ALPS International Symposium

Nadao Hall, Tokyo
February 9, 2011

Scenarios for Global Warming Mitigation andSustainable Development - ALPS Scenarios
Keigo Akimoto
Systems Analysis Group
Research Institute of Innovative Technology for the Earth (RITE)

Contents
1. Historical Trend of GHG Emissions
2. Socioeconomic and GHG Emission Outlook
3. Outlook of Deep Emission Cuts of Global
Emissions4. Barriers of Technology Diffusion
5. Toward Deep Emission Cuts
6. Conclusion2

【Today’s Topic】
Considering possible measures toachieve deep cuts of global GHG
emissions in a real world
through historical evidences andmodel analyses

1. Historical Trend of GHG Emissions

Historical Emissions of Energy-related CO235

CO2 emission (GtCO2/yr)

30

2000-08+2.8%/yr25
World

1971-2000:+1.8%/yr20
Annex I

15
10

Non-Annex I
Kyoto Protocol
adoption

5
0
1970

1980

1990

2000

2010

Increase rate of global CO2 emission was +1.8%/yr between 1971-2000 andafter 2000 the rate was +2.8%/yr. The emission in Annex I has slightly
increased after around 2000.

5

Historical Per-GDP CO2 Emission
Per-GDP CO2 emission (kgCO2/US$)

1.6
Non-Annex I

1.4
1.2
1

World

1971-2000:-1.4%/yr
2000-08:+0.0%/yr

0.8

0.6
Annex I

0.4
0.2

0
1970

Kyoto Protocol
adoption
1980

1990

2000

2010

Increase rate of global per-GDP CO2 emission was -1.8%/yr between 1971-2000
and after 2000 the rate was 0%/yr, while that in Annex I has continuously
decreased.

6

Carbon Price of Emission Trading Scheme

7

Carbon price
EU-ETS Phase II (historical)

US

Around 8-30 €/tCO2

Phase III (estimates by EC*)32 €/tCO2 (before the economic crisis)
16 €/tCO2 (after the economic crisis)

RGGI of the east 7 states (historical)

Around 2-3 $/tCO2

Currently 10 states

The American Power Act (KerryLieberman)

12-25 $/tCO2 in 2013

Currently there are little possibility to approve it.
*) Source: EC, Analysis of options to move beyond 20% greenhouse gas emission reductions and assessing
the risk of carbon leakage, May 2010

It is difficult to achieve high explicit carbon price in a real world, andthe price is below 50$/tCO2 (mostly 20-30$/tCO2)

From Historical Evidences of Emission
Reductions

8

 The Kyoto Protocol is a framework to set ‘cap’ forcountry and to allow flexible mechanism, e.g., emission
trading.
 If marginal abatement costs (carbon price) were almost
equal among all countries and the price were high, theframework could induce large global emission reductions.
 However, this conditions are unexpected to be satisfiedしeven in 2050.
 Only a part of the countries will be under the cap in a realworld, and high carbon prices will induce carbon
leakages. It will be impossible to achieve large emission
reductions economically and politically.
 The Kyoto style framework will never induce large
emission reductions in a real world.

2. Socioeconomic and GHG Emission
OutlookOutlook of Global Per-Capita GDP (ALPS Scenarios)

1060

Range in SRES

Per-capita GDP (Thousand 2000USD)

SRES A1
SRES B150

ALPS-Scenario A

40

Range in ALPS
30

20

SRES B2

10
SRES A2

ALPS-Scenario B

01980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

Note: GDP of SRES scenarios are adjusted to the price in 2000 from that in 1990.

Outlook of Global Population (ALPS Scenarios)
SRES A2(IIASA1996 High)160

Range in SRES

ALPS-Scenario B(100 million people)
Population
人口（億人）

140

SRES B2

UN2008 High

(UN1998 middle)

120

UN2008 Middle

IIASA2007100(10-90 percentile)

Range in
ALPS

80

Range in UN2008

60

UN2008 Low
SRES A1/B1

40(IIASA1996 Low)

ALPS-Scenario A
20
0
1950

1975

2000

2025

2050

2075

2100

11

Outlook of Global GDP (ALPS Scenarios)
400

Range in SRES

SRES A1

GDP (Trillion 2000USD)

350

ALPS-Scenario A

12

SRES B1300

Range in ALPS
250
200
150
100

SRES B2
SRES A2

ALPS-Scenario B
50
01980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100
Note: GDP of SRES scenarios are adjusted to the price in 2000 from that in 1990.

Regional GDP: ALPS Scenario B
1990
Korea
1%
India
1%

Brazil
2%

2100

2020
US
26%

US
29%
Other NA I
16%

Brazil
2%

China
2%

Other
EU15
11%

UK
5%

EU27(+12)2%

Other
Annex I
3%

Japan
11%

Other
EU15
9%

Brazil
3% Korea

EU27(+12)
1%

China
16%

India
11%

1%

2050

US
19%

US
30%

Brazil2%

Other NA I
17%

Other NA I
24%

Korea
2%

Other
Annex I
3%

Japan
3%

UK
4%
France
3%

2005

India
2%

Other EU15
4%EU27(+12)1%

Germany
6%

France5%UK
Germany 2%
2%France2%

Other NA I
38%

China
12%

Japan
17%

US
14%

Germany
4%

Other NA I
19%

Korea
2%
India
4%

Other
Annex I
3%

13

China
6%

Japan
14%

EU27(+12)
1%

Other
EU15
10%

France4%UK
3%France2%

Brazil2%
Korea
1%
Germany
India
5%
7%
UK
4%

Germany
2%

Other EU15
6%

China
22%

EU27(+12)
2%
Japan
6%
Other
Annex I
4%

Other
Annex I3%

Outlook of Global GHG Emission: ALPS Scenario B

14

80000
70000
Other Non-Annex 1

GHG emission [MtCO2eq./yr]

60000

AfricaLatin America

50000

Other Asia
India

40000

China
Other Annex 1

30000

Japan
20000

EU27(+12)
EU15

10000

US

0
1990

2000

2010

2020

2030

2040

2050

The Kyoto six kinds of GHGs excluding LULUCF

Global GHG emission was 32 and 37 GtCO2 in 1990 and 2005, respectively. The
emission will be 55 and 78 GtCO2 in 2020 and 2050, respectively.

Regional GHG Emission: ALPS Scenario B
Other NonAnnex 1
4%
Latin
America7%

Other NonAnnex 1
Af rica2%
7%
Latin
America
8%

1990
US
19%

Af rica
5%

2020

US
15%

15

Annex I exc. US: 22%

EU15
9%

Other Asia
10%

Other Asia
15%

EU15
13%

India
5%

China
12%

Annex I: 58%

Other
Annex 117%

Other
Annex 1
8%
India
7%

EU27(+12)
4%

China
25%

Japan
4%

Other NonAnnex 1
Af rica2%
6%
Latin
America
8%

2005
US
18%

EU27(+12)
2%
Japan
2%

Annex I exc.
US: 27%

Other NonAnnex 1
2%
Af rica
9%

2050

US
11%

EU15
7%
EU27(+12)3%

Latin
America8%

Other Asia
14%

Japan
1%

EU15
11%

India
6%
China
19%

Other
Annex 1
10%

EU27(+12)
2%
Japan
4%

Other
Annex 1
8%

Other Asia
17%
China
23%
India
11%

From Socioeconomic and GHG Outlook High GDP growth by 2050 in many developing countries

particularly of East to South Asian countries are
estimated.
 Per-GDP emissions will decease, but higher GDP growth
induce increase in global GHG emissions, and the global
emission in 2050 will be double of current level underbaseline scenarios.
 Effective emission reductions of all major emitting
countries is necessary. However, different measures arealso important considering different stage of economic
growth, emission reduction potentials etc.

16

3. Outlook of Deep Emission Cuts
Of Global Emissions

Emission Reduction Scenario for Halving
Global Emissions in 2050 by IEA ETP

18

By Technology

By Sector

Source: IEA ETP 2010

Emission Reduction Scenario for Halving
Global Emissions in 2050 by RITE
60

19

Residential & Commercial
Transportation: Other

CO2 Emission & Reduction [GtCO2/yr]

50

Transportation: Road
Other industries
Enegy intensive industries

40

Other energy conversion
Electricity generation: Hydrogen

30

Electricity generation: Biomass

Electricity generation: PV
Electricity generation: Wind

20

Electricity generation: Hydro&Geo
Electricity generation: Nuclear

1002000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Estimated by RITE DNE21+ model, 2011

Electricity generation: Fuel switchingamong fossil fuelsElectricity generation: Efficiency
improvement
Electricity generatioin: CCS
CO2 Emission

Marginal Abatement Cost of CO2 in 2050
20IEA ETP2008

RITE2010
510$/tCO2

ETP2010
BLUE Map
175$/tCO2

Model analyses for halving global emissions presume achievement ofhigh marginal abatement cost (carbon price) in a real world.

From Model Analyses for Halving Emissions
in 205021

 Halving global emissions in 2050 is technologicallypossible.
 However, high marginal abatement costs are inevitable toachieve it.
 It will be difficult to achieve carbon price over 50$/tCO2
particularly by explicit carbon price, i.e., cap & tradescheme, carbon tax, in a real world.
 In order to achieve large emission reductions in 2050,
other measures should be taken.

4. Barriers of Technology Diffusion

Payback Time and Technology Choice
Developing
countries

発電単価（$/MWh）cost ($/MWh)
Generation

140

Japan

23

Coal Power

120
100

Init. inv.; Effic.
Low:
Coal-I80

1250$/kW; 22%

Middle: 1875$/kW; 36%
Coal-II

60

Low

40

MiddleHigh:
Coal-IIIHigh

2125$/kW; 42%

Discount rate:
25 to 8%

20
0
0

2

4

6
8
10
12
Paybacktime (years)
投資回収年数

14

16

18

Note: rate of operation: 75%- Cost efficient technologies are different under different payback time (discount rate).
- Countries having short payback time for investments prefer to low initial investment
costs.

Discount Rate for Technology Choice

24

200%

150%

100%

50%

0%
Refrigerator
Hot
water
冷蔵庫
給湯

Air
Insulator
空調
断熱
conditioner

Source: summarized by Wada (RITE) based on Soren (2002) and Dubin (1992)- Discount rates for technology choice in residential and commercial sectors are
particularly high.
- There are large barriers to diffuse high energy efficiency technologies.
- Other attractive points than high energy efficiency are also important.

Determinants of decision on payback period

25■Factors related to investors
Funds

Financial surplus, fund-raising capacity

Rate of return for companies

The rate of return on investment (ROI) ranges from 10% to 20% in general. A large
divergence from this range will be a barrier against the implementation of investment.

Pure rate of time preference

Not only manager’s rate of time preference but also the manager’s term of office willaffect the payback period. (Incentive inconsistency problem; Investment cannot berecouped during one’s term of office.)

Subjective risk preferences
Subjective risk preferences by investment decision makers.
Costs of access to information and Costs of access to information and organization cannot be ignored in the case ofsmall-scale investment.
organization of information
Appropriate choices cannot be made due to a limitation of examination capability.
Bounded rationality■Factors related to equipment andappliances
Uncertainty about lifetime of equipments

This uncertainty will lead to a barrier against an introduction of new equipment if its
credibility is considered to be low due to lack of its performance.

Expectation for technological progress There is an expectation that better equipment/appliances will be available in the
future.
on equipments
Resistance and sense of rejection
Familiar equipment/appliances tend to be preferred on site.
towards new equipments
Low priority for energy savings■ Factors related
environment

toexternal

Uncertainty about energy prices

Investment decisions are influenced by the probabilities of increases in energy prices.

Market interest rate

Market interest rates have an impact on funding.

Stockholder’s expectation for profits

Stockholders’ decisions depend on whether they expect profits in the short time or in
the long term.

Cost structure relating to technology choices

26

Source: IEA ETP 2010

5. Toward Deep Emission Cuts

Image of Standard Scenarios for Deep Cuts

Carbonprice

Carbon price/
Marginal abatement cost

Baseline scenario
CO2emissionIntervention scenario

This situations cannot be expected in a real world. Particularly explicit
high carbon prices such as over 200$/tCO2 are unexpected.

28

Possible Deep Cuts Scenario in a Real World
Carbonprice

Carbon price/
Marginal abatement cost

Achievement by bottom-up measures
Baseline scenario
CO2emissionIntervention scenario

By technology and social
innovations in addition tobottom-up measures

Mitigation measures avoiding explicit carbon pricing and technology
and social innovations inducing low carbon prices are key for deep
emission cuts.

29Social Situation Scenarios
for Climate Policy
Scenario I
Payback timeobserved in a real
world
Upper

Bottom30

Scenario II
Idealistic payback
time for global
warming mitigations
Upper

BottomPower sector

10.0

6.7

15.0

11.7

Other energy conv.

6.7

3.3

12.0

9.7

Energy intensive sector

6.7

3.3

15.0

11.7

Transport sector

3.3

2.0

10.0

8.3

Res. & Com. Sector

3.1

1.7

8.0

7.0

Note: the range depends on country and time points.

Baseline Global Electricity Generationin Different Social Situation Scenarios
50000

2005

2020

2030

2050

31

PV
Wind

45000

NuclearElectricity Generation [TWh/yr]

40000

Hydro&Geoth
Biomass

35000

Gas-CHP
30000

Gas-High
Gas-Middle

25000

Gas-Low
Oil-CHP

20000

Oil-High
15000

Oil-Middle
Oil-Low

10000

Coal-IGCC+CCS
5000

Coal-High
Coal-Middle

0
Scenario I

Scenario II

Scenario I

Scenario II

Scenario I

Scenario II

Scenario I

Scenario II

Coal-Low

Marginal Abatement Cost for halving global
Emissions in 2050 in Different Social Situation
Scenarios for Climate Policy
600

CO2 Marginal Abatement Cost [$/tCO2]

Scenario I
500

Scenario II

400

300

200

100

0
2000

2010

2020

2030

2040

2050

The marginal cost in the Scenario II world is much lower than that in
the Scenario I.

32

Co-benefit Measures
 In order to decrease net cost for emission reductions

and economic damage, co-benefit measures should be
pursued.

Example 1: High level of transportation systems using IT,
which can mitigate traffic jams, traffic accidents etc.
Example 2: Comfortable urban planning with low carbon
emissions
Example 3: Enhancement of energy securities by nuclear
power, which can induce long-term welfare increases）

Example 4: Smart grids providing new services withvalue added33

Required Measures toward Deep Emission Cuts

34

 Explicit carbon pricing policies, e.g., cap & trade, carbon

tax, require high carbon prices (e.g., over 200 $/tCO2), in
order to achieve deep cuts of emissions, where the
Scenario I world dominates.
 It is not expected to achieve such high explicit carbon
price in all 200 world countries due to economic andpolitical difficulties.
 The following three measures are important to overcome
the difficulties for deep cuts: 1) bottom-up measures
avoiding price signals, which avoid the dominants of
Scenario I, 2) social innovations in long-span to choselong payback time (toward the Scenario II), and 3)
Development of innovative technologies including cobenefit measures and stimulating social changes, and net
cost reductions through these innovations.

6. Conclusion

Conclusion

36

 Emission reduction frameworks using ‘cap’ by top-down will not beable to achieve deep emission cuts in a real world.
 In order to achieve deep cuts of global emissions, other measures
should be taken The emission reduction actions are dominated by payback time which
is observed in a real world under explicit carbon pricing measures.
High explicit carbon prices are needed for deep emission cuts, but
this is unrealistic.
 Bottom-up measures which remove technology diffusion barriers areimportant, considering country, sector and technology specificconditions.
 In addition, innovations of technologies and societies are needed. It is
important to conduct system measures including co-benefit measures,to decrease net costs.
 The ALPS project generates integrated scenarios for global warming
measures and sustainable development to support better decision
making for these complex issues.

Appendix

Per-GDP GHG Emissions by Region
4.5

Scenario B

Year 2005
39 GtCO2eq.

Other Annex I

Per-GDP GHG emission(kgCO2eq./US200$)

4
China

3.5

38

India

3

Africa2.5
EU27(+12)
Other Asia2
1.5

Latin America

1

US

Other Non-Annex I

0.5

EU15
Japan

0
0

10000

20000

30000

40000

50000

60000

GDP (billion US2000$)
4.5Year 2020
55 GtCO2eq.

Per-GDP GHG emission(kgCO2eq./US200$)

4

3.5
3

Other Annex I

2.5

AfricaIndia

2Large increase in GDP andincrease in emissions,while per-GDP emissions
decrease

China
Other Asia

1.5

EU27(+12)
Latin America

1
US

0.5

Other Non-Annex I
EU15
Japan

0
0

10000

20000

30000

GDP (billion US2000$)

40000

50000

60000