1. Introduction to MARKAL Model Structure and Applications Evelyn Wright and Dan Loughlin U.S. EPA Office of Research and Development NE-MARKAL Stakeholders Meeting December 18, 2003

2. Outline Introduction to MARKAL model and structure What questions can MARKAL answer (and who is using it?) EPA's MARKAL modeling programs

3. Introduction to MARKAL model and structure

4. What is MARKAL? An energy-technology-environment model Uses a bottom-up representation of energy-producing, - transforming, and –consuming technologies Finds a least cost set of technologies to satisfy end-use energy service demands AND policies specified by the user Calculates resulting environmental emissions

5. What Does MARKAL Do? Identifies the most cost-effective pattern of resource use and technology deployment over time. Quantifies the sources of emissions from the associated energy system. Provides a framework for exploring and evaluating alternative futures, and the role of various technology and policy options. Quantifies the system-wide effects of energy and environmental policies

6. How MARKAL Does It Represents all energy producing, transforming, and consuming processes as an interconnected network (Reference Energy System ). Selects technologies based on life-cycle costs of competing alternatives. Evaluates all options within the context of the entire energy/materials system by: –balancing all supply/demand requirements, –ensuring proper process/operation, –monitoring in detail each process’s capital stock turnover, and –adhering to user defined environmental & policy restrictions.

7. MARKAL: an economic optimization energy system model Objective function: –MIN[discounted total system cost] –Total system cost includes capital, operating, and fuel costs, plus any taxes assigned to environmental emissions Constraints: –System constraints: energy balance, demands, electrical system –User imposed policy constraints, including emissions caps, technology portfolio standards, taxes and subsidies

8. Key MARKAL features Bottom-up, technology rich approach –Essential for assessing programs where technological change is key Coherent and transparent framework –Data assumptions are open and each result may be traced to its technological cause. Flexible –Easy to modify technology and energy system descriptions to represent local conditions, energy and environmental policies, and "what if" scenarios Long history (> 20 years) of widespread use (> 50 countries)

9. MARKAL Users Total OECD Countries = 21 Total Developing Countries = 23 Total Other Countries = 13

10. MARKAL's four stage representation of an energy system Industry, e.g. -Process steam -Motive power Services, e.g. -Cooling -Lighting Households, e.g. -Space heat -Refrigeration Agriculture, e.g. -Water supply Transport, e.g. -Person-km Demand for Energy Service Industry, e.g. -Steam boilers -Machinery Services, e.g. -Air conditioners -Light bulbs Households, e.g. -Space heaters -Refrigerators Agriculture, e.g. -Irrigation pumps Transport, e.g. -Gasoline Car -Fuel Cell Bus End-Use Technologies Process Technologies Primary Energy Supply Fuel processing Plants e.g. -Oil refineries -Hydrogen prod. -Ethanol prod. Power plants e.g. -Conventional Fossil Fueled -Solar -Wind -Nuclear -CCGT -Fuel Cells -Combined Heat and Power Renewables e.g. -Biomass -Hydro Mining e.g. -Crude oil -Natural gas -Coal Imports e.g. -crude oil -oil products Exports e.g. -oil products -coal Stock changes (Final Energy) (Useful Energy)

11. Example MARKAL Reference Energy System with one end-use demand Each box is a MARKAL technology Each arrow is a MARKAL energy carrier box

12. Portion of an actual MARKAL RES

13. Example Resource Block DATA –Maximum output (total, per year, or both) –Price per unit output –Emissions coefficients Carbon, NOx, SOx, VOC, particles Bit. Coal, 0.8–1.7 # Sulfur/mmBtu Coal Mine

14. Examples of Resources Mining/extraction of –Bituminous coal, 0.4–1.7% sulfur –Lignite, 0.8–1.7% sulfur –Domestic crude oil Imports of –Crude oil –Electricity –Natural gas Stockpile of uranium Biomass crops Municipal waste

15. Example Process Block Capital and operating costs Efficiency Availability Inputs and outputs Emissions Crude Oil Natural Gas Liquids Gasoline Diesel Fuel Residual Oil Carbon, NOx, SOx, VOC, particles Oil Refinery DATA

16. Example Processes Refineries Coke Oven Coal Gasification Processes Steam Methane Reforming Production of Ethanol from Biomass Pipelines Emissions Control Devices Anything that changes the form or location of a fuel

17. Example Demand Technology Block Carbon, NOx, SOx, VOC, particles Light-duty transport demand Gasoline ICE Vehicle Gasoline Capital and operating costs Efficiency Demand(s) serviced Availability Input energy carrier Emissions DISCRATE DATA

18. Examples of demand technologies Cars Refrigerators Air conditioners Lightbulbs Industrial motors

19. What questions can MARKAL answer? (with some current and recent applications)

20. Technology availability and policy What happens if a new technology becomes available, or if an old one becomes cheaper or more efficient? –U.S. DOE Energy Efficiency and Renewable Energy Office, National Energy Technology Lab, and National Renewable Energy Lab, to evaluate benefits from R&D programs –U.S. EPA ORD technology scenarios assessment What are the implications of a technology forcing policy (e.g. renewable portfolio standard)? Project future energy consumption and technology utilization (U.S. Energy Information Administration, International Energy Agency)

21. Environmental emissions policies Establish baseline GHG projections and evaluate costs and effectiveness of reduction strategies (DOE/AID, EPA OAR, many national and international studies) Examine co-control benefits of GHG reduction measures (Belgium) Compare impact of single pollutants vs. multipollutant emissions constraints (EPA OAR) Compare varying emissions permit allocations and trading schemes (Canada)

22. Carbon emissions constraint example results REDUCTIONS FROM

23. Other uses Assess energy price, technology, and environmental implications of varying scenarios for future resource supplies and prices (EPA ORD) Serve as a vehicle to foster communication, synthesize and manage information, and promote stakeholder involvement on energy-technology issues (EPA ORD) Examine how demand-side actions affect the supply- side, and vice versa

24. EPA's MARKAL modeling programs

25. EPA ORD national MARKAL modelling goals Develop and make available a transparent, well-documented national MARKAL database Create and assess scenarios of technology futures in transportation and electricity production Take into account driving forces including –Technological improvements –Energy supply and price –Environmental, energy, and land use policies Provide input to EPA studies of future environmental loadings and impacts

26. Scenario assessment approach (1) Gather data from the major stakeholders in transportation technology futures –Industry –Academic researchers and the National Academies –NGOs –Department of Energy and Transportation –EPA's OAQPS and OTAQ –State governments Allows us to cover the range of possible futures and respond to others' technology assessments

27. Scenario assessment approach (2) Transportation technologies to be assessed include –Conventional and advanced gasoline and diesel ICEs –Gasoline and diesel hybrids –Hydrogen, gasoline, and methanol fuel cells Electricity generation technologies to be assessed include –Advanced coal and natural gas plants –Renewable plants –Advanced nuclear plants –Carbon capture and sequestration

28. Additional EPA national MARKAL projects OAR Office of Atmospheric Programs –Developing goal programming tools to address trade-offs in the assessment of multipollutant strategies –Developing improved, technologically rich characterization of industrial sector energy use OAR Methane and Sequestration Branch –Using MARKAL to assess emissions and energy implications of methane mitigation technologies and programs

29. EPA National MARKAL database SectorSourcesTechnologies TransportationDOE OTT15 personal vehicle technologies in 5 size classes; 40 other passenger and freight technologies ElectricityNEMS, EPRI45 technologies CommercialNEMS300 heating, cooling, ventilation, lighting, and refrigeration technologies ResidentialNEMS135 heating, cooling, lighting, and refrigeration technologies IndustrialSAGEPlaceholder Coal supplyNEMS25 types by region, sulfur content, and mine type. 8-step supply curves Oil/gas supplyNEMS, USGS5 grades imported oil; 9 imported refined products plus natural gas. 3-step supply curves. Domestic oil and gas production under development EmissionsEPA, GREETUnder development

30. EPA National Model Forecasting Methodology MARKAL results are driven by demand projections and technology characterizations Currently, demand projections are taken from the Annual Energy Outlook, extrapolated beyond its time horizon Technology results are loosely calibrated to AEO results We are exploring methods to link MARKAL with other economic models for both regional and national projects; demand would be driven by GDP and other economic and demographic projections

31. EPA regional MARKAL program We wish to provide input to studies of future air quality and ecological impacts of energy-using technologies –This requires finer-than-national resolution We recognize that states and localities need tools to examine criteria pollutant and GHG emission implications of energy and environmental policies We wish to understand the advantages a regional model offers over a national model, for both research and policy purposes We are very glad to be working with NESCAUM to support the development of NE-MARKAL

32. For more information on EPA ORD's national MARKAL data or MARKAL modeling programs, or any questions, contact Evelyn Wright (919) 541-3609 Wright.Evelyn@epa.gov National Risk Management Research Laboratory Mail Drop E-305-02 Research Triangle Park, NC 27711