Improving the Energy-Water-Material
Nexus toward sustainable future in
East Asia
E3ME-FTT modelling: Part 2 - Chapter 8* andChapter10*

Unnada Chewpreecha*Jean-Francois Mercure (lead author)
uc@camecon.com

5 August 2016

Outline of the presentation• E3ME Overview• Methodology Part 2 Chapter 10• FTT Transport• Methodology Part 2 Chapter 8• FTT Industry

E3ME Overview
Detailed Coverage

Comprehensive

Highly Empirical• 59 regions (33European, 26 World)• 70/44 economic
sectors and 42/28
consumption
categories• 23 fuel users of 12fuels• whole energy,environment andeconomy system• two ways feedbacks
between each module• many policy
instruments• 1970-2014 database• 23 stochasticequations• no prior assumptions• econometrics
specification allows for
short-medium andlong term analysis

Consistent

Forward Looking

Modular• based on system ofnational accounting• input-output tables• bilateral trade• annual projections to2050• behavioural equations
with effects fromprevious outcomes• ex-ante scenario
analysis (ex-post isalso feasible)• E3: Energy,Environment,
Economy and materialmodules• power generation andtransport sub-modules• research can bedecentralised

E3ME E3 Linkages

E3ME Latest Developments• New regions (Africa and Middle East regions)• Endogenous energy price – global resources
database• FTT-Transport• Gender specific employment demand (Europeonly)• WEO 2015 baseline

Part 2: Chapter 10

Decarbonising transport systems

E3ME-FTT Transport• FTT: Future Technologies Diffusions– a group of sectoral models of technological change to calculate
global emissions, using diffusion theory– micro-model of technology choice and substitution, given
economic/policy context• E3ME 'top-down' approach is supplemented
by a set of 'bottom-up' engineering submodels (FTT)– the current model version includes a detailed treatment of theelectricity supply industry and road transport (FTT)• Well-established E3ME-FTT-Power

Private passenger transport model
FTT:Transport -- Global transport sector model-Endogenous technology diffusion
25 technologies, 53 world regions
J-F Mercure, Energy Policy, 48 799-811 (2012)(Theory forthcoming in Mercure, J. Evolutionary Economics, 2015)-Parameterised on price distribution and historical diffusion
Large price distribution database
J.-F. Mercure & A. Lam, Environ. Res. Lett. 10 (2015) 064008
Diffusion trend calibrated against history
Model description forthcoming-Current version covers personal transport, freight work is ongoingDiffusion: technology choices
The uptake of new technology:
Innovation – Selection – Diffusion

tt + ΔtJ.-F. Mercure, Energy Policy 48, 799-811 (2012)

Agent diversity in car markets across the globe

J.-F. Mercure & A. Lam, Environ. Res. Lett. 10 (2015) 064008

E3ME-FTT Transport
E3ME consumption equation

car priceincomefuel pricedistancedriven

car sales

FTT-Transport

FTT transport policies*

IO feedback
average carpricecar demandby technology

road transport
fuel demandroad transport
CO2- fuel tax- carbon tax

E3ME-FTT Transport* Policies available• vehicle tax• road tax• fuel tax (on road transport – standard E3ME)• carbon tax (on road transport – standard E3ME)• biofuel mandate• regulations• exogenous share

The diffusion of vehicle technology

53 regions, 25 technologies

15.$UK
Prices'of'cars'(USD/km)
Std'of'price'' fuel'cost'(USD)std'fuel'cost O&M'costs'(USD)
O&M'costs'(std)'
Discount'ratelifetime energy'use'(MJ/km)
Distance'travelled'per'year'
occupancy'rate'
Capacity'factor'C'(initial)
CO2EmissionsSeats/Veh Learning'expo
Petrol$Econ
18683.00
4396.00
0.095
0.013
0.038
0.020
15%
12
1.583
12104
0.375
4539.01.00744 109.732966
4 R0.0144996
Petrol$Mid
32185.00
8164.00
0.123
0.014
0.051
0.030
15%
122.06412104
0.375
4539.00.72093 143.044759
4 R0.0144996
Petrol$Lux
99538.00
49455.00
0.202
0.057
0.064
0.03015%
123.379
12104
0.375
4539.0 R0.216744 234.16231
4 R0.0144996
Advance$Petrol$Econ
18683.00
4396.00
0.076
0.013
0.038
0.020
15%
121.42512104
0.375
4539.01.00744 98.759669
4 R0.0740006
Advance$Petrol$Mid
32185.00
8164.00
0.110
0.014
0.051
0.030
15%
121.858
12104
0.375
4539.00.72093 128.740283
4 R0.0740006
Advance$Petrol$Lux
99538.00
49455.00
0.161
0.057
0.064
0.030
15%
123.04112104
0.375
4539.00.216744 210.746079
4 R0.0740006
Diesel$Econ
22608.00
3297.00
0.069
0.010
0.038
0.020
15%
12
1.351
12104
0.375
4539.00.3 100.104906
4 R0.0144996
Diesel$Mid$
33755.00
7065.00
0.077
0.015
0.051
0.030
15%
12
1.581
12104
0.375
4539.00 117.12274
4 R0.0144996
Diesel$Large
54793.00
14601.00
0.118
0.025
0.064
0.040
15%
12
2.104
12104
0.375
4539.0 R0.441858 155.926763
4 R0.0144996
Advance$Diesel$Econ
22608.00
3297.00
0.084
0.010
0.038
0.000
15%
12
1.216
12104
0.3754539.0
0.3 90.0944151
4 R0.0740006
Advance$Diesel$Mid$33755.00
7065.00
0.095
0.015
0.051
0.000
15%
12
1.423
12104
0.375
4539.00 105.410466
4 R0.0740006
Advance$Diesel$Large
54793.00
14601.00
0.095
0.025
0.064
0.000
15%
12
1.894
12104
0.375
4539.0 R0.441858 140.334087
4 R0.0740006
CNG$Econ21485.45
1000.00
0.048
0.055
0.039
0.020
15%
12
1.508
12104
0.375
4539.00.627906
84.5988
4 R0.0144996
CNG$Mid37012.75
3000.00
0.071
0.069
0.0560.030
15%122.21012104
0.375
4539.00.321858
123.981
4 R0.0144996
CNG$large
114468.70
5000.00
0.082
0.076
0.066
0.040
15%
122.54812104
0.375
4539.0R0.78
142.9428
4 R0.0144996
Hybrid$Econ
29202.00
2826.00
0.084
0.003
0.039
0.030
15%
12
1.414
12104
0.375
4539.0 R0.302328 97.9758621
4 R0.1520031
Hybrid$Mid
34540.00
6594.00
0.073
0.009
0.056
0.040
15%
121.21612104
0.375
4539.0R0.72 84.2592414
4 R0.1520031
Hybrid$Lux$78343.00
9263.00
0.124
0.017
0.066
0.040
15%
122.078
12104
0.375
4539.0R0.78093 144.024517
4 R0.1520031
EV$Econ10990.00
157.00
0.000
0.000
0.046
0.040
15%
120.21012104
0.375
4539.01.32558
0
4 R0.1520031
EV$Mid44745.00
1256.00
0.000
0.000
0.065
0.050
15%
120.54012104
0.375
4539.000
4 R0.1520031
EV$Lux89961.00
2355.00
0.000
0.000
0.080
0.060
15%
120.58012104
0.375
4539.0R30
4 R0.1520031
2$Wheelers$Motorcycle$Econ$(<500cc)
3808.00
1326.00
0.040
0.003
0.030
0.030
15%
70.6766052
0.55
3328.62.2693 46.8324621
2 R0.0144996
2$Wheelers$Motorcycle$Lux$(>500cc)
14932.00
5760.00
0.127
0.039
0.030
0.030
15%
7
2.124
6052
0.55
3328.60.906978 147.159745
2 R0.0144996
Adv$Mot
3808.00
1326.00
0.040
0.095
0.030
0.030
15%
70.6766052
0.55
3328.62.2693 46.8324621
2 R0.0144996
Adv$Mot$
14932.00
5760.00
0.095
0.095
0.030
0.030
15%
72.1246052
0.553328.6
0.906978 147.159745
2 R0.0144996

Mercure & Lam, In preparation (2016)

E3ME-FTT Transport
Decarbonising road transport (Part 2 Chapter 10)• using combination of policies• ongoing joint paper: the 1.5°C scenario
Initial findings so far (preliminary and confidential) …
• Share of electric vehicle do not rise to high percentage by 2050 (except in few countries)• hybrid come in between 30-40 and high efficiency ICE  possible reason for slow electric car uptake• high efficiency ICE vehicle come into the mix  reduce fuel use but not fast enough• decarbonisation takes time
• CNG also increase in countries with existing use of technology• decarbonisation of remaining non-electric can be done using biofuels mandates but need to becareful• global electricity consumption doesn’t become too large (efficiency)• impact on global oil price* policy refinement and various issues still to be looked at. Freight transport is not included.

Part 2: Chapter 8

Economic impact and transition ofindustry under decarbonisation:
under GHG emission reduction target
and energy mix in 2030,2050

E3ME-FTT Industry• Similar concept as FTT-Power and FTTTransport – technology diffusions• More complex because different industries use
different production technologies

E3ME-FTT Industry - example© Xi'an Abundance Electric Technology Co.,Ltd

Santamaria and Linares (2011) http://www.iit.upcomillas.es/docs/IIT-11-090A.pdf

E3ME-FTT Industry
Development stage:• which industries to include?
• defining technologies• defining policy options• data collection• link to E3ME – inputs and feedback– link to E3ME raw material demand?

E3ME-FTT IndustryChoosing sectors:• clear distinction between different technologies• data availability• energy intensive

Possible sectors:• chemical• steel• petroleum• pulp and paper

E3ME-FTT Industry
Possible policy options:• production tax• energy tax (on Industries – standard E3ME)• carbon tax (on Industries – standard E3ME)• regulations• exogenous share

E3ME-FTT Industry Linkages
E3ME

investment
demandaffect all demand types

intermediatedemandconsumerdemandindustry
demandFTT-Industry

exportdemand- fuel tax- carbon tax

importdemand (-ve)

IO feedback

FTT Industry policies*

industry CO2
average priceinvestment
feedback to E3ME investment
Preliminary – subject to change

different
production
methods

fuel demandraw material
demandE3ME-FTT Industry
Decarbonising industry (Part 2 Chapter 8)• using combination of policies• linkage to E3ME provide economic andemployment impacts– capture rebound effects– two-ways interactions between energy, emissions, economy
and materials