ENERGY, ECONOMY AND ENVIRONMENT INTEGRATED LARGE SCALE MODELING AND ANALYSIS OF !

“THE TURKISH ENERGY SYSTEM”Thesis Proposal

Why?

What?

How?

When?

Presentation Agenda

Why?

2

2degrees Celsius

is the maximum

amount of the temperature

increase

2degrees Celsius

is the maximum

amount of the temperature

increase

Turkey’s performance on emissions

Total CO2 Emissions from the Consumption of Energy (Million Metric Tons) (Turkey)

0

75

150

225

300

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

263,54257,03

272,9280,19

250,96

230,9

210,47206,03194,53

184,18

201,93

181,61184,13182,28169,11

153,19139,95144,58

138,06137,29129,48

119,96

103,46109,7105,793,11

8278736369

What?

What?

Researchers do up to now

Top Down

Bottom Up

Market equilibrium approach Optimization approach

Higher sectoral aggregation Better engineering / technology description

Endogenous representation of most macroeconomic parameters like prices and demand elasticities

Better for policy analysis involving  impact assessment of technology and fuel mix within a sector

Top Down

Bottom Up

Top Down

Bottom Up

Top-down models evaluate the system from aggregate economic variables, whereas bottom-up models consider technological options or project-specific climate change mitigation policies (IPCC) !!!!The bottom-up models capture technology in the engineering sense: a given technique related to energy consumption or supply, with a given technical performance and cost. !!

Top-Down Models

IAMEconometric

EquilibriumIO

Top-Down ModelsIAM Econometric

EquilibriumIO

Input-Output models are applied to investigate direct and indirect economic and sectoral effects of the demand driven policies. !They show the process by which inputs in one industry sector produce outputs for consumption or for input into another industry !The major limits of IO models are that they can only be used on a national level; in the original format IO models do not cover substitution and feedback effects and neglect inter-sectoral substitution effects (Rosenbluth, 1968)

MIS ( Macroeconomic Information System) MEPA (Massaschusetts Economic Policy Analysis)

Top-Down ModelsIAM

Econometric

Equilibrium

IO

Econometric models correlate the energy demand with other macro-economic variables. Econometric models are comprised of econometrically estimated equations that do not consider equilibrium assumptions. !Models of this kind include economic structure in detailed way (Löschel, 2002).

POLES (Prospective Outlook on Long Term Energy Systems) QUEST (A Macro-economic model for EU Countries)

IO

Top-Down ModelsEconometric

Equilibrium

IAM

An integrated assessment (IA) model is defined as a combination of scientific and socioeconomic aspects of climate change (Bernstein et al., 1997) !IA models miss the links between economic growth and population

growth and advances in technology. In most of the IAM, it is not clear why some aspects of climate change are included and others not.

DICE (Dynamic Integrated Climate Change) MERGE (An Integrated Assessment Model for Global Climate Change) CETA (A Model for Carbon Emissions Trajectory Assessment) GCAM (Global Change Assessment Model) IMAGE (ntegrated Model to Assess the Greenhouse Effect)

EconometricIO

Top-Down ModelsEquilibriumIAM

!General equilibrium models enable studying price-dependent interactions between the energy system and the rest of the economy (Löschel, 2002). !Each sector is represented by a production function, which is designed to simulate the potential substitutions between the main factors of production !!!!!

GREEN (A Global Model for Quantifying The Costs of Policies to Curb CO2 Emissions) GEM-E3 (Computable General Equilibrium model for Studying Economy-Energy-Environment Interactions) SGM (Second Generation Model) HERMES (Harmonized Econometric Research for Modeling Economic Systems) GTAP-E (GlobalTrade Analysis Project - Energy)

EconometricIO

AGE vs CGE

EquilibriumIAM

The existence of equilibrium is gathered via the standard Arrow–Debreu exposition, then solve for market clearing price vector by means of Scarf’s Algorithm. !On the other hand CGE models consist of macro balancing equations, and unknowns solvable as simultaneous equations (Smale, 1981).

Bottom Up

Bottom-up models represent the energy system with a technology rich description and put the emphasis on the correct description of energy sources and technologies !Such models often neglect the macroeconomic impacts of energy policies.

EFOM (Energy Flow Optimization Model) MARKAL (Market Allocation Model) MESSAGE (Model for Energy Supply Systems and Their General Environment) MIDAS (Multinational Integrated Demand and Supply Model)

Bottom-up Models

SimulationAccounting

Optimization

Bottom-up Models

Simulation

Optimization

Accounting

Accounting models describe the physical flows of energy. !Models that belong to this class, rather than simulate the behavior of a system in which outcomes are unknown, require modelers to determine outcomes beforehand (Mundaca and Neij, 2010).

NIA (National Impact Analysis)

LEAP (Long-Range Energy Alternatives Planning System Model)!

BUENAS (Bottom-Up Energy Analysis System)

Simulation

Bottom-up Models

Optimization

Accounting

Simulation models provide a descriptive quantitative illustration of energy production and consumption based on exogenously determined scenarios (Mundaja, Neij, 2012) !These models are used to represent observed and expected microeconomic behavior that is not related to an optimal or rational pattern. !They simulate the behavior of consumers and producers under various conditions. !

REEPS (Residential End-Use Energy Planning System) !MURE (Mesures d‘Utilisation Rationnelle de l’Energie) !NEMS-RSDM (National Energy Modelling System - Residential Sector Demand Module)

Bottom-up Models

Accounting

SimulationOptimization

The system cost is minimized, or welfare maximized (if the model is a partial equilibrium model the consumer and producer surplus is typically maximized) !!Underlying assumption of optimization methodologies is that all acting agents behave optimal under given constraints

Hybrid

These groups of models combine technological explicitness of bottom-up models with the economic comprehensiveness of top-down models

TIMES-MACRO, MARKAL-MACRO, CIMS, NEMS!ENVEES, ETA-MACRO, HERMES-MIDAS, SCREEN, MESSAGE-MACRO!

How?

How?

to conduct a model

TIMESTIMES is a dynamic, bottom-up, large-scale, linear optimization modeling framework for energy systems !It is designed to be deployed on a multi-period horizon to minimize the total discounted energy system cost. !Quantities and prices of various fuels and other necessary commodities of the energy sector come to equilibrium in each period !TIMES also considers new technologies that will be available in the future

Reference case projections of end-use energy service demands (e.g., residential lighting, steel production and the like) are provided by the user for each region. !The user provides estimates of the existing stock of energy related equipment in all sectors in the base year, and the characteristics of available future technologies, future sources of primary energy supply and their potentials.

TIMES

Using these as inputs, the model aims to supply energy services at minimum global cost by simultaneously making decisions on equipment investment, equipment operation, primary energy supply, and energy trade.

TIMES

TIMES

MACRO

ignore the interdependencies of the energy sector with the remaining economy

MACRO depict the economic relationships of the entire economy, enable one to study the interconnections between economic development and energy demand.

Since this is done on a more aggregate level, detailed technology related information cannot be derived from top-down models

TIMES describe the energy sector in technology-rich way

TIMES-MACRO

TIMES MACROEnergy Demand

Energy Costs

Labor

Consumption

Investment

Capital

Concept of the linkage for a single-region TIMES-MACRO model

When?

Thanks…