as cited in Shukla et al., 2008).

14 How much co-benefit in terms of SO 2 reduction?  SO 2 reduction by 9.1%, 28.6% and 43.2% in ERT10, ERT20 and ERT30 cases respectively.  The highest reduction in SO2 emission would take place in the industrial sector followed by the power sector.  About 57%, 46% and 44% of the SO2 reduction would come from the industrial sector in ERT10, ERT20 and ERT30 cases.

15 Co-benefit in terms of NOx reduction?  % reduction of NOx emission relatively lower than that of SO 2 emission.  NOx emission decreases by 3.3%, 5.2%, 5.3% from the base case in ERT10, ERT20 and ERT30 cases respectively.  The highest NOx reduction (over 80%) would take place in the power sector followed by the industrial sector.  In the transport sector, NOx would increase due to the high use of biodiesel vehicles under ERT30.

16 What would be the effect on net energy import dependency during ? Net energy imports would decrease under all ERT cases. However, coal import would decrease whereas import of natural gas and nuclear would increase. Oil import would exhibit slight increase under ERTs.

17 What would be the effect on net energy import dependency compared to TPES in base case?  The net energy import dependency (NEID) with respect to TPES of the corresponding case would decrease by 2.1% under ERT10 during the period, whereas it would increase by 0.1% and 0.7% under ERT20 and ERT30 respectively.  The net energy import dependency with respect to the base case TPES would be reduced under all ERTs.

18 What would be the effect of CO2 reduction in the diversification of primary energy supply?  The diversification of total primary energy supply (TPES) would increase during the planning horizon.  Shannon-Weiner Index (SWI) is found improved under the ERTs. (The highest value of SWI with 7 types of fuels under consideration would have been 1.95.)

19 Effect on diversification of net energy imports?  The diversification of net energy import would also increase under ERTs.  Shannon-Weiner Index (SWI) is found improved under the ERTs. (The highest value of SWI with 5 types of fuels under consideration would have been 1.61.)

20 Reduction in primary energy requirement under ERT?  TPES would be reduced by 2.4%, 4.1% and 7.5% under ERT10, ERT20 and ERT30 respectively.  The share of coal would decrease; the share of natural gas, biomass and nuclear would increase.  No significant change in the share of oil.

21 Energy requirement for power generation under ERT  The energy supply for power generation would be reduced by 6.3%, 8.4% and 10,8% under ERT10, ERT20 and ERT30 respectively.  The share of coal would significantly decrease while the share of natural gas would increase significantly.  The share of nuclear, biomass and other renewables would increase.

What would be the effect on the nuclear, other renewables and biomass based power generations? With the increasing CO2 reduction target, nuclear power generation would have to increase. Other renewable energy based power generation (i.e., municipal solid waste and wind) would increase. Early deployment of these renewables would be required. Likewise, biomass based power generation would also gradually reach to the limit of its availablility. But the ERTs would require an earlier use of these power generation during the period. Nuclear Other renewables Biomass

23 Reduction in electricity use in the residential sector under ERT  Electricity consumption in the residential sector would decrease under ERTs during due to the adoption of the energy efficient appliances in the sector.  Higher the ERT, the earlier the need to introduce energy efficient devices.

24 Use of bio-fuels in the transport sector under ERT  The emission targets would gradually increase the use of bio-fuel in the transport sector.  ERT10 and ERT20 are not effective to promote bio-fuel use whereas significant bio-liquid fuel use required under ERT30.

25 Conclusions and final remarks  In the base case, total cumulative CO2 emission would increase by 7 folds during as a result, the CO 2 /TPES increases from 51 kg/GJ in 2005 to 75 kg/GJ in  The CO 2 /TPES would be as low as 55 kg/GJ by year 2050 under ERTs.  The total discounted system cost would increase by 0.13% in ERT30 compared to the base case; the cost was nominally higher in ERT20 (i.e., 0.02%).  The marginal cost of CO 2 reduction in ERT20 (i.e., US$/tCO 2 ) in year 2050 is similar to the carbon price in 2050 for stabilization target of 550 ppmV CO 2 e.  The power sector would account for 60 to 84% of the CO 2 emission reduction in the selected ERTs.  SO2 emission would decrease in the range of 9.1% to 43.2% from the base case emission under the selected emission reduction targets during  NOx emission would decrease in the range of 3.3% to 5.3% from the base case emission level.  Both final energy consumption and primary energy supply would decrease under ERTs.  There would be higher diversification of both net energy imports and total primary energy supply under ERTs.  Total net energy import would decrease under all ERT cases. Greater diversification energy resource-mix under ER cases.  Use of cleaner fuel (nuclear, biomass and other renewables) in power generation would increase and the renewables would have to be introduced earlier in ERT cases.  Energy efficient appliances would have to be used in the residential sector earlier than that in the base case.  Bio-fuel use in the transport sector would increase in higher ERT cases and also results in a higher transport sector NOx emission than that in the base case.  There is uncertainty as to public acceptability of large scale nuclear power generation.

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