Gürkan Kumbaroğlu, Ilhan Or, Mine Işık Analysis of the Turkish Energy Sector with the BUEMS ENERGY MODELING FRAMEWORK – 19 June 2017, Singapore – Gürkan Kumbaroğlu, Ilhan Or, Mine Işık

Overview Impose a tax Exercise a tax

Motivation

Framework Top Down Bottom Up

Demand technologies process the input energy sources to produce output demands. Framework Each energy conversion technologies configure or transform the energy sources e.g. change the form of the energy sources. Supply technologies are responsible for supplying energy sources to the system without any input requirement.

Framework 773 Demand Technologies 5 Energy Demand Sectors; 73 Demand Devices

Energy Carriers Final Demand Sectors Demand Technologies Wind Uranium Solar Hydro Geothermal Biomass Electricity Hydrogen Refined Liquids Coal Bio - Gas Synthesis Nat. Gas & CBM Energy Carriers Heat Final Demand Sectors Demand Technologies Industrial Ammonia Aluminum Cement Paper Steel Other 2 Hydro Power 1 Nuclear Power 2 Wind Power 5 IGCC Power/CHP 20 Combustion/CHP 11 Poly Generation 8 Liquefaction 2 Ethanol Production 1 Oil refining 2 Coal Wash & Coke 2 Solar Power 5 Gasifier/Digester 1 Geothermal Power 4 Hydrogen Production 2 Fuel Cell Power/CHP 2 Heat Plants Primary Energy Sources Conversion & Process Natural Gas Oil Service Accomodation Education Health Care Gross Sale Retail Sale Cooking Space Heating&Cooling Water Heating&Cooling Lighting Other Service Residential Space Heating&Cooliing Refrigration Industry Transport 12 Passenger transport 8 Freight transport 6 Commercial air conditioning 2 Urban air conditioning 5 Urban cooking & water heat 7 Urban space heat 3 Lighting & Appliances Marine Transport Technologies High Temperature Heaters Motor Technologies Space Heaters Air Conditioners Water Heatiers Cooking Oven Hydro Power Nuclear Power Wind Power IGCC /CHP Combustion/CHP Poly-Generation Liquefaction Ethanol Production Oil Refining Coal Wash & Coke Solar Power Gasifier/Digester Geothermal Power Hydrogen Production Fuel Cell Power/CHP Heat Plants Road Transportion: Vehicle, Bus, Truck 2. Air Transportation 3. Marine Transportation: Passenger, Freight 4. Rail Transportation: Low temperature Heaters Lighting Appliances Office Appliances Residential Appliances Road Vehicles Rail Transport Technologies Air Transport Technologies Iron&Steel Chemical Paper&Pulp Glass Non-Ferrous Metal Automobile Food & beverage Other Industry

BUEMS model structure Supply level Investment level Capacity level Activity level

BUEMS model structure Supply level Investment level Capacity level Activity level Variable Description 𝑠𝑢𝑝(𝑠, 𝑡) Supply Level of Supply Technology 𝑠 𝑠𝑢𝑝(𝑠𝑖𝑚p, 𝑡) Supply Level of Import Technology 𝑠𝑖𝑚p 𝑠𝑢𝑝(𝑠𝑚i𝑛, 𝑡) Supply Level of Mining Technology 𝑠𝑚i𝑛 𝑠𝑢𝑝(𝑠𝑟𝑛w, 𝑡) Supply Level of Renewable Technology 𝑠𝑟𝑛w 𝑠𝑢𝑝(𝑠𝑒𝑥p, 𝑡) Supply Level to Export Technology 𝑠𝑒𝑥p

BUEMS model structure Supply level Investment level Capacity level Activity level Variable Description 𝑐𝑎𝑝(𝑐, 𝑡) Capacity Level of Energy Conversion Technology 𝑐 𝑐𝑎𝑝(𝑐𝑒, 𝑡) Capacity Level of Electricity Generation Technology 𝑐𝑒 𝑐𝑎𝑝(𝑐h, 𝑡) Capacity Level of LTH Generation Technology 𝑐h 𝑐𝑎𝑝(𝑐𝑝, 𝑡) Capacity Level of Process Technology 𝑐𝑝 𝑐𝑎𝑝(𝑑, 𝑡) Capacity Level of Demand Technology 𝑑 𝑐𝑎𝑝(𝑑𝑎gr, 𝑡) Capacity Level of Agriculture Sector Demand Technology 𝑑𝑎gr 𝑐𝑎𝑝(𝑑𝑟sd, 𝑡) Capacity Level of Residential Sector Demand Technology 𝑑𝑟sd 𝑐𝑎𝑝(𝑑csd, 𝑡) Capacity Level of Service Sector Demand Technology dcsd 𝑐𝑎𝑝(𝑑𝑖nd, 𝑡) Capacity Level of Industry Sector Demand Technology 𝑑𝑖nd 𝑐𝑎𝑝(𝑑𝑡rn, 𝑡) Capacity Level of Transport Sector Demand Technology 𝑑𝑡rn

BUEMS model structure Supply level Investment level Capacity level Activity level Variable Description 𝑎𝑐𝑡(𝑐, 𝑡) Activity Level of Energy Conversion Technology 𝑐 𝑎𝑐𝑡(𝑐𝑒, 𝑡) Activity Level of Electricity Generation Technology 𝑐𝑒 𝑎𝑐𝑡(𝑐h, 𝑡) Activity Level of LTH Generation Technology 𝑎𝑐𝑡(𝑐𝑝, 𝑡) 𝑐h Activity Level of Process Technology 𝑐𝑝

BUEMS model structure Supply level Investment level Capacity level Activity level Variable Description 𝑖𝑛𝑣(𝑐, 𝑡) Investment level of Energy Conversion Technology c 𝑖𝑛𝑣(𝑐𝑒lc, 𝑡) Investment Level of Electricity Generation Technology celc 𝑖𝑛𝑣(𝑐h, 𝑡) Investment Level of LTH Generation Technology 𝑐h 𝑖𝑛𝑣(𝑐𝑝, 𝑡) Investment Level of Process Technology 𝑐𝑝 𝑖𝑛𝑣(𝑑, 𝑡) Investment Level of Demand Technology 𝑑 𝑖𝑛𝑣(𝑑𝑎gr, 𝑡) Investment Level of Agriculture Sector Demand Technology 𝑑𝑎gr 𝑖𝑛𝑣(𝑑𝑟sd, 𝑡) Investment Level of Residential Sector Demand Technology 𝑑𝑟sd 𝑖𝑛𝑣(𝑑csd, 𝑡) Investment Level of Service Sector Demand Technology 𝑑csd 𝑖𝑛𝑣(𝑑𝑖nd, 𝑡) Investment Level of Industry Sector Demand Technology 𝑑𝑖nd 𝑖𝑛𝑣(𝑑𝑡rn, 𝑡) Investment Level of Transport Sector Demand Technology 𝑑𝑡rn

BUEMS model structure Objective function : Min. [discounted total system cost] System constraints : energy balance, demands, electrical system Policy constraints : emission caps, technology portfolio standards, taxes and subsidies Price PE QE Quantity Equilibrium for an Energy Service Demand in MARKAL-TR

BUEMS model structure Objective Function

Data Collection Kick-off Meetings Public Institutions Ministry of Energy & Nat. Resources Ministry of Environment Ministry of Public Works & Settlement Energy Market Regulatory Authority Statistical Institute of Turkey NGO & Private Sector Ankara Chemical Manufacturers Association Paper Manufacturers Association Cement Manufacturers Association Goodyear Inc. Ege Fertilizer Inc. NGO & Private Sector Istanbul - Chemical Manufacturers Association Association of Cogeneration Companies Steel Manufacturers Association TÜPRAŞ Inc. ŞİŞECAM Inc. Scientific & Technical Research Council / Coordination

Ministry TUBITAK Boğaziçi University Public Institutions NGOs Ministry of Energy & Nat. Resources Ministry of Environment Ministry of Public Works & Settlement Ministry of Transport Ministry of Education Ministry of Interior Ministry of Health Ministry of Agriculture Ministry of Culture & Tourism Energy Market Regulatory Authority Statistical Institute of Turkey Hydraulic Works Electr. Gen. Co. Boğaziçi University Ministry Dir. of Highways NGOs Chemical Manufacturers Association Paper Manufacturers Association Contractors Association Cement Manufacturers Association Cogen Association Private Sector Organizations Tire Kutsan AŞ PETKİM AŞ ŞİŞECAM AŞ ISDEMIR AŞ

Model Validation Total Primary Energy Total Cost

Model Results

AGR

AGR IND

Emissions as CO2 equivalent for the year 2032 is expected to be 150 Emissions as CO2 equivalent for the year 2032 is expected to be 150.5Mton and hits 253Mton by 2052 AGR IND

Emissions as CO2 equivalent for the year 2032 are expected to be 150 Emissions as CO2 equivalent for the year 2032 are expected to be 150.5Mton and hit 253Mton by 2052 AGR IND 2012

The share of natural gas consumption increases linearly through the period 2012–2052, reaching 34 per cent by 2052. Coal consumption declines, from 26 per cent in 2012 to 21 per cent in 2052 2052 IND 2012

The share of diesel consumption diminishes over time LPG consumption ends by 2037 From 2037 onwards usage of ethanol increases rapidly, peaking in year 2052 2052 TRANSPORT SECTOR

Total energy consumption in 2012 = 1386PJ Natural gas consumption maintains its 30 per cent share in primary energy consumption through the period 2027–2052 The share of electricity consumption increases steadily and hits 955.74 by 2052 2052 RESIDENTIAL & SERVICE SECTOR

POWER SECTOR The share of coal consumption increases linearly through the period 2012–2052, reaching 74 per cent by 2052. No “NUCLEAR”! The share of natural gas consumption as a primary energy resource declines throughout the whole timespan, but still manages to stand at 20 per cent by 2052 İN 2012 coal %39 nga %44 hyd %11 In 2052 coal %74 Nga % 20

Scenario Analysis CARBON TAX EMISSION BOUND The purpose of the emission bound and carbon tax is to promote the use of clean technology and fuel options and to reduce the use of fossil fuels and the negative exteriority caused by it. CARBON TAX EMISSION BOUND Nomenclature Scenario Definition CO2_10_BM BUEMS model $10 emission tax scenario result CO2_20_BM BUEMS model $20 emission tax scenario result CO2_30_BM BUEMS model $30 emission tax scenario result CO2_50_BM BUEMS model $50 emission tax scenario result Nomenclature Scenario Definition BAU_10_BM BUEMS model 10% emission bound scenario result BAU_20_BM BUEMS model 20% emission bound scenario result BAU_25_BM BUEMS model 25% emission bound scenario result

Scenario Analysis Contribution of sectors on emission mitigation (%)

Scenario Analysis Fuel consumptions under BAU_BM and CO2_50_BM

Scenario Analysis

Scenario Analysis MACC for power sector

Scenario Analysis MACC for industry sector

Scenario Analysis MACC for residential & commercial sector

Scenario Analysis MACC for transport sector

Ongoing Research Development of Sectoral Forecasting Models Subsectoral projections Energy intensities Domestic production levels Export levels Simulation / econometric estimates BU-GAS BU-ELE Integration of a Macroeconomic Module Economic parameters Substitution elasticities Value shares TIMES-MACRO BUEMS-MACRO Model