Larissa P. N. de OliveiraVITO/EnergyVille

“Climate policy Engagement in Brazil: how delayed action might lead to CCS as the last

resort to mitigation”

ETSAP Workshop – 27/11/2016

Madrid

Contents

1.Research Background

2.Introduction

3.Methodology

4.Results

5.Conclusions

6.Future Work

Background

• Original Work

– Oliveira, L. P. N. “Temporal Issues in Mitigation Alternatives for the Energy Sector in Brazil”, D.Sc. Thesis. Energy Planning Program, Federal University of Rio de Janeiro (2016).

• “Sandwich” period (1 year) at Imperial College London – Overall subject: Integrated modelling for evaluating low carbon policies in

Brazil

• Other publications:– OLIVEIRA, L. P. N.; ROCHEDO, P. R. R., PORTUGAL-PEREIRA, J.; HOFFMANN, B. S.; ARAGÃO, R.; MILANI, R.; LUCENA, A.

F. P.; SZKLO, A. S.; SCHAEFFER, R. Critical technologies for sustainable energy development in Brazil: technological foresight based on scenario modelling. Journal of Cleaner Production 130 PP. 12-24.

– LUCENA, A. F. P.; CLARCKE, L.; SCHAEFFER, R.; SZKLO, A. S.; ROCHEDO, P. R. R.; NOGUEIRA, L. P. P.; DAENZER, K.; GURGEL, A.; KITOUS, A., KOBER, T. Climate policy scenarios in Brazil: A multi-model comparison for energy. Energy Economics 56 PP. 564-574, 2016.

– NOGUEIRA, L. P. P.; LUCENA, A. F. P.; RATHMANN, R.; ROCHEDO, P. R. R.; SZKLO, A. S.; SCHAEFFER, R. Will thermal power plants with CCS play a role in Brazil's future electric power generation? International Journal of Greenhouse Gas Control 24 PP. 115-123, 2014.

– NOGUEIRA, L. P. P.; HAWKES, A. D.; NAPP, T. Can Brazil fulfil long-term reduction targets? An Evaluation of Consequences of Delayed Action on its energy sector. 9th Conference on Sustainable Development of Energy, Water and Environmental Systems (SDEWES). Venice-Istanbul, September, 2014.

Introduction

• Motivation– Different approaches regarding time preference lead to different

outcomes in scenario-making;

– Brazil has assumed a strong position towards climate change, but faces an economic and political turmoil;

– Bring the debate of delayed action to country level;

– Bring insight on the effect of delayed action in Brazil (considering its particularities).

• Research question: – Could Brazil become locked on fossil fuel technologies if it does not anticipate climate action?

Integrated Modeling

Time preference Climate Change

Brazil’s Context

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Brazil World

Energy Supply - 2012

Non-renewable Renewable

Brazil’s Context

Hydraulic11%

Firewood and charcoal

8%Sugarcane products

16%

Other renewables4%

Petroleum and oil products

39%

Natural gas14%

Coal and coke6%

Uranium1%

Other non-renewables

1%

Brazil’s Context

0

500000

1000000

1500000

2000000

2500000

1990 1995 2000 2005 2010

Gg

CO

2

CO2 Emissions

Energy Industrial Processes Land Use Change and Forestry Waste Treatment

Brazil’s in a crossroads…

• On the demand side:

– Increasing population

– Economic growth in recent years

– Increasing demand in the long-term • Despite current economical crisis

• On the supply side:

– Still highly renewable (due to hydro and ethanol)

– Hydro reminiscent potential in Amazon region

– Pre-salt discoveries increased natural gas consumption

– Low cost coal-fired electricity generation

Brazil’s Context

• Low Carbon PoliciesBefore... PNMC: 36.1% to 38.9%

reduction in 2020 compared to a BAU scenario (voluntary).

Today: INDC: absolute targets of

1.3 GtCO2e until 2025 and 1.2 GtCO2e until 2030 (37% and 43% reduction) in relation to 2005 levels.

Methodology

• Integrated Modeling Tool : TIMES

• TIMBRA– Intertemporal optimization – perfect foresight

• 5 energy levels (+2 dummies):– Resources: 4 types (non-renewables)

– Primary Energy: 8 types

– Secondary Energy: 18 types

– Final Energy: 20 types

– Useful Energy: supplies 22 demand types

– Around 300 technology types

– Base year: 2010

– Time Horizon: 2010-2050, 5-year periods.

Methodology• Simplified structure

Methodology• Simplified structure: resources

Methodology• Simplified Structure: Liquid fuels and H2

Methodology• Simplified structure: Electricity Generation

Methodology• Simplified structure: Transport Sector

Methodology• Simplified structure: other demand sectors

Industry:MiningCementCeramicsPulp and PaperPig-iron and SteelNickel & IronIron-alloysChemicalFood and Bev.TextileOthers

Methodology• Simplified Structure

Methodology

• Scenarios:– Discount rates:

• Market discount rates per sector: 12%-15%

• Social discount rate: 3%

BASE_MKTS

LC_MKTS_PF

LC_MKTS_PFD

BASE_SOC

LC_SOC_PF

LC_SOC_PFD

– Low carbon policies:• Based on INDC for 2030 -

575,8 million tCO2

• Early (2030) vs. delayed action (2040) reflects level of international cooperation.

Main Results

0

200

400

600

800

1,000

1,200

1,400

BA

SE

_M

KT

S

LC_

MK

TS

_P

F

LC_

MK

TS

_P

FD

BA

SE

_M

KT

S

LC_

MK

TS

_P

F

LC_

MK

TS

_P

FD

BA

SE

_M

KT

S

LC_

MK

TS

_P

F

LC_

MK

TS

_P

FD

BA

SE

_M

KT

S

LC_

MK

TS

_P

F

LC_

MK

TS

_P

FD

2010 2020 2030 2040 2050

TW

h

Electricity GenerationEthanol

H2 CCGT

MSW

Wave

Solar Hybrid

Solar

Wind

Biomass w/CCS

Biomass

Hydro

Nuclear

Diesel

Fuel Oil

NG w/CCS

NG

Coal Co-firing

Coal w/CCS

Coal

0

200

400

600

800

1,000

1,200

1,400

BA

SE_

MK

TS

LC_M

KTS

_PF

LC_M

KTS

_PFD

BA

SE_

MK

TS

LC_M

KTS

_PF

LC_M

KTS

_PFD

BA

SE_

MK

TS

LC_M

KTS

_PF

LC_M

KTS

_PFD

BA

SE_

MK

TS

LC_M

KTS

_PF

LC_M

KTS

_PFD

2010 2020 2030 2040 2050

MtC

O2

CO2 Emissions

CO2 Capture -H2

CO2 Capture -Bio

CO2 Capture -EE

Net Emissions

0

200

400

600

800

1,000

1,200

1,400

BA

SE_

SOC

LC_

SOC

_P

F

LC_

SOC

_P

FD

BA

SE_

SOC

LC_

SOC

_P

F

LC_

SOC

_P

FD

BA

SE_

SOC

LC_

SOC

_P

F

LC_

SOC

_P

FD

BA

SE_

SOC

LC_

SOC

_P

F

LC_

SOC

_P

FD

2010 2020 2030 2040 2050

TW

h

Electricity GenerationEthanol

H2 CCGT

MSW

Wave

Solar Hybrid

Solar

Wind

Biomass w/CCS

Biomass

Hydro

Nuclear

Diesel

Fuel Oil

NG w/CCS

NG

Coal Co-firing

Coal w/CCS

Coal

0

200

400

600

800

1,000

1,200

1,400

BA

SE_

SOC

LC_S

OC

_PF

LC_S

OC

_PFD

BA

SE_

SOC

LC_S

OC

_PF

LC_S

OC

_PFD

BA

SE_

SOC

LC_S

OC

_PF

LC_S

OC

_PFD

BA

SE_

SOC

LC_S

OC

_PF

LC_S

OC

_PFD

2010 2020 2030 2040 2050

MtC

O2

CO2 Emissions

CO2 Capture -H2

CO2 Capture -Bio

CO2 Capture -EE

Net Emissions

More fossil-based

More renewables

Market DR Social DR

Main Results

• Primary sources across scenarios:

0

1

2

3

4

5

6

7

Coal

Natural Gas

Crude oil

Biomass

Biofuels

Nuclear

Hydro

Other Renewables

2030

BASE_SOC LC_SOC_PF LC_SOC_PFD

BASE_MKTS LC_MKTS_PF LC_MKTS_PFD

Main Results

• Primary sources across scenarios:

0

1

2

3

4

5

6

7

Coal

Natural Gas

Crude oil

Biomass

Biofuels

Nuclear

Hydro

Other Renewables

2050

BASE_SOC LC_SOC_PF LC_SOC_PFD

BASE_MKTS LC_MKTS_PF LC_MKTS_PFD

Main Results

• Abated emissions through CCS

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

CaptureEE

CaptureBio

CaptureH2

BASE_SOC LC_SOC_PF LC_SOC_PFD

BASE_MKTS LC_MKTS_PF LC_MKTS_PFD

Main Results

• Normalized Global Cost vs. Normalized Emissions of Scenarios.

1.002

1.004

1.006

1.008

1.010

1.012

1.014

1.016

1.018

0.68 0.70 0.72 0.74 0.76 0.78

No

rmal

ize

d T

ota

l Co

st

Normalized Emissions

LC_SOC_PFD

LC_SOC_PF

LC_MKTS_PFD

LC_MKTS_PF

delayed

early

early

delayed

Conclusions

• Energy budget of Brazil’s INDC seems to be quite stringent under high long-term economic growth premises;

• Different elements related to time preference influence the technology transition: among them the discount rate choice and the level of international cooperation;

• Still, under delayed action, Brazil’s energy system gets (more) locked in fossil technologies bioCCS potential, e.g., is underexplored.

• Perfect foresight results deviate from real market rationale of some specific sector (e.g., ethanol + EE).

• Important to be aware of discounting effects and model rationale when interpreting results (expl: early vs. delayed actions with different DRs).

Future work for TIMBRA

• Better depiction of demand side processes should relief the pressure for CCS and other advanced technologies;

• Better depiction of industry sector;

• Adjustments in short-term macroeconomic assumptions to reflect current economical crisis;

• Sensitivities related to discount rates;

• Allowing trade with other regions ‘cap-and-trade’ shouuldalso relief pressure on supply;

• Integration with Latin America (ongoing).

Thank you!

Larissa P. N. de Oliveiralarissa.oliveira@energyville.be

Co-authors:Roberto Schaeffer, Ph.Droberto@ppe.ufrj.be

Alexandre Szklo, D.Sc. szklo@ppe.ufrj.br

Adam D. Hawkes, Ph.D.a.hawkes@imperial.ac.uk

This research was financed by CNPq and CAPES, funding agencies in Brazil.This research was partly financed by ‘Science Without Borders’ Program

(http://www.cienciasemfronteiras.gov.br/web/csf-eng/).