Environmental Module and methodology for the assessment of data quality SUST-RUS 22. April 2010

2 Agenda  Timing of work packages and their components  Environmental Issues in Russian Federation  Environmental Module: Data Issues & Modeling Approach  Discussion

3 WP0 Project management WP1 Development of methodology WP2 Data collection and analysis WP3 General structure of the model WP6 International dimension WP7 Social dimension WP5 Environmental dimension WP4 Sustainability indicators WP8 Linking the three dimensions of sustainability WP9 Policy analysis including assessment of the model reliability WP10 Dissemination of the project results Construction of the set of the economic indicators (WP 4.3) Timing of work packages and their components

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5 Energy & Climate Issues Energy intensity (amount of energy consumed per unit of GDP) is higher than any of the world’s 10-largest energy-consuming countries. Russia’s energy intensity vs. countries of the former Soviet Union is very high Source: Worldbank and IFW (2008)

6 Energy & Climate Issues Source: Worldbank and IFW (2008) Comparative Energy Intensity of Steel Production (2005)

7 Environmental situation in Russia Climate change impacts (risks linked to permafrost degradation, increased frequency and intensity of extreme meteorological phenomena such as floods and winter melts ) Air pollution levels exceed maximum allowable concentrations in major urban areas of Russia. Acidifying emissions lead to surface water acidification (e.g. in the border areas between Russia and Norway) and to heavy damages of forests (e.g. in Norilsk). Today around 50% of total SO2 emissions come from the five largest sources in the metallurgical industry. In future, SO2 emissions from the power sector will rise due to increasing competitiveness of coal against natural gas. Other problems: water quality and toxic waste (around 20-30% of drinking water does not meet quality standards)

8 Russia’s strategy to combat air pollution Improving energy efficiency: 40% reduction of Russia’s energy efficiency by 2020 compared with 2007 levels (Presedent Medvedev signed a decree in June 2008); significant increase in energy efficiency of electric power sector (government order of Prime Minister Putin 2009) Climate Doctrine of the Russian Federation approved in 2009: Reduction of the share of energy generated from natural gas to 46% or 47% by 2030, doubling of nuclear power capacity, limit the burning of gas produced from oil wells, increase the use of renewable energy in electricity production to 4,5% by 2020 Compliance with international agreements (e.g. UNFCCC / Kyoto; UNECE Convention on Long-Range Transboundary Air Pollution / 1994 Oslo Protocol: 40% SO2 reduction compared to 1980 levels)

9 Environmental sustainability indicators Define a set of sustainability indicators to assess Russia’s environmental performance within SUST-RUS modeling framework Policy-relevant indicator lists used at international and national level: 58 indicators / 19 related to environment - developed by the United Nations Commission on Sustainable Development (2001) 79 structural indicators (SIs) / 18 related to environment – agreed upon between by the European Council an the Commission in order to assess the progress made towards the Lisbon strategy goals Sustainable development indicators (EU SDIs) / About 55 indicators related to climate change and energy, sustainable consumption and production, sustainable transport, and natural resources - developed by the European Commission in order to measure progress towards the 2006 EU Sustainable Development Strategy (

10 Environmental sustainability indicators The following table lists indicators by whether they are (i) covered by standard CGE models (blue-green), (ii) in the scope of extended CGE models (yellow), or (iii) most likely beyond the scope of CGE models. EU SDIs are classified according to three levels: –Level 1 indicators refer to overall lead objectives. –Level 2 indicators correspond to priority objectives of the EU sustainable development strategy. –Level 3 indicators refer to actions.

11 Environmental sustainability indicators

12 Environmental sustainability indicators

13 Environmental sustainability indicators

14 Environmental sustainability indicators

15 Environmental sustainability indicators

16 Environmental sustainability indicators Selection of policy-relevant indicators which correspond to our modeling framework: 1. CO2 emissions (per sector, per energy consumption) 2. Gross inland energy consumption by fuel 3. Electricity consumption of households 4. Final energy consumption by sector / transport (per GDP) 5. SO2 and NOx emissions by source sector (optional) 6. Regional depositions and ambient air concentrations (optional) 7. Waste (optional)

17 The SUST-RUS environmental module: options Two main tasks of the environmental module: 1. Modeling of Russia’s environmental development depending on economic acitivities; 2. Modeling the impacts of environmental policies (including technical standards, energy and emission taxes, and tradable permits) on the behaviour of firms and households and thus on the Russian economy and environment At the best, SUST-RUS will include three environmental dimensions: climate change, deposition (transboundary pollution) of acidifying emissions, and ambient air quality ( → explore the synergies and trade-offs of local and regional air pollution control and of GHG mitigation policies). Check environmental dimensions with respect to practicability and data availability.

18 The SUST-RUS environmental module: options Cimate change: CO2 CO2 emissions are directly related to the fuel input used in production of sectors and in consumption of households Household activities might be linked to CO2 emissions via the use of so-called ‘durable goods’ (e.g. cars and heating systems in GEM-E3) CO2-emissions are computed with help of input-specific emission factors No end-of-pipe abatement technologies such as CCS will be included (still too expensive)

19 The SUST-RUS environmental module: options Climate change: CO2 The costs of climate policy (e.g. a carbon tax) are added to the fuel prices ( → user costs of energy). Since input decisions depend on relative prices, a change of relative prices affects input demands and CO2 emissions. Carbon policies affect the CO2 emission level via two channels: 1. substitution of fuels within existing technologies, 2. decline in production 3. technological update. Data requirement CO2 Region-specific energy balances: Energy consumption by region, sector, fuel (disaggregated), and transport/heating Share of energy-relevant use of fossil fuels in total fuel consumption

20 Energy consumption in Russian iron and steel sector (2005, mtoe) Source: Bashmakov et. al (2009) The SUST-RUS environmental module: options

21 Energy consumption in Russian iron and steel sector (2005, mtoe) Source: Bashmakov et. al (2009) The SUST-RUS environmental module: options

22 The SUST-RUS environmental module: options Deposition of acidifying emissions: SO2, NOx SO2 and NOx emission levels depend on abatement (end-of-pipe) technologies such as flue gas desulfurization plants. The sector-specific user costs of energy now include also abatement costs. SO2 and NOx are transboundary pollutants leading to ambient air concentration and deposition far from the emitting source. Environmental feedback mechanisms could be introduced (see e.g. Bergman and Hill 2000 ) Data requirement SO2, NOx Energy balances: Energy consumption by region, sector, fuel (disaggregated), and transport/heating Fuel-and sector-specific SO2 and NOx emission coefficients

23 The SUST-RUS environmental module: options Data requirement SO2, NOx Sector-specific marginal abatement cost functions (and separate abatement cost functions for heating and cars). Common asumptions: Marginal abatement cost functions are increasing on a progressive scale in the amount of already abated emissions; firms in all regions have access to abatement technologies at the same costs. Data sources: Russia-specific technology and cost databases for SO2: MOSES model (developed by TME, the Netherlands), the IIASA GAINS-Europe model (includes estimates for the European part of Russia and for NOx, PM, VOC), the GEM-E3 model (only for EU-countries) Transport matrices for SO2 and NOx (specific for Russia’s regions) Data sources: Source-receptor calculations with the Unified (UN-ECE) EMEP model using meteorological and emission data; acid deposition monitoring network in East Asia EANET

24 The SUST-RUS environmental module: options Data requirement SO2, NOx Parameters to convert total region-specific primary pollutants into concentration and deposition of secondary pollutants (values can be taken from GEM-E3 model) Damage function: Damage estimates for Russia per damage category (e.g. acidification of forest and agricultural soils, health effects) and monetary evaluation (damage function) are required.

25 Discussion Next steps Core model code Environmental module as a “stand-alone tool”, no feedback effects Data availabilty (TER form and regional energy balances from Rosstat) and data proceeding for CO2; Data availability for SO2, NOx and PM (including Russa’s specific abatement cost curves) ……..