International Conference on
Post-Kyoto Climate Change Mitigation ModelingGrand Hilton, Seoul
June 17-18, 2010

Analyses on GHG Mitigation Costsand Measures and their Implications
Keigo AkimotoGroup Leader, Systems Analysis Group
Research Institute of Innovative Technology for the Earth (RITE)
Guest Professor, Graduate School of Art and Science
The University of Tokyo

Introduction:
Analyses on Current WorldHistorical Trends of Industrial Transfer
and Carbon Leakage
UK590
580

3400

+1%

Imported CO23300

560
550
540530520
Imported CO2-6%

CO2 Emission (MtCO2)

CO2 Emission (MtCO2)

+6%

3350

570

510

EU15Domestic CO23250
3200+1%3150
3100
3050

Domestic CO2

3000500
Y1990

Y1995

Y2000

Y1990

Y1995

Y2000

Source: Homma et al. (RITE), 2008

♦ Industries transfer among countries easily under a globalized world.
♦ Global emission reductions cannot be achieved without global industrial

structure change, that means consumption structure changes are required.

3

Comparisons of Energy Efficiency
ー Iron & Steel Sector (BF/BOF) ー
Efficiency of basic oxygen furnace steel(GJ/t-crude steel)

34

2000

2005

3230

better
28
26
24
22
20

Note: Electricity is converted by using 1MWh=0.086/0.33toe.
Source: Estimates by RITE based on IEA statistics, IISI (WSA) etc.

4

Analyses on Emission Reduction
Targets Proposed
to Copenhagen Accord

Overview of the Model(2 Models and 1 Scenario)

6

1. DNE 21+ Model

Non-Energy CO2Emissions Scenario

2. Non-CO2 GHG
Assessment Model• Assessment model forenergy-related CO2emissions• 54 regions in theworld• Bottom-up modeling(200-300 specifictechnologies aremodeled)• Projection module fornon-energy CO2emissions• 54 regions in theworld• Estimations ofsectoral non-energy
CO2 emissions to beconsistent with GDPand production
activities• Assessment model forthe 5 non-CO2 GHG
emissions (CH4, N2O,HFCs, PFC, SF6)
• 18 regions in theworld (allocated to the54 regions, based on
the historical data)• The methodology issimilar to the USEPA
assessment

Estimates of the 6 GHG emissions, emission reduction costs
and potentials, and specific cost-effective measures foremission reductions
Note: LULUCF is excluded for the estimates.

Energy Assessment Model: DNE21+♦ Linear programming model (minimizing world energy system cost)♦ Evaluation time period: 2000-2030 (or -2050)
Representative time points: 2000, 2005, 2010, 2015, 2020, 2025, 2030, 2040, 2050

♦ World divided into 54 regions
Large area countries are further divided into 3-8 regions, and the world is divided
into 77 regions.

♦ Bottom-up modeling for technologies both in energy supply and demandsides (200-300 specific technologies are modeled.)♦ Primary energy: coal, oil, natural gas, hydro&geothermal, wind,photovoltaics, biomass and nuclear power♦ Electricity demand and supply are formulated for 4 time periods:
instantaneous peak, peak, intermediate and off-peak periods♦ Interregional trade: coal, crude oil, natural gas, syn. oil, ethanol,hydrogen, electricity and CO2♦ Existing facility vintages are explicitly modeled.
- The model has detailed information in regions and technologies enough to analyze
sectoral approach.
- Consistent analyses among regions and sectors can be conducted.

7

Pledged Mid-term Targets
Emission Reduction Target in 2020Japan

−25% relative to 1990

EU

−20% - −30% relative to 1990

United States−17% relative to 2005

Canada−17% relative to 2005

Australia−5% - −25% relative to 2000

Russia−15% - −25% relative to 1990

Korea
China
India

−30% relative to Baseline(−4% relative to 2005)−40% - −45% for per-GDP emission relativeto 2005
−20% - −25% for per-GDP emission
relative to 2005

8Marginal Abatement Cost Curves in 2020
500

Japan -25% relative to 1990(-30% relative to 2005)

450

Marginal abatement cost [$/tCO2eq]

9400
350

US300

Japan -15% relative to 2005(-8% relative to 1990)

250
200
150

EU-27Japan

US -17% relative to 2005(-3% relative to 1990)

Annex IAnnex I -25%10050

EU-30% including 4% of CDM
EU-20% including 4% of CDM

0-30-20-100102030

GHG emission reduction in 2020 relative to 1990 [%]GHG emissions in 2005

4050

15Target relative to 1990

10High end

5Low end

GHG emissions relative to 2005 (%)

GHG emissions relative to 1990 (%)

Mid-term Emission Reduction Target of Major
Annex I Countries (Y2020)

0-5-10-15-20-25-30-35

Marginal abatement cost

1.2

Target relative to 2005
High end
Low end

Per-GDP Cost

High end
400

Low end

300
200
100

00

Estimates with the RITE DNE21+ modelHigh end1Per-GDP cost (%)

Marginal abatement cost （$/tCO2eq.）

500

35
30
2520
151050-5-10-15-20-25-30-35

Low end0.8
0.6
0.4
0.20010Mid-term Emission Reduction Target of Major
Non-Annex I Countries (Y2020)
Target relative to 1990

350
300

160
GHG emissions relative to 2005 (%)

GHG emissions relative to 1990 (%)

400

Low endHigh end

250
200
150
100
50Korea

ChinaIndia

Low end120

High end

100
80
60
40
20-20

Marginal abatement cost

0.18

Low end0.16

High end

0.14

20

Per-GDP cost (%)

Marginal abatement cost ($/tCO2eq.)

1400025

Target relative to 2005

1510Korea

China

India

Per-GDP Cost
Low endHigh end

0.12
0.1
0.08
0.06
0.04

50000

Korea
China
Estimates with the RITE DNE21+ model

0.02

India

Korea

00

China

India

11Impacts on Japanese Economics

GHG Emission Reduction Potentials
and Costs in 2020 in Japan
25% reduction relative to 1990(30% reduction relative to 2005)(Marginal cost: $476/tCO2eq)
Replacement of
BF-BOF Plant
before Life-time

Reduction of Kerosene Use

15% reduction relative to 2005
(Marginal cost: $151/tCO2eq)
Efficiency Improvement ofExpansion of Bio-ethanol
Air-conditioner & Television
Use
Efficiency Improvement ofRefrigerator & Air-conditioner

CCS
Nuclearpower

Diffusion of NGCC
(Natural Gas Combined Cycle)

Estimates with RITE DNE21+ model

Diffusion ofWind Power

Efficiency
Improvement ofDiffusion of PV
Various Electric
Expansion of Bio-ethanol Use
Appliances
Efficiency Improvement of Passenger Car
Efficiency Improvement of Television
Diffusion of HEV for Commercial Vehicle
Reduction of Kerosene UseNote) Expansions of nuclear power are limited in 2020 over the already planned power stations, andtherefore, the reduction potentials of nuclear power are excluded above.

Economic Impacts by Mid-term Targets in Japan
Keio Univ.
KEO

Nikkei CenterCGENIES

Macro-economic

AIM/CGE

Alternative 1: +4% relative to 1990(-4% relative to 2005) , Baseline (The Alternative 1 is assumed to be 0% of GDP loss)
Alternative 3▲7% relativeto 1990(▲14%relative to2005)

Alternative 5▲15%relative to1990(▲21%relative to2005)
Alternative 6▲25%relative to1990(▲30%relative to2005)

GDP (real)

▲0.5%

▲0.6%

▲0.9%

▲0.5%

Private Fixed Invest.

+3.4%

+0.1%

+2.2%

▲0.8%

Disposal Income(per household)▲3.1%▲15,000 JPY▲0.8%▲40,000 JPY

▲0.7%

▲1.1%
▲50,000 JPY

Cost of fuel and light(per household)+19.7%+30,000 JPY+17.6%+30,000 JPY－+13.2%+20,000 JPY

Gasoline price+40JPY/L+30JPY/L+40JPY/L+20JPY/L

GDP (real)

▲2.1%

▲1.4%

▲2.6%

▲0.8%

Private Fixed Invest.

+7.9%

+0.0%

+5.3%

▲0.2%

Disposal Income(per household)▲8.2%▲390,000 JPY▲1.9%▲90,000 JPY

▲2.1%

▲2.3%
▲100,000 JPY

Cost of fuel and light(per household)+44.8%+80,000 JPY+38.6%+70,000 JPY－+34.5%+60,000 JPY

Gasoline price+90JPY/L+70JPY/L+90JPY/L+60JPY/L

GDP (real)

▲5.6%

▲3.2%

▲6.6%

▲6.0%

Private Fixed Invest.

+6.6%

▲0.4%

+12.5%▲11.9%

Disposal Income(per household)▲15.9%▲770,000 JPY▲4.5%▲220,000 JPY

▲5.6%

▲9.1%
▲440,000 JPY

Cost of fuel and light(per household)+76.6%+130,000 JPY+81.0%+140,000 JPY－+65.7%+110,000 JPY

Gasoline price+190JPY/L+170JPY/L+220JPY/L+130JPY/L

14

Long-term Emission Reduction
Perspective

CO2 Emission Reductions by Sector
For Halving Global Emission in 2050

0$/tCO2Marginal cost
334$/tCO2

Source: RITE DNE21+ estimates, March 2008.

There are no silver bullet technologies, and the best mix of the effective
technologies are needed.

16For Sustainable GHG Mitigation
Actions

For Sustainable Mitigation Actions♦ Balanced mitigation efforts among countries will beneeded (Mitigation cost is one of the important
indicators particularly among developed countries.).
♦ For reducing the economic losses, the following efforts

will be needed.
1) Cost reductions of mitigation technologies throughdevelopment of innovative technologies,
2) Removing social barriers for deployment of energy
efficiency technologies,3) Deployment of co-benefit measures with system
considerations (e.g., energy security, environment
compatible city with high quality), and
4) Increase in environment consciousness (to bediscussed in the following slides)

18

Willingness to Pay (WTP) for
Preventing Global Warming in Japan
Zero19below 500

500-1000

1000-2000

2000-5000

5000-

JPY/month

JPY/month

JPY/monthJPY/month

JPY/month

Respondents

Source: Japanese government, from May 22 to June 1, 2008

・ Only 4% of Japanese public accepts more than 5,000 JPY per month perhousehold (60,000 JPY/yr) for preventing global warming. However, estimates
imply that 220,000-770,000 JPY/yr per household are required for achieving
25% reduction in 2020 relative to 1990 level.
- Need to explore compatibility of environment and economic growth
in a well balanced manner

Toward Compatibility of Environment
and Economic Growth20Cost
Global warming mitigation costenvironment-friendlyconsciousness
compatibility ofenvironment
and economic
growthYear
Both developments of innovative technologies and deployments of mitigation
technologies with low cost and increase in environment conscious behavior
are important for compatibility of environment and economic growth.
Increase in environment consciousness will induce changes in consumption
structures.
Basic economic growth is also important for increase in environment-friendly
consciousness.

Conclusion♦ Global cooperation is a key for preventing global

warming and toward sustainable development, and fairemission reduction targets among countries are
significant for achieving emission reductions.
♦ There are large differences among countries. Manyinternational frameworks, different types of emission
reduction targets, and different types of policies will beneeded for really effective emission reductions.
♦ Both of improvements of global warming mitigation

technologies and increase in environment conscious
behavior are important for compatibility of environment
and economic growth.
♦ Models are powerful tools, but not prediction tools. Wellunderstanding them is important for policy making.

21

Appendix

Region divisions of DNE21+

23

Technology Descriptions in DNE21+ (1/2)
24Industry

Fossil fuels
Coal
Oil (conventional, unconv.)
Gas (conventional, unconv.)

Energy conv.
processes(oil refinery, coalgasification, bioethanol, gas
reforming, waterelectrolysis etc.)

Unit
production
cost

Iron & steel
CementPaper & pulp
Chemical (ethylene, propylene,ammonia)

Aluminum
Cumulative production

Solid, liquid and gaseous fuels, andelectricity <Top-down modeling>

Renewable energies
Hydro power & geothermalWind power
Photovoltaics
Biomass

ElectricPowergeneration

Unit
supplycost

Transportvehicle
Solid, liquid and gaseous fuels, andelectricity <Top-down modeling>

Residential & commercial
Annual production

Nuclear power

CCS

Refrigerator, TV, air conditioner
etc.
Solid, liquid and gaseous fuels, andelectricity <Top-down modeling>Technology Descriptions in DNE21+ (2/2)–An Example for High Energy Efficiency Process in Iron & Steel Sector–25
Blast furnace, sintering
furnace, BF, BOF,
casting, and hot rolling

Coal forsteel sector

24.1
GJ

Type III:
Current coke oven23.8 GJ

Recycling ofwaste plastics
and tires
0.25 GJ

Waste plastics
and tires
0.25 GJ

22.5 GJ

Type IV:
Next-generation
coke oven

Electricity (grid)Powergeneration
facility

Electricity
455 kWhType III and IV:
High-eff.
Intersection(Sophisticatedsteelmaking
process with manyenergy saving
facilities including
CDQ, TRT, COG
and LDGrecovery)(Larger scalecapacity plant)

91 kWh111 kWh

Carbon capture
from BFG

Compressed
CO20.60 tCO2

0.98 GJ

Utility
4.1 GJ

Heavy
oil

Process gases recovery
8.6 GJ

Steel product derived
from BOF steel
1 ton of crude steel
equivalent for each type

BF: blast furnace, BOF: basic oxygen furnace, CDQ: Coke dry quenching,
TRT: top-pressure recovery turbine, COG: coke oven gas, LDG: oxygen furnace gas