Global CGE model Junichi Fujino APEIS Training Workshop Nov. 25 to - PowerPoint PPT Presentation

Global CGE model Junichi Fujino APEIS Training Workshop Nov. 25 to Dec. 8, 2004, National Institute of Environment Studies, Tsukuba Dec.8 2004 1

Country CGE model and Global CGE model Japan C->G: Detailed economic activity CGE G->C: Import/export scenario model Other China Global CGE CGE CGE model model model Thailand India CGE CGE model model 2

GTAP and GTAP-EG � GTAP ver 5.4 (ver 6 will be published in next March) � Globally economy data � 78 regions, 57 sectors � Overview of country CGE data + global trade data � GTAP-EG � CGE programs including trade structure � Static model, MPSGE written in GAMS � Armington trade substitution 3

GTAP for Asian regions 1 Australia AUS 11 SGP Singapore 2 New Zealand NZL 12 Thailand THA 3 CHN China 4 HKG Hong Kong 13 Vietnam VNM 5 Japan JPN 14 BGD Bangladesh 6 Korea KOR 15 India IND 7 TWN Taiwan 8 IDN Indonesia 16 Sri Lanka LKA 9 Malaysia MYS Rest of South 17 XSA 10 Philippines PHL Asia 4 3 XOC Rest of Oceania 17 BGD Bangladesh

5 GTAP-EG

Main issues with global CGE model World ： Long-term Emissions Scenarios including non-CO2 gases Japan and World ： FTA bilateral/multi-lateral trade Japan ： carbon tax Japanese scenarios and world 6

AIM/Top-down model � Overview of AIM/Top-down model � Data from GTAP (ver.3) and energy balance table (IEA) � Computable general equilibrium model with recursive dynamics � CO2 emissions from fossil fuels � Time period: 1992-2010 � Region: 21 � Sector: 8 7

Output Production structure nesting Energy Primary Factor Intermediates Goods input input Fossil Fuel Electricity CO2 CO2 Fuels Fuels input input Electricity Electricity Elasticity of Substitution = 0 input input Non-energy Non-energy goods goods CO2 CO2 Fuel Carbon Capital input input Labor input input goods Right production sectors production sectors consumption consumption investment investment consumption consumption CO2 CO2 rent rent emission emission carbon carbon Governments Governments right right primary primary factors factors CO2 CO2 Household Household Outline of AIM/CGE 8

Classification of sector Y Agricultures, other manufactures and services COL Coal CRU Crude CRU GAS Natural gas EGW Electricity OIL Petroleum and coal products (refined) EIS Energy intensive products TRN Transport industries CGD Savings good 9

Definition of region JPN Japan CHN China AUS Australia IDI India NZL New Zealand IDN Indonesia USA United States of America MYS Malaysia CAN Canada PHL Philippines EUR Western Europe THA Thailand TWN Taiwan LAM Latin America KOR Republic of Korea MEA Middle East and North Africa HKG Hong Kong SSA Sub Saharan Africa SGP Singapore ROW Rest of World EEU+ CIS Eastern Europe + Commonwealth of Independent States 10

Scenarios for analysis Emission trade Climate policy in US and Australia Japan Others BaU No CO2 reduction Scenarios reducing CO2 emissions Scenario 1 Keep original policy No trade 1.6% of emissions Half of Scenario 2 Keep original policy in 1990 reduction 1.6% of emissions Half of Scenario 3 Ratify Kyoto in 2008 in 1990 reduction Scenario 4 Keep original policy Half of reduction 11

Carbon Price 500 Carbon price ($/tC at 1992 price) 450 Scenario 1 400 Scenario 2 350 Scenario 3 300 Scenario 4 250 200 150 100 50 0 JPN AUS NZL USA CAN EUR EEU+CIS Price of carbon tax in 2010 12

GDP change 3.0 Scenario 1 2.5 Scenario 2 compared to reference case (%) 2.0 Scenario 3 GDP change in 2010 1.5 Scenario 4 1.0 0.5 0.0 -0.5 -1.0 -1.5 -2.0 JPN AUS NZL USA CAN EUR EEU CHN IDI +CIS GDP change in 2010 compared to BaU 13

Production change in Japan Y COL GAS EGW OIL EIS TRN GDP 0 compared to reference case (%) -5 Change of production/GDP -10 -15 Scenario 1 -20 Scenario 2 -25 Scenario 3 Scenario 4 -30 -35 Change of production in each sector and GDP in Japan (2010) 14

EII production change 4 2 Change of EIS production in 2010 0 compared to reference case (%) -2 -4 -6 -8 Scenario 1 Scenario 2 -10 Scenario 3 Scenario 4 -12 JPN NZL CAN TWN HKG EEU+ IDI MYS THA MEA ROW AUS USA EUR KOR SGP CISCHN IDN PHL LAM SSA Change of energy intensive industry production in 2010 compared to BaU 15

Basic framework of AIM/CGE(Asia CGE(Asia) ) Basic framework of AIM/ � Type: Top-down, CGE, recursive dynamics � Program ： GTAP-EG/GAMS/MPSGE � Database ： GTAP ver.5(1997), IEA � Target Year: 2100 � Target Region: 18 regions � Target Sector: 13 sectors � Energy depletion, electricity mix � Non-CO 2 gas abatement � (Land use: use SRES/B2(AIM) scenario) 16

Regions Regions 1 ANZ Australia/NZ 10 OWE Other Western Europe 2 JPN Japan 11 EEU Eastern Europe 3 KOR Korea, Rep. 12 FSU FSU 4 CHN China 13 OPE OPEC 5 IND India 14 MEX Mexico 6 SEA South & SE Asia 15 BRA Brazil 7 USA USA 16 LAM Latin America 8 CAN Canada 17 AFR Africa 9 WEU Western Europe 18 ROW Rest of the World Sectors Sectors 1 GAS Natural gas works 8 FRS Forestry 2 ELE Electricity and heat 9 FSH Fishing 3 OIL Refined oil products 10 EII Energy Intensive Industry 4 COL Coal transformation 11 OIN Other Industry 5 CRU Crude oil 12 T_T Transport 6 AGR Agriculture 13 SER Service 7 LVK Livestock 17

Structure of AIM/CGE(Asia) model MAC MAC non- non- Energy CO2 CO2 Electricity resource input mix depletion CO2 Fuels input Electricity input Non-energy goods MAC CO2 input non- input CO2 consumption Production Sectors MAC investment multi-gas emission CO2 non- rent consumption CO2 Government right CO2 MAC primary non- factors CO2 Household 18

Temperature raise constraint and dynamic Temperature raise constraint and dynamic recursive model recursive model 2000 MAC MAC non- non- Energy CO2 CO2 Electricity 2010 resource input mix depletion CO2 Fuels input MAC non- MAC Electricity non- Energy input 2020 CO2 Non-energy CO2 Electricity resource input goods MAC mix CO2 depletion CO2 input non- Fuels input MAC CO2 input MAC non- non- consumption 2030… Electricity Energy CO2 input Non-energy CO2 Production Sectors Electricity MAC resource investment input multi-gas emission CO2 goods MAC non- mix rent depletion consumption CO2 CO2 input MAC MAC CO2 non- non- Fuels non- 2100 input Energy input CO2 CO2 Electricity CO2 consumption Electricity resource Government input input Non-energy Production Sectors mix MAC depletion investment CO2 right multi-gas emission goods MAC CO2 MAC non- MAC non- rent non- CO2 consumption Fuels input Energy input CO2 non- CO2 CO2 CO2 MAC Electricity Electricity input primary resource non- CO2 input input consumption Non-energy factors mix depletion CO2 CO2 Government Household goods Production Sectors MAC MAC Fuels investment multi-gas emission CO2 right CO2 GHG emissions input input non- non- rent consumption Electricity input CO2 CO2 input CO2 consumption Non-energy MAC primary non- goods MAC Production Sectors MAC factors Government investment multi-gas emission CO2 CO2 input Household CO2 non- rent non- consumption right input CO2 CO2 consumption CO2 Other gases: MAC Production Sectors MAC primary non- multi-gas emission investment Government CO2 factors non- t consumption n CO2 right Household e CO2 r CO2 SOx, NOx MAC primary Government non- factors CO2 right Household CO2 BB+FF MAC primary non- factors CO2 Household Emission path to satisfy stabilization target Simple Climate Model Based on Joos model 19 (AIM/SSG)

Anthropogenic GHG emissions Anthropogenic GHG emissions (GtC-eq/yr) (GtC-eq/yr) 10 12 14 16 10 12 14 16 0 2 4 6 8 0 2 4 6 8 CO2 2000 2000 2010 2010 CH4 2020 2020 N2O 2030 2030 CO2(BaU) CO2 2040 2040 2050 2050 CH4 CH4(BaU) 2060 2060 N2O CO 2 only 2070 2070 N2O(BaU) 2080 2080 BaU 2090 2090 2100 2100 Anthropogenic GHG emissions emissions Anthropogenic GHG emissions Anthropogenic GHG (GtC-eq/yr) 10 12 14 16 0 2 4 6 8 CO2 2000 2010 CH4 2020 N2O 2030 CO2(BaU) 2040 2050 CH4(BaU) 2060 multi gas 2070 N2O(BaU) 2080 20 2090 2100

GDP impact and Carbon Price GDP impact and Carbon Price 18,000 16,000 14,000 GDP (10bil.1997US$) 12,000 BaU 10,000 CO2 only 8,000 multi gas 6,000 900 4,000 Carbon Price (1997US$ per ton-C) 800 2,000 700 0 600 2000 2020 2040 2060 2080 2100 BaU 500 CO2 only 400 multi gas 300 200 100 0 21 2000 2020 2040 2060 2080 2100

Impact of Japan/Korea FTA Simulation cases � BaU case: the present condition case � FTA case: no tariff between Japan and Korea � FTA � abolition of tariff (considered) � oversea investment (not considered) � 22

Region code description 1 JPN Japan 2 KOR Korea - Republic of 3 CHN China 4 AS7 ASEAN7 5 IND India 6 ANZ Australia+New Zealand 7 CAN Canada 8 USA United States 9 WEU Western Europe 10 REF Economic Reform 11 ROW Rest of the World 23