Comparing hard-linking (TIMES-MSA) and soft-
linking (TIMES-HERMES) methodologies for
quantifying economic impacts of miti...
Outline
• Introduction
• Methodological approach
• Results
• Conclusions
• Next steps
2
3
Introduction
• Assess and develop possible linkages between energy and economy
comparing different approaches for quanti...
4
Methodological approach
HERMES
Reference Scenario
 Macroeconomic outputs
IrishTIMES
Energy Service
Demand projection
Sc...
5
CO2 emissions
CO2 emissions by sector and period for each scenario
6
CO2 emissions
Difference in percentage of CO2 emissions in NETS22 vs NETS22-ED,
NETS22-H22 and NETS22-MSA in 2020 by sec...
7
CO2 emissions
Difference in percentage of CO2 emissions in NETS22 vs NETS22-ED,
NETS22-H22 and NETS22-MSA in 2030 by sec...
8
Energy service demand indexes
Overall energy service demand index. This is a weighted (on consumption) normalised index
...
9
Energy system pathway changes
Final energy consumption by sector
10
Energy system pathway changes
Difference of final energy
consumption in percentage by
sector in 2020
NETS22 vs NETS22-E...
11
Energy system pathway changes
Renewable shares in transport (RES-T), heating (RES-H) and electricity
(RES-S) sectors by...
12
Energy system pathway changes
System electrification - electricity consumption by sector and scenario
13
Energy system pathway changes
System gasification – gas consumption by sector and scenario
14
Economic implications
• GDP MSA Ref is the expected GDP;
• GDP NETS22 MSA is the real GDP due to the NETS22 target;
• G...
15
Economic implications
Undiscounted system costs over GDP
2010 2020 NETS22 2030 NETS22
ED H22 MSA ED H22 MSA
Other Costs...
Conclusions
• The results presented show energy service demands are
affected by:
 Price response - Irish TIMES-ED and
 F...
Next Steps
• The next Steps will include new runs with HERMES model
variants (e.g. labour tax offset).
• Better understand...
Thank You
www.ucc.ie/energypolicy
18
E4SMA S.r.l., www.e4sma.com
www.linkedin.com/company/e4sma https://twitter.com/E4SMAs...
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Comparing hard-linking (TIMES-MSA) and soft-linking (TIMES-HERMES) methodologies for quantifying economic impacts of mitigation

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Comparing hard-linking (TIMES-MSA) and soft-linking (TIMES-HERMES) methodologies for quantifying economic impacts of mitigation

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Comparing hard-linking (TIMES-MSA) and soft-linking (TIMES-HERMES) methodologies for quantifying economic impacts of mitigation

  1. 1. Comparing hard-linking (TIMES-MSA) and soft- linking (TIMES-HERMES) methodologies for quantifying economic impacts of mitigation Maurizio Gargiulo a,b, John Curtis c, James Glynn b, John Fitzgerald c, Brian Ó’Gallachóir b a E4SMA Srl, Turin, Italy. B Environmental Research Institute, University College Cork, Cork, Ireland. C Economic and Social Research Institute, Dublin, Ireland.
  2. 2. Outline • Introduction • Methodological approach • Results • Conclusions • Next steps 2
  3. 3. 3 Introduction • Assess and develop possible linkages between energy and economy comparing different approaches for quantifying the economic impacts of mitigation. • The two models are IrishTIMES and HERMES model. • The analysis takes as a starting point the non-ETS emissions reduction results (22% below 2005 levels by 2030) for Ireland from the EU 2030 Climate and Energy Policy Framework. • HERMES is a complete structural model of the Irish economy first developed in the late 1980s – Irish sub-model of EC HERMES project. • Firms minimise their cost of production/maximise profits • Households maximise their utility • World economy exogenous via NIESR’s NiGEM model • More Info: http://www.esri.ie/pubs/WP460.pdf
  4. 4. 4 Methodological approach HERMES Reference Scenario  Macroeconomic outputs IrishTIMES Energy Service Demand projection Scenario runs:  NETS22  NETS22-ED  NETS22-MSA NETS22 outputs:  CO2 prices  Investments NETS22 HERMES scenario  New Macroeconomic outputs New Energy Service Demand projection HERMES IrishTIMES Scenario NETS22-H22 Results Comparison
  5. 5. 5 CO2 emissions CO2 emissions by sector and period for each scenario
  6. 6. 6 CO2 emissions Difference in percentage of CO2 emissions in NETS22 vs NETS22-ED, NETS22-H22 and NETS22-MSA in 2020 by sector
  7. 7. 7 CO2 emissions Difference in percentage of CO2 emissions in NETS22 vs NETS22-ED, NETS22-H22 and NETS22-MSA in 2030 by sector
  8. 8. 8 Energy service demand indexes Overall energy service demand index. This is a weighted (on consumption) normalised index on 2010 of each demand Normalised index on 2010 energy service demand sum of residential, agriculture, service and other industries demands Normalised index on 2010 energy service demand of goods transport.
  9. 9. 9 Energy system pathway changes Final energy consumption by sector
  10. 10. 10 Energy system pathway changes Difference of final energy consumption in percentage by sector in 2020 NETS22 vs NETS22-ED, NETS-MSA and NETS-H22. Difference of final energy consumption in percentage by sector in 2030
  11. 11. 11 Energy system pathway changes Renewable shares in transport (RES-T), heating (RES-H) and electricity (RES-S) sectors by scenario and period – Gross Final Consumption 2010 2020 NETS22 2030 NETS22 Renewable Share ED H22 MSA ED H22 MSA Heat (RES-H) 2% 7% 5% 7% 5% 13% 19% 20% 19% Electricity (RES-E) 3% 6% 6% 6% 6% 12% 14% 14% 13% Transport (RES-T) 1% 10% 8% 10% 6% 4% 9% 13% 8% Total RES 6% 22% 18% 23% 17% 29% 41% 45% 40% Renewable shares in transport (RES-T), heating (RES-H) and electricity (RES-S) sectors by scenario and period – Gross Electricity Consumption 2010 2020 NETS22 2030 NETS22 Renewable MODAL Shares ED H22 MSA ED H22 MSA Heat (RES-H) 4% 18% 12% 18% 13% 35% 32% 36% 30% Electricity (RES-E) 17% 26% 27% 29% 28% 46% 47% 49% 45% Transport (RES-T) 3% 24% 19% 25% 15% 17% 15% 19% 15%
  12. 12. 12 Energy system pathway changes System electrification - electricity consumption by sector and scenario
  13. 13. 13 Energy system pathway changes System gasification – gas consumption by sector and scenario
  14. 14. 14 Economic implications • GDP MSA Ref is the expected GDP; • GDP NETS22 MSA is the real GDP due to the NETS22 target; • GDP Loss (in the last row) compared to the expected GDP. The GDP HERMES Ref is the GDP from the HERMES reference scenario used to project the energy service demand for IrishTIMES in step 1. The GDP HERMES NETS22 is the GDP from the HERMES NETS22 scenario based on the IrishTIMES outputs in step 1. IrishTIMES-MSA vs HERMES 2010 2020 2030 (GDP MSA Ref - GDP HERMES Ref) / GDP HERMES Ref 0.00% 0.00% 0.00% (GDP HERMES NETS22 – GDP HERMES Ref)/ GDP HERMES Ref 0.03% 2.47% 2.58% (GDP NETS22 MSA – GDP MSA Ref)/GDP MSA Ref -0.57% -0.60% -0.56%
  15. 15. 15 Economic implications Undiscounted system costs over GDP 2010 2020 NETS22 2030 NETS22 ED H22 MSA ED H22 MSA Other Costs / GDP 5.6% 1.9% 1.8% 1.9% 1.7% 1.9% 1.8% 1.9% 1.8% Investments / GDP 2.1% 4.1% 3.9% 4.2% 3.8% 4.1% 3.9% 4.2% 3.8% Fuel / GDP 3.5% 3.8% 3.4% 3.8% 3.3% 3.0% 3.0% 3.1% 3.0% Total costs / GDP 11% 9.8% 9.1% 9.9% 8.9% 9.1% 8.7% 9.2% 8.6% CO2 Marginal abatement costs
  16. 16. Conclusions • The results presented show energy service demands are affected by:  Price response - Irish TIMES-ED and  Full macroeconomic feedback - Irish TIMES-MSA and Irish TIMES-HERMES. • The results show the different impacts on GDP generated by Irish TIMES-MSA and Irish TIMES-HERMES. In particular:  Irish TIMES-MSA models a GDP contraction associated with mitigation,  Irish TIMES-HERMES models a GDP growth due economic stimulus provided by revenue recycling of the carbon tax to reduce labour taxes. 16
  17. 17. Next Steps • The next Steps will include new runs with HERMES model variants (e.g. labour tax offset). • Better understanding of MSA results VS HERMES/COSMOS  Ireland has low energy intensity per Gross value added in both industry and services relative to other EU countries.  A structural model (like HERMES/COSMO) may give greater insight that a production function model (MSA) ?? 17
  18. 18. Thank You www.ucc.ie/energypolicy 18 E4SMA S.r.l., www.e4sma.com www.linkedin.com/company/e4sma https://twitter.com/E4SMAsrl

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