The myopic UKTM model (my-UKTM): lessons learned for reaching UKs - - PowerPoint PPT Presentation

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The myopic UKTM model (my-UKTM): lessons learned for reaching UKs - - PowerPoint PPT Presentation

Oct 27, 2023 145 likes •268 views

The myopic UKTM model (my-UKTM): lessons learned for reaching UKs climate targets 28 th April 2016 Francesco Fuso Nerini UCL Energy Institute f.fusonerini@ucl.ac.uk UKs decarbonization goals Climate Change Act: 80% GHG reduction by

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SLIDE 1

The myopic UKTM model (my-UKTM):

lessons learned for reaching UK’s climate targets

28th April 2016

Francesco Fuso Nerini

UCL Energy Institute f.fusonerini@ucl.ac.uk

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SLIDE 2

UK’s decarbonization goals

Climate Change Act:

  • 80% GHG reduction by 2050

‘Carbon budgets’ strategy

  • Four carbon budgets have been

legislated, and the fifth is currently under review

FIGURE 1 UK'S APPROVED AND UNDER REVIEW CARBON BUDGETS (Committee on Climate Change, 2015)

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SLIDE 3

UKTM – The UK TIMES Model

  • Continuously used for policy support
  • Successor to UK MARKAL
  • Overview
  • Integrated energy systems model
  • Prefect foresight
  • Least cost optimization
  • Partial equilibrium
  • Technology rich
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SLIDE 4

Rationale for Myopic models

Optimization models useful for providing information regarding the cost-

  • ptimal pathway for reaching decarbonisation goals

HOWEVER Governmental decisions are made with a limited decision horizon and imperfect knowledge of the long term developments of those decisions (Keppo and Strubegger, 2010). Models with a myopic foresight could be useful to better represent the shorter term focus of decision making compared to perfect foresight models.

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SLIDE 5

Myopic UKTM (my-UKTM)

  • Same technology detail as

UKTM

  • Myopic foresight
  • Advantages:
  • Comparable with UKTM  can

be used in conjunction

  • Better represents myopic

decision making

  • Lower computational times

FIGURE 2 EXPLORED FORESIGHT OPTIONS

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SLIDE 6

Why Myopic UKTM

  • With the carbon budgets the UK is setting a long-term vision
  • However, changing circumstances (e.g. governments), uncertainty regarding the

future and the high-capital requirements of energy projects result often the adoption

  • f short-term measures and in the postponement of long-term strategic decisions
  • Combining the usage of UKTM and my-UKTM can help understand:
  • The linkage between short- and long- term goals
  • The effect of possible path-dependencies and lock-ins in the energy sector
  • How insights gained from a perfect foresight model (e.g. carbon prices) could

work in world where decisions are made myopically

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SLIDE 7

Scenario Analysis

PERFECT FORESIGHT-UKTM

  • perfect

foresight UKTM model for achieving 80% GHG reduction by 2050 MYOPIC-20 & MYOPIC-10:

  • As PF-UKTM but with 20 and 10 years

foresight respectively MYOPIC-20-CT & MYOPIC-10-CT:

  • a carbon tax obtained from the PF-UKTM

scenario is applied to the my-UKTM runs (20 and 10 years foresight)

Marginal price

  • f CO2eq

FIGURE 1 UK'S APPROVED AND UNDER REVIEW CARBON BUDGETS (CCC, 2015)

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SLIDE 8

The effects of myopic foresight

Structurally different investments Perfect foresight UKTM

  • Invests in long-term structural

investments from year 1 (e.g. electricity and hydrogen-based transportation)

Myopic UKTM

  • Invests in projects with a short-term

view, with the result of having to invest in a range of technologies in the last model years

FIGURE 3 DIFFERENCE IN GHG EMISSIONS, MYOPIC 20 – PERFECT FORESIGHT

  • 30
  • 20
  • 10

10 20 30 [Mt CO2]

Agriculture & Land Use Services Electricity Industry Residential Transport Hydrogen Processing Upstream

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SLIDE 9
  • 10
  • 11
  • 36
  • 6

1 8 28 75

  • 65
  • 68

126 173 193 223 308 405

  • 200
  • 100

100 200 300 400 500 600

2010 2015 2020 2025 2030 2035 2040 2045 2050 Myopic 20 Myopic 10

The effects of myopic foresight

FIGURE 4 CUMULATIVE COST DIFFERENCE BETWEEN PERFECT FORESIGHT AND MYOPIC UKTM RESULTS [BILLION £]

Lower costs in the first model years Considerably higher costs after 2025

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SLIDE 10

Effect of a carbon tax obtained from the perfect foresight model

Carbon tax in my-UKTM as the marginal cost of GHG in perfect foresight UKTM:

FIGURE 5 TOTAL EMISSIONS APPLYING A CARBON TAX FROM THE PERFECT FORESIGHT MODEL [Mt CO2eq]

  • 100

200 300 400 500 600 700 2010 2015 2020 2025 2030 2035 2040 2045 2050

Myopic 20 Myopic 10 Perfect foresight

The myopic runs do not reach the target of 80% GHG reduction by 2050

  • 70% reduction for the myopic20
  • 65% reduction for the myopic10

2020 2030 2040 2050 CO2eq price [£/t CO2] 37 99 128 288

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SLIDE 11

Conclusion & way forward

  • Perfect foresight and myopic UKTM can be used in conjunction to gain

policy-relevant insights

  • ‘Myopic’

planning results in the delayed adoption

  • f

low-carbon technologies and increased costs for reaching UK’s decarbonisation goals

  • A carbon tax obtained from perfect-foresight optimization models may be

under-valued Ongoing work to look at the effect of late action on the achievement of the decarbonisation goals

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SLIDE 12

Thank you for your attention!

Francesco Fuso Nerini

UCL Energy Institute f.fusonerini@ucl.ac.uk