August 4 2016
Maniwa, Okayama

Improving the Energy-Water-Material Nexus
toward sustainable future in East Asia-Modelling Part 1-Soocheol Lee
Meijo University

Low-carbon, Sustainable
Future in East Asia:
Improving energy systems,
taxation and policy
cooperation2

Research Questions and Answers of the previous Study
How should East Asia choose its energy and power sources?
The implementation of a sustainable mix of energy and power sources based on
restriction of nuclear power and fossil fuels, with a range of support measures forrenewables and energy efficiency.
How could East Asian countries design energy/carbon taxes or other carbonpricing instruments
Our analysis with the E3ME-Asia model showed that, across the East Asianregion, carbon taxes offer a favorable way of raising these revenues, typicallycosting less in terms of GDP and employment than the alternative options.
How should East Asia choose and coordinate low-carbon policies in the tide offree trade?
The development of a low-carbon partnership in East Asia that will enable policy
coordination in climate and energy issues.

Contents and Study Periods
PART 1
Improving power sectors toward sustainable low carbon economy
across East Asia（study period:2016 April~2017March ）PART2
Industry transition, transportation system and sustainable low carbon
economy across East Asia（study period:2016 April~2017March ）PART3Transition of water, resource and land use for environmental
sustainability(study period:2017 April~2018 March)
PART4
Building a policy framework to ensure future environmental
sustainability(study period: 2017 April~2018 August)Study schedule of 2016: chapters in Part 1 & 2○August 3~5 : Maniwa workshop(one day biomass tour, 1.5 day workshop, half day cultural tour)⇒Overseas co-authors present the ideas on the papers in which they have interest.
⇒S Lee presents how to model Part 1 (the power sector)⇒Unnada presents how to model Part 2○September 30 :⇒Co-authors in Parts 1 and 2 submit 1~2 pages ideas and some references on the chapters to the first authors.
○September 30~October 30 :⇒First authors make outlines of the chapters and discuss this with co-authors and share ideas on modelling of
the chapters with Cambridge Econometrics○October 31~November 3 : Intensive modelling workshop at Cambridge Econometrics⇒exercise to model the chapters in Part 1 and Part 2 with the staff of CE and leading authors○December 31 : Finish the first draft of papers in Part 1○March 31, 2017 : Finish the final draft of papers in Part 1⇒First authors determine co-authors and order of co-authors, discussing with editors.
⇒Contribute peer reviewed English language journals if authors want to. In this case, authors contribute thesummary or reshuffled paper to the book chapter of this study⇒Post papers on the REEPS website as working papers⇒Recommend to present working papers to domestic and international conferences

Background and aims of this study
As global populations and incomes increase throughout the world, pressure on
environmental resources is also increasing. Although the problem is global, East
Asia, which includes the world’s second and third largest global economies andthe world’s largest source of greenhouse gas emissions, will play a key role inshaping the world that we live in.

With the Paris COP, policy makers across the world are turning their attention tomeasures to reduce greenhouse gas emissions. However, while substantial
reductions in greenhouse gas emissions are necessary to mitigate climatechange, the problem is in reality far more complex.
Issues of energy consumption are intertwined with those of land use, water andthe consumption of other materials – this has been described as the energywater-material-food ‘nexus’. Researchers are only now beginning to grapple withthis problem and policy makers across the world do not yet have the necessary
tools with which to understand the issue.

In this study we apply new advanced modelling techniques to help develop anunderstanding of the key issues and interactions, including socio-economic
impacts. Using these models, we will make forecasts to 2050 based on abusiness-as-usual scenario for East Asia, covering power sector, industrial
production and the use of energy, water, key mineral resources, and land as well
as agricultural production.
Further, we will calculate emissions of environmental pollutants such as CO2 andparticulate matter accompanying the use, production, and consumption of theabove resources, and we will assess the impacts of health damage and declining
land use on agriculture.
Assuming increased energy and resource productivity, we will examine theimpact of introducing various policy packages aimed at limiting pollution
accompanying the use of these resources (e.g., carbon pricing and taxes on nonrenewable resources, water resources, virtual water transfers, and unsustainable
land use). And we use CGE models on some important issues, also comparing
results to E3ME-Asia analyses.

The final section shows that cooperation across the East Asian region will beessential to meeting the challenges posed by the nexus. The research willmeasure, evaluate, and compare the impacts of introducing policies at theindividual country level as well as simultaneous adoption of policies throughout
East Asia⇒⇒on the efficient use of energy, water and other resources, and land andagricultural productivity and on the suppression of emissions of various
pollutants. It is aimed at policy makers who will ultimately be responsible formeeting these challenges while ensuring economic and social prosperity forpeople across the region.

biodiversity

agriculture／forestry(Par2-B)

Land use(Part2-B)

Material use(part2-A)

Energy-Water-MaterialNexus
Economy, Industry,
Transportation(Part1-A,B)

Environment(Part1,2,3)
Climate change(Part1-A,B)

FTT:power

FTT:transportation

FTT:industry

FTT: landuse &agriculture

Pollution＆Health(Part2-B)

Energy(Part1,2,3)
Social, culture,etc.

Water use(Part2-A): FTT model building in thisproject:main study subject in thisproject:mainly future
Study subject

Study Target

Energy System, Industry and Resource Use Transition toward Sustainable Future in East AsiaPublicity●Symposium(4~6 in 4 years)●Presentation in international academic associations●Working papers, papers for journals (more than 20 papers)●Book publishing (20 chapters)

Teams andStudy
Subjects

Secretariat andModelingteam

Team 1（Energy andindustry transition）

Designing sustainable electricity systems in East Asia, Reappraisal of renewableenergy,Economic impact and transition of industry under decarbonisation

Team 2(Decarbonisingtransportation,building

Decarbonising transport systems, Reducing the environmental impact of buildings
Financing the energy system and industry transition

Team 3(water, resource
use transition)

Interaction between energy and material consumption, Sustainable use of water
resources. Managing the use of mineral and biomass resources

Team 4(agriculture, landuse transition,etc.)

Land use requirements and the agricultural sector, Local pollution and related
health effects, The economics of the nexus, in East Asia and beyond

Team 5(policy frame work,policy cooperation)

Policy lessons from Europe and other global regions, Lessons from East Ssia
Building cooperation between East Asian regions, Case study: East Asian supergrid

Study methods

Hearing and research(governments, Institutes, business circles,companies), Workshop, Modeling running, Policy analyses

Study Tool

Mainly E3ME-Asia＋FTT：Power,Industry,Transportation,agriculture

Study teamStudy network

Secretariat andmodeling teamTeam １Team ２

Team ３

Team ４３２ academics：Japan（15+３）、Overseas（UK(４), East Asia（10））

Team ５Modelling PART 1
Improving power sectors toward sustainable low
carbon economy across East Asia

Japanese GHG targets

1,397 million ton(2005=100)

3.8% reduction
comparing to 2005

②GDP growth rate
(1.7%/year from2013 to 2030)①③

1,408 million ton

25.4% reduction
Comparing to 2005（26% reduction
comparing to 2013）

80% reduction
comparing to2005年

2020 target
2030 target

2005

2013

2020

2050 target

2030

2050

Japan`s Energy and Power mix plan in 2030
GDP growth rate
(1.7%/year from 2013to 2030)

2030 powermix plan

EnergyConservation(50.3 million KL)

Electricity
About 25%(966.6 bil. kWh)Heat, Gasoline,
City gas, etc.
75%

EnergyDemandGeothemal(1~1.1%)

Renewables(22~24)

Electricity
About 28%(980.8 bil. kWh)Heat, Gasoline,
City gas, etc.
72%

Nuclear(20~22)

Biomass(3.7~7.6%)

Wind(1.7)

Nuclear(10~11%)PV(7.0%)

LNG
(18%)

Hydro(8.8~9.2%)

LNG
(27)

Renewables(13~14%)

Coal(25%)

LPG(3%)
Coal(26)

Petroleum(30%)

Petro (3%)

Total electricity output(1,065 billion kWh)

361 million KL

2013

326 million KL

2030

2030

2030

NuclearandFossil
FuelReliance85%Modelling this part
• ●Using FTT(Future Technology Transition) power sub model connected by
E3ME, we can estimate the changes of power sectors by 2050 of East Asia
by the policy scenarios of regulating the coal power, nuclear each and coal
power and nuclear power simultaneously.
• ●We introduce power sector policies such as feed in tariffs or subsidies toincrease renewables share and show how much these policies promoterenewables.
• ●We could put carbon tax on power sector to estimate how this change
the power mixes in East Asia. We could put a cap on nuclear so that it
doesn’t come up as substitution for fossil fuels technologies• ●For linking grids, we effectively join the regions in FTT, removing some of
the resource constraints on variable / peak load sources. It would have
impacts on harmonising electricity prices between regions. The whole
diffusion dynamic could also change as well, we would need to discuss withJ-F, developer of FTT, but potentially very interesting.

Base line for modelling this Part
●Set base lines of Electricity mixes, CO2 emissions and GDPs of China,Japan, Korea and Taiwan by 2050 using reference scenarios of｢Asia/World Energy Outlook｣ by EEIJ
⇒This report disclose detailed and reliable reference data on energy
and economy of CJKT by 2040
⇒We calibrate the energy and economy data from 2040 to 2050
using the trends of 2030~2040 in ｢ Asia World/ EnergyOutlook｣●Population data by 2050
⇒UN World Population Perspective

Pathway to get the 2050 GHG target

China(23.2%)
Taiwan(6.6%)
Korea(4.1%)(2010=100)

Japan(-16.2%)

Reference scenario ofAsia/World Energy Outlook
2015 by EEIJ

CarboncostJapan`s 2050
target80%
reduction

2013

2020

2030 INDC

2050

Chapter 3. Modelling the power sectors in East Asia : thechoice of power sources by nuclear and coal power
regulations●In this chapter we explore possible scenarios of power sector development for
four East Asian regions (China, Japan, Korea, and Taiwan), all of which havespecific targets for changing the composition of their technology mix in order togenerate power(by chapter 3 of Routledge 2015).
●We use a method that is based on technology diffusion(E3ME+FTT), in which
pathways of technology result from energy policy choices like 5 policy scenarios
below. We explore the feasibility of current aspirations and targets by evaluating
the effectiveness of putative electricity policies in chosen 5 scenarios below.

We simulate impacts on electricity mixes of CJKT using
E3ME+FTT by the 5 scenarios below•••••Scenario 1 : Nuclear ⇒ fade out by 2050
Scenario 2 : Coal ⇒ regulate by 2050Scenario 3 : Scenario 1 + Scenario 2Scenario 4 : Scenario 3 +Policy scenario on renewable
Electricity subsidies of CJKTScenario 5 : all scenarios + East Asia Super Grid impacts

On the expected results of the scenarios in general on
the electricity mixes of CJKT:·····

Sc 1 will show a shift from nuclear to coal
Sc 2 will show a shift from coal to gas
Sc 3 will be a shift from coal and nuclear to gas
Sc 4 will be a shift from nuclear and fossil fuels torenewables
Sc 5, one of the important features of a super-gridwould be that intermittent renewables could becombined better without needing so much storage– but with only an annual resolution this isdifficult to judge with E3ME.

Chapter 4. Modelling the power sectors in East Asia : the choiceof power sources by feed-in-tariffs and carbon taxes to meet the2030 INDCs and 2050 targets● In this chapter we focus on the power sector and we will see
how power mixes of CJKT will be influenced by feed-in-tariff andcarbon tax on power sector by 2050 below.
● Estimate carbon tax to meet the 2030 INDCs of CJKT andsimultaneously to meet the 80% reduction by 2050(comparing 2010)
in Japan, Korea and Taiwan and 50% reduction by 2050(comparing2010) in China(no restriction on energy mix target of CJKT).

Policy Scenarios• Scenario 1 :Nuclear ⇒fade out by 2050 plus feed-in tariff and carbontax• Scenario 2 :Coal ⇒regulate by 2050 plus feed-in-tariff and carbon tax• Scenario 3 :⇒Scenario 1 + Scenario 2 plus feed-in-tariff and carbon tax• Scenario 4 :⇒Scenario 3 +Policy scenario on renewable Electricity
subsidies plus Carbon Tax• Scenario 5 : Carbon tax alone(no recycling)Chapter 5. Modelling the power sectors in East Asia : economicand environmental impact by the choice of power sources ofnuclear and coal power regulations●In chapter 3 above, we will analyse scenarios, i.e. limiting the share of nuclear power, limiting theshare of coal-fired power, limiting the share of both nuclear and coal-fired power, and subsidizing
renewables. Economic impacts of these scenarios in East-Asia are not immediately or intuitively
obvious to predict.
●This is due to many interacting factors: phasing out inexpensive energy systems, such as nuclear
and coal-fired plants, drives up the total costs of supplying electricity in the power sector. This, inturn, may decrease welfare for consumers and may also reduce international trade competitivenessthrough higher export prices(Chapter 4 of Routledge 2015).
●Meanwhile, investment in low-carbon technology often has beneficial impacts on employment (see,for instance, Wei et al. 2010, and Cambridge Econometrics et al. 2013), since new technologies often
involve higher levels of technological complexity and sophistication, research and development
activities, and increased demand in interrelated sectors across the economy.

We will provide the economic impacts from E3ME-Asia for eachscenario of electricity policy and technology, as defined in the chapter
3 above.

Scenario 1 : Nuclear ⇒ fade out by 2050
Scenario 2 : Coal ⇒ regulate by 2050
Scenario 3 : Scenario 1 + Scenario 2Scenario 4 : Scenario 3 +Policy scenario on renewable
Electricity subsidies of CJKTScenario 5 : all scenarios + East Asia Super Grid(??)

Chapter 6. Modelling power sectors in East Asia: the choice of powersources by CGE-This chapter is CGE version of chapter 3,4-Basically same scenario and same logic of chapter 3,4Chapter 7. Modelling power sectors in East Asia: economic andenvironmental impact by the choice of power sources by CGE(CGEversion of chapter 5)-This chapter is CGE version of chapter 5-Basically same scenario and same logic of chapter 5