Development of multi-regional and multi-sectoral energy-economic model and the analysis of CO2 emission reduction

The KP (Kyoto Protocol) came into force in February 2005, which is an international treaty designed to limit GHG emission for Annex I for the period from 2008 to 2012. The international arguments on the framework of emission reduction after 2013 will also begin soon. Under these circumstances, the role and importance of the mitigation strategies of climate change is increasing. In order to assess the impacts on energy and economy by mitigation of climate change, we have developed a new dynamic optimization-type model, DEARS (Dynamic Energy-economic Analysis model with multi-Regions and multi-Sectors), to deal with the changes in both energy systems and industrial structure not only for the world but also detailed region up to the middle of this century. This model is an intertemporal non-linear optimization type where the objective function of cumulative consumption utility is maximized. The model represents energy technology choice, sectoral energy consumption and economic growth by region for the middle term. This model consists of an energy systems module having about 15 energy technologies, e.g. coal power with and without CCS (Carbon Capture and Storage), nuclear power and biomass power and of an economic module having 18 economic sectors; the world is divided into 18 regions. Both energy and monetary flow systems module are consistent with each other. In the energy module, the supply side is formulated by bottom-up fashion, while the demand side is formulated by top-down fashion. The energy systems module covers various energy conversion processes (electricity generations and CCS, etc.). The assumptions for the bottom-up energy systems include the fossil fuel resource estimates by WEC (2000) and USGS (2000), and their cost-supply functions by Rogner (1997). The economic module is based on GTAP (Global Trade Analysis Project) model and its comprehensive world economic database, which has been widely used for economic analysis on the international trade and impacts across various sectors. Thanks to the above model structure, the model enables to evaluate the costs and technologies to reduce CO2 emission for 18 regions under CO2 emission regulations. Dealing with the detailed regional division leads to observe the regional differences of both economic and energy systems. Therefore the model provides useful information about the quantitative and comprehensive assessments for the climate change mitigation policies. A case study was carried out on the assumption under the reference case (No-CO2-regulation) and the CO2 emission constraint cases for IPCC-WGI 550 ppmv stabilization scenarios under SRES-B2 population scenario up to the middle of this century. Global warming mitigation strategies were evaluated for the multi-regions and multi-sectors up to the mid-century using the computational results of this model. Two cases for the CO2 emission constraint are assumed:(1) IPCC stabilization profile for the world, and (2) IPCC stabilization profile under the KP constraint to 2012 and the U.K. proposal constraint after 2013 for Annex I countries. In both of the constraint cases, the CO2 emission of the world is constrained to meet that of IPCC stabilization scenario. The U.K. proposal constraint means that the CO2 emission for Annex I countries will keep the U.K. proposed target after 2013, where the CO2 emission is reduced to about 40% in 2050 relative to that in 1990. In the stabilization case, a large CO2 emission reduction for Annex I countries causes the shift in the production of several energy-intensive industrial sectors from Annex I regions to Non-Annex I regions, so-called “carbon leakage.” The changes in energy systems are also described. In both of the constraint cases, the share of the non-fossil energy increases, and it means that the renewable energy and nuclear power plays an important role in CO2 reduction for the middle term. The model analysis results show the optimized strategies differ by region and sector under CO2 emission reduction policy.