Recent developments at CIAM Markus Amann International Institute for Applied Systems Analysis

Issues Revision of the NEC Directive Revision of the Gothenburg Protocol New GAINS features to model energy efficiency improvements and fuel substitution Marginal costs of GHG mitigation in Annex1 countries

Revision of the NEC directive NEC report #6 published in July 2008 Commission has postponed proposal on NEC until further notice New call for tenders for NEC follow-up analysis published – without specific dates for calculations New PRIMES 2009 baseline will be released in June 2009; will be used for EC4MACS interim assessment

Revision of the Gothenburg Protocol Call for national energy projections – deadline May 31, For appropriate format: contact Janusz Cofala Baseline projection for WGSR in September 2009; traditional GAINS analyses will be complemented by quantifications of impacts by the various WGE Task Forces and Centres Set of emission control scenario calculations for EB December 2009

EC4MACS schedule Model documentations are now on the Internet ( Internet consultation on methodology has been started – deadline for comments: June 15, 2009 Interim assessment (full model chain with recent PRIMES + CAPRI baseline projections): August 31, 2009 EC4MACS review workshop (together with Task Force on Integrated Assessment Modelling): October 2009

Marginal cost curves for GHG mitigation GAINS has been used compare GHG mitigation efforts between Annex 1 countries, all gases and sectors, at detailed technical level (several 100 source categories, 300+ mitigation measures, etc.) systems approach (integrated perspective covering demand and supply sectors), consistent with UNFCCC 2005 inventories Results, input data and an interactive calculator freely available in the public domain:

New GAINS structure for domestic sector to facilitate assessment of energy efficiency improvements Separate treatment of Residential and Commercial energy use Needs distinguished: –Space heating + ventilation + Air conditioning (HVAC) –Water heating –Cooking –Lighting –Large appliances –Small appliances, Up to 10 climate regions, Flats/Single family houses, Built before/after 2010, For each source category: –Up to 3 efficiency stages –Switch to less carbon-intensive fuels (coal to gas or biomass, solar…), –District heat with CHP instead of local boilers

New GAINS structure for industrial sector to facilitate assessment of energy efficiency improvements - Iron and steel Raw steel, Finished products, Scrap, Coke oven coke, Sinter, Pellets, Pig iron, Direct reduced iron, Open hearth furnace, Basic oxygen, Electric arc furnace, Casting, rolling finishing, Thin slab casting, Other –Non-ferrous metals Aluminum (primary, secondary), Other metals (primary, secondary), Other –Non-metallic minerals –Cement (of which clinker), Lime, Other –Chemicals Ammonia, Ethylene, Chlorine, Other –Pulp and paper Pulp (from wood, from recovered paper), Paper and paperboard, Other –Other industries Changes in production structure (e.g., primary vs. secondary metals, clinker content in cement) included in the baseline

Estimating mitigation potentials Four steps a)Inventory of ~300 mitigation measures, with technical and economic features

Mitigation measures ~300 options in each country Structural measuresCO 2 measuresN 2 O measures F-gas measures CH 4 measures

Estimating mitigation potentials Four steps a)Inventory of ~300 mitigation measures, with technical and economic features For each source sector in each country: b)For 2005: Match emissions reported to UNFCCC –with activity data from UNFCCC, IEA and national statistics, –adjust implementation rates of mitigation measures.

Estimating mitigation potentials Four steps a)Inventory of ~300 mitigation measures, with technical and economic features For each source sector in each country: b)For 2005: Match emissions reported to UNFCCC c)For 2020: Match baseline energy use of IEA World Energy Outlook with activity rates projected by IEA modify implementation rates of energy efficiency measures to reproduce IEA energy projection. Develop baseline emission projection -adjust implementation rates of mitigation measures as reported in National Communications.

Estimating mitigation potentials Four steps a)Inventory of ~300 mitigation measures, with technical and economic features For each source sector in each country: b)For 2005: Match emissions reported to UNFCCC c)For 2020: Match baseline energy use and develop baseline emission projection d)Determine further mitigation potential –from implementing the best available (energy efficiency and C mitigation) measures that are not assumed in the baseline, –considering constraints on replacement of existing capital stock, structural limits, etc.

Energy intensity of ethylene production

Efficiency frontier

Estimating mitigation costs Three steps: 1.Determine unit costs for each mitigation option: –Annualized investments + operating costs – savings per unit of reduced emissions –Reflect resource costs without transfers (no taxes, subsidies, profits, transaction costs, etc.) –Alternative interest rates for annualization of investments: Social (4%/yr) Private (20%/yr) 2.For a given mitigation target: -Determine least-cost portfolio of mitigation measures (i.e., including upstream effects), through optimization model 3.Cost curves: Series of optimizations between baseline emissions and maximum mitigation case

Marginal abatement cost curve Annex I in 2020, 20% interest rate, excl. LULUCF Analysis not completed yet for: Belarus, Croatia, Turkey, Cyprus, Malta +7% +2% -3% -10% -16% % -2% -7% -13% -20% Rel. to 2005 Rel. to 1990 Carbon price (€/t CO 2 eq) Baseline emissions Maximum mitigation case Technical potential Market potential (at 20% interest rate)

An initial implementation For largest Annex 1 countries (98% of 1990 emissions), EU27 presented in aggregate Based on activity projections of IEA World Energy Outlook 2008 and FAO World Agriculture Perspective Key assumptions: –Only currently available technologies –Natural turnover of capital stock, no premature scrapping –No behavioural changes –Domestic measures only –LULUCF excluded for now Initial analysis compiled from publicly available information, received only limited review by national experts up to now

Baseline GHG emissions projections for IEA WEO2008 projection Analysis not completed yet for: Belarus, Croatia, Turkey, Cyprus, Malta

Total costs for GHG mitigation, Annex 1, 2020 for different interest rates (excl. LULUCF)

Total cost curves for 2020 (% of GDP) (10% interest rate, excl. LULUCF) AUS NZ CA NO US CH JP EU RU UKR

Comparison of mitigation efforts for a 16.5% reduction of total Annex 1 emissions Efficiency vs. equity AU CA EU JP NZ NO RU CH UKR US Change Per- Carbon Costs Costs per- to 1990 capita price % GDP capita AU CA EU JP NZ NO RU CH UKR US Change Per- Carbon Costs Costs per- to 1990 capita price % GDP capita AU CA EU JP NZ NO RU CH UKR US Change Per- Carbon Costs Costs per- to 1990 capita price % GDP capita AU CA EU JP NZ NO RU CH UKR US Change Per- Carbon Costs Costs per- to 1990 capita price % GDP capita

On-line calculator on the Internet

Co-benefits on air pollutant emissions Annex 1, 2020