1. Long-term Analysis of Global CO 2 Emission Reduction by Efficient Technologies Yutaka NAGATA (CRIEPI) Katsura FUKUDA (MRI, Inc.) Yuko MORI (JKL, Inc.) Yutaka NAGATA (CRIEPI) Katsura FUKUDA (MRI, Inc.) Yuko MORI (JKL, Inc.) International Energy Workshop July 6, 2005 Kyoto International Energy Workshop July 6, 2005 Kyoto

2. International Energy Workshop, Kyoto2 ContentsContents  Introduction  Model Structure  Case settings and presuppositions  Results  CO 2 emission  Technological change caused by CO 2 constraint  Emission trading cost  Conclusions  Introduction  Model Structure  Case settings and presuppositions  Results  CO 2 emission  Technological change caused by CO 2 constraint  Emission trading cost  Conclusions No time !

3. July 6, 2005International Energy Workshop, Kyoto3 IntroductionIntroduction  Effectuation of the Kyoto Protocol  Reducing CO 2 emission by efficient technologies is the key  Combination with the flexible mechanisms (emission permit trading, JI, and CDM) is also important  This study analyzed the effect of efficient technologies quantitatively  Effectuation of the Kyoto Protocol  Reducing CO 2 emission by efficient technologies is the key  Combination with the flexible mechanisms (emission permit trading, JI, and CDM) is also important  This study analyzed the effect of efficient technologies quantitatively

4. July 6, 2005International Energy Workshop, Kyoto4 Final energy demand (26 regions, 9 kinds) Final energy demand (26 regions, 9 kinds) Model structure Transportation demand Production cost curves of resources Production cost curves of resources Technological and cost conditions of technology Technological and cost conditions of technology Primary energy demand (26 regions, 10 kinds) Primary energy demand (26 regions, 10 kinds) Energy prices (26 regions, 10 kinds) Energy prices (26 regions, 10 kinds) CO 2 emissions and traded permits CO 2 emissions and traded permits Cost of CO 2 capture and sequestration (optional) Cost of CO 2 capture and sequestration (optional) Exogenous conditions Constraint for new construction and CO 2 Constraint for new construction and CO 2 Installed capacity of energy technologies and their operation Installed capacity of energy technologies and their operation Discounted total energy supply cost until 2030 Discounted total energy supply cost until 2030 METEOMETEO Major Output

5. July 6, 2005International Energy Workshop, Kyoto5 Characteristics of the METEO model Dynamic optimization Dynamic optimization Cost function of resource reserves Cost function of resource reserves Price-induced energy conservation Price-induced energy conservation Detailed treatment for load curve of electricity Detailed treatment for load curve of electricity Treats Asian countries in detail Treats Asian countries in detail 3 ways of technological change 3 ways of technological change (1) mixture of power generation (2) fuel conversion (3) alternative fuel vehicles Dynamic optimization Dynamic optimization Cost function of resource reserves Cost function of resource reserves Price-induced energy conservation Price-induced energy conservation Detailed treatment for load curve of electricity Detailed treatment for load curve of electricity Treats Asian countries in detail Treats Asian countries in detail 3 ways of technological change 3 ways of technological change (1) mixture of power generation (2) fuel conversion (3) alternative fuel vehicles

6. July 6, 2005International Energy Workshop, Kyoto6 Assumptions of production cost curve for fossil fuels Production Cost (1=Average Price) Production (1=Proved Reserves) Grade 1 Grade 2 Grade 3 Grade 4 Grade 5 Grade 6 Grade 7 Grade 8 Grade 9 Grade 10

7. July 6, 2005International Energy Workshop, Kyoto7 Regional division 10 Thailand 4 Japan 1 China 3 Taiwan 2 Hong Kong 5 Korea 6 Singapore 15 Australia 16 New Zealand 26 Latin America 25 Mexico 24 USA 23 Canada 22 Africa 21 Middle East 19 Russia 17 OECD Europe 18 Non-OECD Europe 20 Former Soviet Republics 7 Malaysia 8 Indonesia 9 Philippines 11 Brunei 12 Vietnam 13 India 14 Other Asia

8. July 6, 2005International Energy Workshop, Kyoto8 Fuel conversion flow Biomass Nuclear Hydro Geothermal Solar Wind Coking Coal Coal Natural Gas Crude Oil Iron & Steel Coal Liquefaction Coal Gasification Oil Refinery LPGGasolineNaphtha Gas Oil Fuel Oil Gas Liquefaction Vaporization of LNG Gas Demand Coal Demand LPG Demand Naphtha Demand Power Generation Coal Power Oil Power Gas Power Biomass Power Nuclear power Hydro Power Geothermal Power Solar Power Wind Power Gasoline Demand Diesel Oil Demand Electricity Demand Fuel Oil Demand GTL DME

9. July 6, 2005International Energy Workshop, Kyoto9 Case settings CO 2 constraint Emission trading region No Kyoto forever Reduced by 4% in every 5 years since 2010 NoBAUSR(A)SR(B) Japan and China JC(A)JC(B) Annex-I (ratified) Annex(A)Annex(B) World-wideWorld(A)World(B) Countries which have no obligation and not ratified Annex-I are assumed to have same amounts of emission credits in the BAU case.

10. July 6, 2005International Energy Workshop, Kyoto10 Regional CO 2 emission (in 2030) Gt-C with CO 2 constraint No constraint

11. July 6, 2005International Energy Workshop, Kyoto11 Production of crude oil (BAU case) MTOE/year Grade 1 Grade 2 Grade 3 Grade 4 Grade 5 Grade 6 Grade 7 year

12. July 6, 2005International Energy Workshop, Kyoto12 with CO 2 constraint Differences in CO 2 emission (in 2030) Mt-C Purchase credit Sell credit No constraint

13. July 6, 2005International Energy Workshop, Kyoto13 Capacity of power plants (World, in 2030) GW

14. July 6, 2005International Energy Workshop, Kyoto14 Electricity generation (Japan, in 2030) GWh

15. July 6, 2005International Energy Workshop, Kyoto15 Electricity generation (China, in 2030) GWh

16. July 6, 2005International Energy Workshop, Kyoto16 Energy consumption by fossil fuel conversion tech. (in 2030) MTOE GTL and DME will not be installed at the regions where CO 2 constraints will be applied since CO 2 is emitted during the process.

17. July 6, 2005International Energy Workshop, Kyoto17 Energy consumption by vehicles (in 2030) MTOE * The share of hybrid vehicles in number is twice because the efficiency of them is twice of gasoline vehicles

18. July 6, 2005International Energy Workshop, Kyoto18 Cost of emission trading Credit Value ($/ton-CO 2 ) year Emission trading cost Differences in total cost between each case and the SR cases Total amount of excess (insufficient) emissions by region = Current price range of EU allowance

19. July 6, 2005International Energy Workshop, Kyoto19 ConclusionConclusion  Global CO 2 emission will be doubled in 2030 from the 1990 level in the BAU case.  Introduction of clean-coal technologies is important in Japan and other countries.  Advanced fuel conversion technologies and alternative fuel vehicles will be introduced irrelevant to CO 2 constraints.  The theoretical cost of emission trading in 2030 will be $36-$145 per ton-CO 2.  Global CO 2 emission will be doubled in 2030 from the 1990 level in the BAU case.  Introduction of clean-coal technologies is important in Japan and other countries.  Advanced fuel conversion technologies and alternative fuel vehicles will be introduced irrelevant to CO 2 constraints.  The theoretical cost of emission trading in 2030 will be $36-$145 per ton-CO 2.

20. July 6, 2005International Energy Workshop, Kyoto20 Scope of the METEO model Region Worldwide, multi-regional (26 regions) Time range 2000-2030, 7 points (every 5 years) Primary energy type 10 kinds (2 coal, oil, gas, biomass, nuclear, geothermal, hydro, PV, wind Final energy type 9 kinds (2 coal, gasoline, diesel, naphtha, LPG, other oil, gas, electricity Fuel conversion technologies oil refinery, GTL, DME, natural gas liquefying, coal liquefying, coal gasification, steel making (by-product gases) Efficient vehicle tech. hybrid car, alternative fuel vehicles (CNG, DME) Power generation technologies PCF, USC-PCF,Conventional gas CC, Advanced CC (ACC), MACC, IGCC, IGFC Energy transportation considered (depends on mode and length) Energy prices / resource reserves considered (cost function in ten steps of supply curve) Energy conservation considered (reverse function of energy demand)