Environmental climate instruments in Romania: A comparative approach using dynamic CGE modelling

International audienceThis study simulates a CO2 permit market in Romania using a dynamic general equilibrium model. The carbon constraint is set at 20.7% below the reference emissions level for sectors eligible according to the EU-ETS (European Union Emission Trading Scheme). Free permit distribution enhances growth despite a severe emissions cap, because environmental regulation stimulates structural changes (Porter, 1991). That is, grandfathering allows sectors additional resources to invest in developing technologies, but it also raises the CO2 abatement costs because of energy rebound effects from enhanced growth. Results under endogenous growth (Romer, 1990) are very similar to those obtained under an exogenous growth scenario (Ramsey, 1928), as the substitution effects are responsible for the majority of variations; in addition, Romanian research activities are too modest to significantly impact this system. The abatement cost per unit of GDP is higher under endogenous growth, as spillover effects reduce incentives to invest. Technological diffusion continues to have a positive impact on economic growth, which counterbalances the free-riding attitude adopted by some energy-intensive sectors, such as glass and cement

Quotas allocation rules in Romania assessed by a dynamic CGE model

Alternative mechanisms for EU ETS (European Union Emissions Trading Scheme) quotas allocations within the Romanian economy are evaluated using a general equilibrium model within a dynamic intertemporal framework. Several distribution rules are simulated based on: the historical emissions, the least-cost approach and the auctioning scheme with and without a preliminary selection of eligible sectors. (1) The resulting marginal abatement cost in ETS eligible sectors is only 5.75 EUR/t CO2 for reducing pollution by 20.7%. Such a low level is explained by low energy prices and by substitution possibilities with low carbon content resources (nuclear and hydroelectricity). (2) Including all sectors in the trade creates a more flexible market than in the ETS, since more reduction options are available. (3) The ETS has high feasibility for monitoring. All eligible sectors (except refineries and metallurgy) present the lowest abatement cost in the economy. (4) Auctioning introduces a strong carbon price-signal, which reduces emission intensity but creates distortions in terms of trade and worsens the country's energy dependency. (5) Environmental policy has modest macroeconomic results and tends to correct the resources allocation. (6) The strong double dividend obtained under certain circumstances indicates Romania's potential for improving its energy efficiency and carbon intensity.climate policies, EU ETS, National Allocation Plan, quotas allocation, Romania, dynamic GCE modeling.

Environmental climate instruments in Romania: A comparative approach using dynamic CGE modelling

This study simulates a CO2 permit market in Romania using a dynamic general equilibrium model. The carbon constraint is set at 20.7% below the reference emissions level for sectors eligible according to the EU-ETS (European Union Emission Trading Scheme). Free permit distribution enhances growth despite a severe emissions cap, because environmental regulation stimulates structural changes (Porter, 1991). That is, grandfathering allows sectors additional resources to invest in developing technologies, but it also raises the CO2 abatement costs because of energy rebound effects from enhanced growth. Results under endogenous growth (Romer, 1990) are very similar to those obtained under an exogenous growth scenario (Ramsey, 1928), as the substitution effects are responsible for the majority of variations; in addition, Romanian research activities are too modest to significantly impact this system. The abatement cost per unit of GDP is higher under endogenous growth, as spillover effects reduce incentives to invest. Technological diffusion continues to have a positive impact on economic growth, which counterbalances the free-riding attitude adopted by some energy-intensive sectors, such as glass and cement.tradable permits, Romania, endogenous/exogenous growth, spillover effects.

Zero is the only acceptable leakage rate for geologically stored CO2: an editorial comment

International audienceLeakage is one of the main concerns of all parties involved with the development of Carbon Capture and Storage. From an economic point of view, Van der Zwaan and Gerlagh (2009) suggest that CCS remains a valuable option even with CO2 leakage rate as high as of a few % per year. But what is valuable is, ultimately, determined by social preferences and parameters that are beyond economic modeling. Examining the point of view of four stakeholder groups: industry, policy-makers, environmental NGOs and the general public, we conclude that there is a social agreement today: zero is the only acceptable carbon leakage rate.Le risque de fuite du carbone représente aujourd'hui l'une des préoccupations majeures des acteurs impliqués dans le développement de la technologie de Captage et Stockage du Carbone. Ce commentaire est une discussion autour des résultats de la recherche de Van der Zwaan et Gerlagh (2009) qui concluent à l'aide d'outils économiques que le CCS est une option envisageable même avec un taux de fuite de quelques % par an. Cependant, les préférences individuelles relèvent à notre avis davantage d'une convention sociale que d'hypothèses de modélisation. Dans une perspective plus ample, il apparaît ainsi essentiel d'examiner le CCS non seulement sous l'angle de l'efficacité économique, mais également sous celui du respect des conditions d'acceptabilité sociale, politique et technique du contrôle des risques liés au CCS. Aujourd'hui, ces conditions suggèrent que le seul niveau de fuite acceptable est le taux zéro. Pour le montrer, nous analysons le concept de fuite de carbone selon le point de vue de quatre parties prenantes: l'industrie, le régulateur, le public et des ONG environnementales. Le processus actuel de confrontation des positions ne pourrait conduire à un compromis sur une niveau de fuite socialement accepté non nul que dans les décennies à venir

Actuarial risk assessment of expected fatalities attributable to carbon capture and storage in 2050

International audienceThis study estimates the human cost of failures in the CCS industry in 2050, using the actuarial approach. The range of expected fatalities is assessed integrating all steps of the CCS chain: additional coal production, coal transportation, carbon capture, transport, injection and storage, based on empirical evidence from technical or social analogues. The main finding is that a few hundred fatalities per year should be expected if the technology is used to avoid emitting 1 GtC yr-1 in 2050 at baseload coal power plants. The large majority of fatalities are attributable to mining and delivering more coal. These risks compare to today's industrial hazards: technical, knowable and occupational dangers for which there are socially acceptable non-zero risk levels. Some contemporary European societies tolerate about one fatality per thousand year around industrial installations. If storage sites perform like that, then expected fatalities per year due to leakage should have a minor contribution in the total expected fatalities per year: less than one. But to statistically validate such a safety level, reliability theory and the technology roadmap suggest that CO2 storage demonstration projects over the next 20 years have to cause exactly zero fatality.Dans cette étude on estime les coûts humains des défaillances dans la filière du CSC en 2050, en utilisant l'approche actuarielle. La mortalité prévue est évaluée à tous les stades du CSC : production additionnelle de charbon, captage du carbone, transport, injection et stockage, en se basant sur des données empiriques issues d'analogues techniques et sociaux. La conclusion principale est que quelques centaines de décès par an sont à attendre quand la technologie est employée pour éviter l'émission d'1 GtC an-1 en 2050 pour 1500 centrales électriques de base alimentées en charbon. La mise en oeuvre du CSC épargnerait sans doute plusieurs dizaines de milliers de vies en 2050 par l'atténuation du changement climatique. Ainsi, en termes de vies sauvées attendues, les bénéfices du CSC l'emportent sur ses coûts. La grande majorité des décès sont attribuables à l'extraction de davantage de charbon, et viennent ensuite les pertes dans l'acheminement maritime. Ces risques sont comparables aux accidents industriels d'aujourd'hui : des dangers techniques, connaissables et professionnels pour lesquels existent des niveaux de risque non zéro socialement acceptés. Si les sites de stockage opèrent à des niveaux de sûreté actuellement tolérés dans des installations analogues, les pertes annuelles attendues liées aux fuites, pourtant une préoccupation importante pour le public local, devraient contribuer de façon mineure à la mortalité annuelle attendue : inférieures à un. Mais cette condition de performance des sites de stockage sera refutée si une seule mort se produit avant 2030

Zero is the only acceptable leakage rate for geologically stored CO2: an editorial comment

Leakage is one of the main concerns of all parties involved with the development of Carbon Capture and Storage. From an economic point of view, Van der Zwaan and Gerlagh (2009) suggest that CCS remains a valuable option even with CO2 leakage rate as high as of a few % per year. But what is valuable is, ultimately, determined by social preferences and parameters that are beyond economic modeling. Examining the point of view of four stakeholder groups: industry, policy-makers, environmental NGOs and the general public, we conclude that there is a social agreement today: zero is the only acceptable carbon leakage rate.

Flexibility Assessment in Nuclear Energy dominated Systems with Increased Wind Energy Shares

This study analyses the system integration of wind energy in terms of balancing capacities, prices and power plants scheduling. The case study is the French power system, whose characteristics rely on high rates of nuclear power, with some ability to load-follow. The study evaluates several configurations of power plants in 2030 by using a dynamic optimization dispatching model with a highly detailed discrete-time formulation. Results show that operating the French power system with 28 GW of wind power by 2030 seems technically feasible but relies heavily on the capacity of nuclear reactors to follow variations, on storage applications to insure flexibility and on market capacity to allow generators to adapt continuously to the demand. Simulations show that for 11% wind power in the total generation by 2030, balancing the variation is less a matter of installing more flexible capacities, as load factors might decrease and reduce the investors’ interest when prices are relatively low. Balancing becomes more an issue of ramping rates and unit scheduling, power market regulation and real-time market interactions with the day-ahead and intra-day markets.JRC.F.6-Energy Technology Policy Outloo

Power System Flexibility With Electricity Storage Technologies: a Technical-economic Assessment of a Large-scale Storage Facility

This study analyzes power storage as a key option to support wind energy integration. The case study is the French power system, whose characteristics rely on high rates of nuclear power and a strong emerging wind energy market. A dynamic optimization dispatching model is used to simulate the operation of the power system, under two development scenarios of the technology mix by 2030, one scenario documented by European Commission, EC [1], and a second one by French Transmission System Operator, RTE [2]. Both scenarios result in power storage requirements of around 7 TWh for more than 4 GW installed storage capacity of pumped hydro power plants in France as a whole. In this context, it is assessed the profitability of an additional regional project of Compressed Air Energy Storage (CAES) located in the region of Bretagne. It shows how benefits could accrue by avoiding the regional wind curtailment of 59 GWh, by providing ancillary services such as secondary reserve, and by increasing the use of grid assets and the nuclear power output with more than 230 GWh. The profitability of the CAES project remains however negative, around -70 €/MWh despite the social value and the system benefits that results in. The study assesses possible ways to incentivize the investment in new storage projects, through for instance contracts for difference, which would link the storage operation, its investment cost and stage of development to the power market design via power prices and a pre-defined rate of return. The periodical revision of these regulatory arrangements would enable the storage investor to recover the investment cost and would eliminate the risk of over rewarding generators in the case of windfall profits.JRC.F.6-Energy systems evaluatio