Ioanna Mouratiadou, Gunnar Luderer, Elmar Kriegler Sensitivity of Emissions and their Drivers to economic Growth and Fossil Fuel Availability: a regional Analysis Ioanna Mouratiadou, Gunnar Luderer, Elmar Kriegler Potsdam Institute for Climate Impact Research (PIK) Promitheas Conference Athens, 9-11 October 2013

Motivation and Objectives Economic growth is an important determinant of energy demand and fossil fuel availability one of energy supply. How do these two factors affect baseline developments and climate stabilization requirements? Regional resource endowments and energy end use determine technology use and mitigation potential. What are possible regional emission patterns and their drivers, and regional abatement strategies? What are robust versus sensitive elements of scenarios for achieving a sustainable global energy future in compliance with ambitious climate protection goals across world regions? Which findings are robust across world regions and when do regional characteristics prevail? 2 2 2

Scenarios Economic growth: Fossil fuel availability: based on 2008 Revision of UN World Population Prospects assumptions on speed of growth and convergence these scenarios: medium population, fast convergence Fossil fuel availability: data on total size of fossil resource base, recovery rates extraction costs Stringency of climate protection: no-policy and 450 ppm CO2-equiv concentration overshoot and full when and where flexibility A: Economic growth: GDP paths through adjustments of labor productivity; B: Reference assumptions on long-term fossil fuel availability, with a focus on variations of coal, oil, and gas: these assumptions lead to the development of different extraction cost curves; C: stringency of climate protection targets. Drivers  Policy Medium Growth Slow Growth Fast Growth Medium Fossils High Fossils Low Fossils Baseline BAU DEF BAU SL Gr BAU FS Gr BAU HI Fos BAU LO Fos 450 ppm CO2-equiv 450 DEF 450 SL Gr 450 FS Gr 450 HI Fos 450 LO Fos 3 3 3

REMIND Model Multi-regional (11 regions) hybrid model with timespan 2005-2100 Coupled economic growth model, detailed energy system model, and simple climate model Ramsey-type optimal growth, optimizing intertemporal global welfare Production factors (capital, labor, and final energy) produce economic output (GDP) used for investments in capital stock, consumption, trade, and energy system expenditures 4 4 4

Regions Europe China USA Five major regions at different stages of their economic development (developed, emerging, developing) India Africa 5 5 5

Emissions - Default Baseline Global cumulated emissions: ~65% of global cumulated emissions by investigated regions Total emissions : China ~22%; USA and India ~13% each, Europe ~9%, Africa ~7% Temporal trends Developed: conservative changes but noteworthy increases at the second half of the century Emerging and developing: initial sharp growth and then stabilizing or declining Per capita emissions US and Europe at the high end China converges Africa and India below world average despite considerable initial increases 6 6 6

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Emissions Drivers – Baseline Economic Growth Scenarios Findings on major emiters (total and per capita) remain robust Higher emissions with faster growth Drivers in emissions differences Till 2050 almost entirely GDP and EI. With faster growth, higher GDP (scenario assumptions) and lower EI (substitution of energy with capital, energy efficiency). After 2050 also CI developments are important With faster growth, higher fossils extraction but faster exchaustion and earlier switch towards renewables Diverse CI reactions accross regions: inter-fuel substitution varies depending on price increases accross fuels and regions Africa: till mid-century - sharp growth in CI and also population growth; GDP per capita and EI improvements grow steadily after mid-century - lower population growth rates and CI improvements allow emissions to stabilize India: till mid-century - mainly economic growth, insufficiently compensated by energy intensity improvements aggravated by population and CI after mid-century - lower economic growth rates and CI and population decrease China: similarly to India, sharp economic growth and only partly dampened by EI improvements, and then lower economic growth rates and CI and population decrease. however, at last two decades CI starts to increase again. Europe and US: that is similar to EUR and US, where after an initial decline, CI increase sharply at some point in time 8 8 8

Emissions Drivers – Baseline Fossil Fuel Scenarios Findings on major emiters (total and per capita) more sensitive Tendency for higher availabilty relating to higher emissions but numerous exceptions Drivers in emissions differences EI tend to be higher for high availability (limited price-induced energy-to-capital subtitution effect) CI are the key drivers of changes in emissions With higher fossils, higher oil shares (liquids), gas and coal (electricity) and lower renewables Inter-fuel substitution (oil versus coal) can lead to counter-intuitive effects in some regions Africa: till mid-century - sharp growth in CI and also population growth; GDP per capita and EI improvements grow steadily after mid-century - lower population growth rates and CI improvements allow emissions to stabilize India: till mid-century - mainly economic growth, insufficiently compensated by energy intensity improvements aggravated by population and CI after mid-century - lower economic growth rates and CI and population decrease China: similarly to India, sharp economic growth and only partly dampened by EI improvements, and then lower economic growth rates and CI and population decrease. however, at last two decades CI starts to increase again. Europe and US: that is similar to EUR and US, where after an initial decline, CI increase sharply at some point in time 9 9 9

Emissions – Climate policy Total emissions: Drastic reductions in all regions Per capita emissions: Convergence towards 2080 Economic growth variation: negligible change in CI, some variation in EI Fossils Variation: both CI and EI unaffected 10 10 10

Emissions Drivers – Climate policy Higher emission in baseline, higher emission requiremens EI improvements mainly till 2050, most reductions through CI reductions Greatest reductions: Africa, US, China, India, Europe EI improve more in developing and emerging economies, lower CI when more BECCS All regions develop their renewables capacities, BECCS, (nuclear), and reduce fossils Technological implications of climate stabilization are robust. 11 11 11

Conclusions Baseline emissions and emission reductions sensitive to scenario variation, but climate policy trajectories and regional technology portfolios robust towards massive emissions reductions through renewables deployment and fossils phase out. China, the US, and India remain the greatest emiters, highlighting their importance for global climate. Per capita emissions difference between advanced and developing economies remains in a no-policy world, while climate policy achieves greater convergence. In climate policy, both EI and CI improvements important, but the effect of the latter dominates. Relative fossil prices crutial for emissions patterns, but regional vulnerability to fossil fuel prices not relevant under climate policy. Carbon free energy technologies boosted by faster growth, lower fossils availability, and carbon pricing. Developing economies, such as Africa, might pose a significant opportunity for low carbon-development. 12 12 12

More information on RoSE: Website: http://www.rose-project.org/ Policy Brief with key messages Special Issue in Climatic Change Public available database Acknowledgements: http://www.stiftung-mercator.de/ 13 13 13

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Energy Mixes – Default Baseline Africa: till mid-century - sharp growth in CI and also population growth; GDP per capita and EI improvements grow steadily after mid-century - lower population growth rates and CI improvements allow emissions to stabilize India: till mid-century - mainly economic growth, insufficiently compensated by energy intensity improvements aggravated by population and CI after mid-century - lower economic growth rates and CI and population decrease China: similarly to India, sharp economic growth and only partly dampened by EI improvements, and then lower economic growth rates and CI and population decrease. however, at last two decades CI starts to increase again. Europe and US: that is similar to EUR and US, where after an initial decline, CI increase sharply at some point in time 15 15 15

Energy Mixes – Default Baseline Africa: till mid-century - sharp growth in CI and also population growth; GDP per capita and EI improvements grow steadily after mid-century - lower population growth rates and CI improvements allow emissions to stabilize India: till mid-century - mainly economic growth, insufficiently compensated by energy intensity improvements aggravated by population and CI after mid-century - lower economic growth rates and CI and population decrease China: similarly to India, sharp economic growth and only partly dampened by EI improvements, and then lower economic growth rates and CI and population decrease. however, at last two decades CI starts to increase again. Europe and US: that is similar to EUR and US, where after an initial decline, CI increase sharply at some point in time 16 16 16

Emissions Drivers – Default Baseline Economic growth and energy intensity (EI) improvements Main drivers of emissions for all regions Higher economic growth rates in developing and emerging economies (scenario assumptions) Faster EI improvements (substitution of energy with capital, efficiency parameters) Africa: till mid-century - sharp growth in CI and also population growth; GDP per capita and EI improvements grow steadily after mid-century - lower population growth rates and CI improvements allow emissions to stabilize India: till mid-century - mainly economic growth, insufficiently compensated by energy intensity improvements aggravated by population and CI after mid-century - lower economic growth rates and CI and population decrease China: similarly to India, sharp economic growth and only partly dampened by EI improvements, and then lower economic growth rates and CI and population decrease. however, at last two decades CI starts to increase again. Europe and US: that is similar to EUR and US, where after an initial decline, CI increase sharply at some point in time Carbon Intensities (CI) Important and affecting significantly temporal emissions trends Africa and India, sharp increase (more fossils to fuel development) but then decline. Others, coal to substitute oil. Population More important in emerging and developing economies 17 17 17