IGES International Workshop on
the Clean Development Mechanism
March 24-25, 2000
NIES, Tsukuba, Japan

Basic Structure of IGES GHG Emission Model- Initial GHG Projection of Japan Tae Yong Jung
Institute for Global Environmental Strategies, Japan
Choon-Geol Moon
Hanyang University, Korea

Contents
IGEM Structure (Brief)
Initial Results of Japan (BaU)Future Research Plan

IGES, Japan/Hanyang University, Korea

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IGEM Structure (Brief)
Theory Review
D Economic Theories : Macro Economics,
International Economics, Energy Economics,
Environment Economics, Economic Development,
Computable General Equilibrium
D Econometric (Statistic) Theories: Statistic
Inference, Estimation Methodologies &Techniques, Data Handling
D Engineering/Technology: Assessment ofTechnology Specifications, Cost Evaluation
IGES, Japan/Hanyang University, Korea

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IGEM Structure (Brief)
Characteristics
D Country-specific Hybrid Model Three Countries : China, Japan, Korea
 Open Macro Economic Model Econometric/CGE Model Energy/GHG Emission Model Link with Bottom-up Model (Hard Linkage)

D CDM Analysis Model Project-base Analysis
 Bilateral Financial Flows
IGES, Japan/Hanyang University, Korea

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IGEM Structure (Brief)
Characteristics
D Estimation Methods
 Unit Root Test: Statistical Test for Non-StationaryVariables
 Co-integration Method : Most Advanced Statistic(Econometric) Inference to Estimate Long-run
Relationships
 Error-Correction Method: To Estimate Short-run
Variations (Equilibrium Condition)

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IGEM Structure (Brief)
Characteristics
D Estimation Methods
 Kalman Filter Technique: The Application of ElectricEngineering Signal, Allowing Time-varying
Coefficient Estimation
 Autoregressive Distributed Lag Specification(ARDL):ARDL(1,1) is specified.
 System Estimation Method: To Capture the Inter-fuelSubstitution in Energy Demand Equations

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IGEM Structure (Brief)
Characteristics
D CGE Methods
 Open/Dynamic/ Multi-Sector Model Capital Accumulation with AEEI and International

Financial Flows for CDM Analysis
 Multi-tier KLEM Production Function withArmington Assumption
 Fuel-substitution Elasticity from Econometic
Estimation (Localization of Parameters)

IGES, Japan/Hanyang University, Korea

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IGEM Structure (Brief)
Characteristics
D CGE Methods
 Five Blocks: Production, Private Consumption,

Gov’t & Public, Investment, Foreign Sectors
 Production Sector: 9 Energy-producing Sectors,
Energy intensive Industries, Transport, Service Consumption Sector: Stone & Geary Utility
Function (Max.) Ö Linear Expenditure System
 Gov’t Sector: Income (Tax) vs. ExpenditureÖ Net Gov’t Savings
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IGEM Structure (Brief)
8 Modules
D Macro Economic Module Demand Side of an Economy
 Simple Keynesian Open Macro Economic Model

Example: Consumption Function- Error Correction Model (Short-run)()∆ Ct = δ 1 ∆ Ct −1 + δ 2 ∆ ytm−1 + β Ct −1 − (a0 + a1 ytm−1 + a2 rt −1 + a3Wt −1 ) + u∆C ,t- Co-Integration Model (Long-run)
Ct = a0 + a1 ytm + a2 rt + a3Wt- Time-varying Coefficient (If necessary)β, δ1, δ2
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IGEM Structure (Brief)
8 Modules
D Bilateral Financial Module Linkage between Two Countries
 CDM Project: Financial Flow Analysis

D Computable General Equilibrium(CGE) Module Input-Output Tables of Each Country Energy Balance Table Social Account Matrix (SAM) Construction
 Sector Classification: Flexible
 Localization of Parameters for Calibration: Based on

Estimation, if possible.
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IGEM Structure (Brief)
8 Modules
D Energy Demand Module
 Each End-use Final Energy Demand Sector Classification: Flexible (Data Availability) Econometric Estimation
 GHG emissions are deriving.

D Energy Supply Module Energy supply is assumed to meet demand.

(Equilibrium Assumption)
 Transformation Sector: Engineering Approach toFigure out Primary Energy Demand
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IGEM Structure (Brief)
8 Modules
D Linkage Module Technical Assessment of CDM Project: Bottom-up

approach is preferable.
 Hard Linkage with Bottom-up Model: AIM (maybe)
 Advantage of Hard Linkage: IGEM can be tangiblemodel. (Soft linkage makes the model large.)
 Still, the soft linkage of top-down and bottom-up
models is the most challenging work.

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IGEM Structure (Brief)
8 Modules
D Scenario Module
 Scenario Generator: Systematic Way
 Marginal Change Analysis: Due to CDM project, whatis the deviation from BaU projection, in terms ofenergy, GHG emission
D Output Module Output Generation: Economic Activities, Energy,

GHG Emissions
IGES, Japan/Hanyang University, Korea

13Initial Results of Japan (BaU)
Energy Demand (Residential Sector)

80
MT OE

60402001975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Coal

OilGasElectricity

IGES, Japan/Hanyang University, Korea

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Initial Results of Japan (BaU)
Energy Demand (Commercial Sector)

100
MT OE

80
60402001975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Coal

Oil

Gas

Electricity

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Initial Results of Japan (BaU)
Energy Demand (Transportation Sector)

MT OE

150
1005001975 1980 1985 1990 1995 2000 2005 2010 2015 2020
OilElectricity

IGES, Japan/Hanyang University, Korea

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Initial Results of Japan (BaU)Energy Demand (Industrial Sector)

250
MT OE

2001501005001975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Coal

OilGasElectricity

IGES, Japan/Hanyang University, Korea

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Initial Results of Japan (BaU)
Comparison with Other Models

600.0
500.0

MTOE

400.0
300.0
200.0
100.00.0
IGES
2000

APERC
2000

IGES
2005

APERC
2005

IGES
2010

APERC
2010

ResComTransport

Industrial

IEEJ
2010

IGES, Japan/Hanyang University, Korea

IGES
2020

IEEJ
2020

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Initial Results of Japan (BaU)
CO2 Emissions (Residential Sector)

MT -C

3025201510501975 1980 1985 1990 1995 2000 2005 2010 2015 2020
CoalOilGas

IGES, Japan/Hanyang University, Korea

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Initial Results of Japan (BaU)
CO2 Emissions (Commercial Sector)

MT -C

3025201510501975 1980 1985 1990 1995 2000 2005 2010 2015 2020
CoalOilGas

IGES, Japan/Hanyang University, Korea

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Initial Results of Japan (BaU)
CO2 Emissions (Transportation Sector)

MT -C

120
1008060402001975 1980 1985 1990 1995 2000 2005 2010 2015 2020
DieselGasoline

Heavy Oil

LPG

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Zet Oil21

Initial Results of Japan (BaU)
CO2 Emissions (Industrial Sector)
150

MT -C

12090603001975 1980 1985 1990 1995 2000 2005 2010 2015 2020
CoalOilGas

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Initial Results of Japan (BaU)
CO2 Emissions (Power Generation Sector)
200

MT -C

150
1005001975 1980 1985 1990 1995 2000 2005 2010 2015 2020

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Initial Results of Japan (BaU)
Comparison with Other Models

500.0

MT -C

400.0
300.0
200.0
100.0
0.0
IGES
2000

APERC
2000

AIM(T)
2000

IGES
2005

APERC
2005

AIM(T)
2005

Final End-Use

IGES
2010

APERC
2010

Power Gen.

AIM(T)
2010

IEEJ
2010

IGES
2020

AIM(T)
2020

IEEJ
2020

T otal

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Future Research PlanCDM Analysis (by April, 2000)
D First Stage: CDM between Japan and China
 Feasible CDM Projects: To Collect Information
 Analysis based on IGEM

Final Results (after April, 2000)
D To Complete Three Countries Analysis
D To Report the ResultsBased on IGEM
D To Disseminate Outputs in Various Occasions
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Future Research PlanExpansion to Other Countries (May, 2000 - )D India
D Russia
 Joint Implementation Analysis

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