PMR Technical Workshop “ Post-2020 Mitigation Scenarios and Carbon Pricing Modelling ” Session “ Key modeling issues and challenges facing ETS design and implementation ” Kazakhstan case Aidyn Bakdolotov Nazarbayev University Research and Innovation System aidyn.bakdolotov@nu.edu.kz Brasilia, 03 February 2016 1
• Overview of Kazakhstan’s ETS • Modeling capacities • Modeling activities undertaken • Modeling activities planned • Conclusions 2
Overview of Kazakhstan’s ETS 2009 – the ratification of the Kyoto Protocol 2010 – start of ETS development – Cap-and-Trade scheme ETS Design Element Kazakhstan Coverage Companies in Oil, coal, and gas; power; mining and metallurgy; chemical Emission Coverage Phase I: About 55% of Kazakhstan’s GHG emissions and 77% of CO2 Gases Covered Carbon Dioxide (CO2) Threshold for Inclusion 20,000t/CO2e/yr National allocation plan for 2013 Sectors covered: Number of Free allowances Reserve energy, oil & gas, industry enterprises 178 147 MtCO2 20 MtCO2 National allocation plan for 2014-2015 Sectors covered: Number of Free allowances Reserve energy, oil & gas, industry enterprises 166 307 MtCO2 38 MtCO2 National allocation plan for 2016-2020 Sectors covered: Number of Free allowances Reserve 3 energy, oil & gas, industry enterprises 140 746 MtCO2 22 MtCO2
• Overview of Kazakhstan’s ETS • Modeling capacities • Modeling activities undertaken • Modeling activities planned • Conclusions 4
TIMES-KAZAKHSTAN MODEL TIMES - The Integrated MARKAL-EFOM system developed by ETSAP of IEA Developed since 2011 under the project funded by Ministry of education and science of RK System boundaries: national (monoregional) and subnational (multiregional) Time horizon: 2011-2050 GOAL: to explore the evolution of the system in the long-term, to design and test national energy-environmental related policies and strategy INPUT TIMES Output • The existing system (capacities • Technology Supplies end-use energy and flows) services at minimum investments • Assumptions on final energy system cost by (costs and demands simultaneously making capacities) • Technical and economical equipment investment • Flows of energy parameters of future • Emissions and operating, primary • Trade technologies energy supply, and • Country-specific technical and energy trade decisions natural constraints • A set of P&M, projects 5
Combustible Reclassified fuel-energy balance of Coal Crude Oil Oil Products Gas Hydro Renewables & Electricity Heat Total Kazakhstan, 2013 (ktoe) Waste Production 49925 82203 0 24469 662 874 0 0 158133 Imports 798 7531 8305 4472 0 0 72 0 21179 NEB Reclassification methodology Exports -13708 -73235 -10044 -11367 0 0 -277 0 -108631 Stock changes -672 0 -202 -174 0 -2 0 0 -1049 Total primary energy supply 36343 16499 -1947 17400 662 872 -205 0 69626 Transfers 4 0 -5 0 0 0 0 0 -1 Statistical differences 0 0 1 0 0 0 0 0 1 Main activity producer electricity plants -9481 0 0 -418 -662 0 3876 0 -6685 Autoproducer electricity plants 0 0 0 -2089 0 0 752 0 -1337 Main activity producer CHP plants -9964 0 -25 -1467 0 0 2494 3669 -5293 Autoproducer CHP plants -2929 0 -52 -1280 0 0 793 1599 -1869 Main activity producer heat plants -3466 0 -430 -2664 0 0 0 4254 -2305 Oil refineries 0 -15679 15580 0 0 0 0 0 -99 Coal transformation -2257 0 0 0 0 0 0 0 -2257 Non-specified (transformation) 0 0 547 0 0 71 0 0 618 Energy industry own use -605 -192 -1571 -4508 0 0 -1471 -810 -9158 Losses -3 -612 -128 -878 0 0 -661 -1937 -4219 Final consumption 7643 16 11972 4102 0 943 5579 6774 37029 Industry 3628 13 2320 903 0 1 3398 2200 12463 Iron and steel 2793 0 519 34 0 0 1069 660 5075 Chemical and petrochemical 10 0 22 254 0 0 244 137 667 Non-ferrous metals 0 0 0 0 0 0 1135 900 2035 Non-metallic minerals 607 0 73 147 0 0 114 53 993 Transport equipment 1 0 3 4 0 0 52 10 69 Machinery 20 13 33 3 0 0 54 48 171 Mining and quarrying 118 0 618 322 0 0 551 157 1765 Food and tobacco 32 0 118 86 0 0 111 173 520 Paper, pulp and print 0 0 2 13 0 0 5 11 31 Wood and wood products 0 0 0 0 0 0 0 0 0 Construction 38 0 922 30 0 1 41 34 1066 Textile and leather 1 0 4 2 0 0 9 8 24 Non-specified (industry) 7 0 7 8 0 0 15 10 47 Transport 5 3 5254 330 0 0 78 8 5677 Road 0 0 4583 0 0 0 0 0 4583 Domestic aviation 0 0 370 0 0 0 0 0 370 Rail 4 0 277 0 0 0 61 0 342 Pipeline transport 0 3 11 330 0 0 17 8 369 Domestic navigation 0 0 13 0 0 0 0 0 13 Other 3797 0 4088 2636 0 941 2103 4567 18133 Residential 2402 0 1568 2179 0 919 925 2362 10355 Commercial and public services 1220 0 2012 439 0 21 1109 2115 6916 Agriculture/forestry 176 0 506 19 0 2 68 89 860 6 Non-energy use 213 0 310 233 0 0 0 0 756 Non-energy use industry/transformation/energy 213 0 310 233 0 0 0 0 756
Sectoral disaggregation and calibration • The National Energy Balance is the main source for the description of flows and technologies in the energy model. • Breakdown of the balance and calibration of the base-year system according to a bottom-up approach. BALANCE Commodity 1 Commodity 2 Commodity 3 Commodity 4 Commodity 5 Commodity 6 item 1 X 1,1 X 1,2 X 1,3 X 1,4 X 1,5 X 1,6 item 2 X 2,1 X 2,2 X 2,3 X 2,4 X 2,5 X 2,6 item 3 X 3,1 X 3,2 X 3,3 X 3,4 X 3,5 X 3,6 item 4 X 4,1 X 4,2 X 4,3 X 4,4 X 4,5 X 4,6 item 5 X 5,1 X 5,2 X 5,3 X 5,4 X 5,5 X 5,6 item 6 X 6,1 X 6,2 X 6,3 X 6,4 X 6,5 X 6,6 Service Commodity 1 Commodity 2 Commodity 3 Commodity 4 Commodity 5 Commodity 6 item A,1 =30%*X 1,1 =50%*X 1,2 =10%*X 1,3 =0%*X 1,4 =30%*X 1,5 =20%*X 1,6 item B,1 =40%*X 1,1 =20%*X 1,2 =40%*X 1,3 =70%*X 1,4 =40%*X 1,5 =20%*X 1,6 item C,1 =30%*X 1,1 =70%*X 1,2 =50%*X 1,3 =30%*X 1,4 =30%*X 1,5 =60%*X 1,6 item A,2 =10%*X 2,1 =25%*X 2,2 =10%*X 2,3 =20%*X 2,4 =35%*X 2,5 =50%*X 2,6 item B,2 =60%*X 2,1 =55%*X 2,2 =60%*X 2,3 =40%*X 2,4 =35%*X 2,5 =15%*X 2,6 item C,2 =30%*X 2,1 =20%*X 2,2 =30%*X 2,3 =40%*X 2,4 =30%*X 2,5 =35%*X 2,6 7
• Overview of Kazakhstan’s ETS • Modeling capacities • Modeling activities undertaken • Modeling activities planned • Conclusions 8
Modelling activities undertaken Aim: analysis of the impact of the domestic carbon market on the macroeconomic indicators of economic development Time of modelling: June 2014. Modelling tool: TIMES-KZK. Obstacles: • GDP (macroeconomic parameter) is exogenous to the model • Mismatch of the sectors in model with sectors covered by NAP 9
Projections of GDP and Population Two projections of GDP (at June 2014): One projections of Population: ETS scenarios 10
Baseline scenario CO2 emissions in three sectors CO2 emissions in three sectors 400 100% 80% 300 Mln CO2-eq 60% 200 40% 100 20% 0 0% 2009 2010 2012 2015 2020 2025 2030 2009 2010 2012 2015 2020 2025 2030 Power sector Industry sector Upstream sector Power sector Industry sector Upstream sector • Baseline scenario is the basis for calculation of the sectoral caps for the next scenarios • The formula for sectoral caps is the same as in the NAP (based on historical values) • For the whole time horizon, the caps have been calculated based on emissions from previous years plus reserve quota for new installations (20 MtCO2-eq) 11
Marginal costs of CO2 500.00 450.00 400.00 350.00 300.00 250.00 200.00 150.00 100.00 50.00 0.00 2020 2025 2030 2020 2025 2030 GDP-I GDP-II Cap Power sector Cap Industy sector Cap Upstream sector Cap-and-Trade 12
Trade flows between sectors (CO2 in tones) Trade between sectors “Cap -and- Trade” scenario and GDP-I from/to Industy sector Upstream sector Power sector 13120 5960 2020 Upstream sector Power sector 15310 2025 Upstream sector 988 Power sector 11033 2030 Upstream sector 10405 13
Observations and lessons • The design of the ETS in the model not fully replicated domestic ETS due to the mismatch of the sectors and levels of disaggregation • The standalone TIMES model cannot reflect the trade between the enterprises in the same sector • The standalone TIMES model cannot directly estimate the ETS impact on macroeconomic parameters (link with CGE can do it) • The power sector is the most flexible due to the shifting from coal to gas 14
• Overview of Kazakhstan’s ETS • Modeling capacities • Modeling activities undertaken • Modeling activities planned • Conclusions 15
PMR Project 16
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