Cb Low Carbon Sa Media Aug 09

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Low carbon economy: Modelling and more

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Cb Low Carbon Sa Media Aug 09

  1. 1. <ul><li>Low carbon economy: </li></ul><ul><li>Modelling and more </li></ul><ul><li>CSE </li></ul><ul><li>At the South Asia Media Briefing Workshop </li></ul><ul><li>Delhi, August 27-28 </li></ul>
  2. 2. Low carbon economy <ul><li>An economy model with a minimal output of GHG emissions, specifically carbon dioxide </li></ul><ul><li>Energy efficiency, low carbon energy supply & terrestrial carbon (forestry and agriculture) –reducing consumption or lifestyle changes not considered </li></ul><ul><li>Abatement cost: (cost of new tech – old tech)/(GHG emissions from old – new) -- US$ 100/ Euro 60 per tonne of CO 2 e avoided </li></ul>
  3. 3. WGIII, AR4, IPCC, 2007 <ul><li>How much emission reductions can be done by 2030, by using technologies that will cost less than 100 US$/ CO 2 e abatement cost? </li></ul><ul><li>Potential: 16-30 billion tonne CO 2 e – 30-50% below business-as-usual in 2030 </li></ul><ul><li>Building, agriculture and forestry sector – cheapest + maximum potential </li></ul><ul><li>65% of the total potential in the developing countries </li></ul>
  4. 4. McKinsey global GHG abatement cost curve <ul><li>Potential of technologies with abatement cost below Euro 60/ CO 2 e. </li></ul><ul><li>Potential : 38 billion tonnes in 2030 – 70% below BAU or 35% below 1990 levels </li></ul><ul><li>Worldwide cost : Euro 200-350 billion/ yr by 2030 – 1% of Global GDP </li></ul><ul><li>Capital cost: 500-800 billion/yr above BAU investment </li></ul><ul><li>70% of total abatement potential in the developing countries </li></ul>
  5. 6. McKinsey GHG abatement cost curve <ul><li>10 billion tonnes of CO 2 e by 2030 at negative cost + 20 billion tonnes between Euro 0-20 + 8 billion tonnes Euro 20-60 </li></ul><ul><li>14 billion tonnes in energy efficiency in buildings, transport and industrial sectors + 12 billion tonnes in low carbon energy (nuclear+renewable+CCS) + 12 billion tonnes forestry and agriculture </li></ul><ul><li>World in 2030: 330 million ha. new forests + 70 percent renewable electricity + 40% hybrid cars …………… </li></ul>
  6. 7. <ul><li>Low carbon models for India </li></ul>
  7. 8. McKinsey’s India GHG abatement cost curve <ul><li>India’s energy consumption would quadruple and GHG emissions would increase from about 1.5 billion tonnes CO 2 e in 2005 to 5-6.4 billion tonnes by 2030 </li></ul><ul><li>Potential to restrict total emissions to 3.0 billion tonnes CO 2 e in 2030 </li></ul><ul><li>But it will cost more than a trillion US$ -- 2-3% of GDP </li></ul>
  8. 10. McKinsey’s India GHG abatement cost curve <ul><li>Cost of solar technologies and nuclear lower in India – highly debatable. </li></ul><ul><li>Some proposals ludicrous – afforest pasture land, anti-methanation vaccines to 140 million heads of livestocks </li></ul>
  9. 11. National Climate Change Policy Modelling Forum <ul><li>India Computable General Equilibrium (CGE) Model: GDP growth, level of energy use and GHG emissions </li></ul><ul><li>India MARKAL Model: “optimal” choice of energy-technology combination and least cost options to satisfy end-use energy demands. </li></ul><ul><li>India Activity Analysis Model: GDP, poverty and impact of GHG mitigation policy on poverty </li></ul><ul><li>India SWAT Hydrology Model: impact on water resources </li></ul><ul><li>India ASWP Cropping Model: impact on agriculture </li></ul>
  10. 12. Preliminary results – CGE, MARKAL, AA Model <ul><li>Reference scenario (Business as usual) </li></ul><ul><li>India can achieve around 8 per cent GDP growth rate till 2030 which will virtually eliminate poverty </li></ul><ul><li>India’s commercial energy consumption increases by 5.1 times – coal consumption increases by 4 times and petroleum by 5 times. </li></ul><ul><li>CO 2 intensity of the economy (kg CO2e per US$ GDP) will decline by 3.7% per annum </li></ul><ul><li>India’s per capita CO 2 emissions will be around 2.7 tonnes in 2030, much below the current global per capita emissions of 4.5 tonnes </li></ul>
  11. 13. Preliminary results – CGE, MARKAL, AA Model <ul><li>Scenario studies: </li></ul><ul><li>Imposition of revenue positive carbon tax on the production sectors (US$ 10, 20, 40, 80 per tonne CO 2 e) </li></ul><ul><li>Imposition of revenue neutral carbon tax on the production sectors (US$ 10, 20, 40, 80 per tonne CO 2 e) </li></ul><ul><li>Binding emission reduction target of 20% from the reference scenario ( deviation of 20% from business as usual ) </li></ul>
  12. 14. Preliminary results – Impact of carbon tax
  13. 15. Preliminary results – Impact of carbon tax
  14. 16. Preliminary results – Impact of tax and binding targets <ul><li>Carbon tax will reduce India’s GDP growth rate, reduce per capita consumption level and hence welfare and will therefore increase poverty </li></ul><ul><li>Carbon tax will have no significant impact on energy consumption, CO 2 emissions or the commercial energy mix in the country </li></ul><ul><li>Binding emission reduction targets will reduce per capita consumption level and hence welfare much more than carbon tax and therefore will have larger impact on poverty levels </li></ul>
  15. 17. Modelling and more <ul><li>Model outcomes highly depend on assumptions made, algorithm used and quality of data fed </li></ul><ul><li>The outcome of Indian models primarily hinges on two key assumptions they have made for the BAU scenario – Total factor productivity (TFG) growth rate of 3% per annum and Autonomous Energy Efficiency Index (AEEI) of 1.5% per annum. </li></ul><ul><li>We believe these are optimistic assumptions. lower these two and GDP decreases, emissions and per capita emissions increases </li></ul>

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