Energy scenario choices: insights from a retrospective review of UK energy futures

Since the 1980s, there has been a shift in energy research. It has shifted from approaches that forecast or project the future to approaches which make more tentative claims and which explore several plausible scenarios. Due to multiple uncertainties in energy systems, there is an infinite amount of plausible scenarios that could be constructed and scenario developers therefore choose smaller, more tangible sets of scenarios to analyse. Yet, it is often unclear how and why this scenario choice is made and how such choices might be improved. This paper presents a retrospective analysis of twelve UK energy scenarios developed between 1978 and 2002. It investigates how specific scenarios were chosen and whether these choices captured the actual UK energy system transition. It finds that scenario choice reflected contemporary debates, leading to a focus on certain issues and limiting the insights gleaned from these exercises. The paper argues for multi-organisation and multi-method approaches to the development of energy scenarios to capture the wide range of insights on offer. Rather than focus on uncertainty in model parameters, greater reflection on structural uncertainties, such as shifts in energy governance, is also required

Modelling to generate alternatives: A technique to explore uncertainty in energy-environment-economy models

In this study we describe a novel formulation of the so-called modelling to generate alternatives (MGA) methodology and use it to explore the near cost optimal solution space of the global energy-environment-economy model TIAM-UCL. Our implementation specifically aims to find maximally different global energy system transition pathways and assess the extent of their diversity in the near optimal region. From this we can determine the stability of the results implied by the least cost pathway which in turn allows us to both identify whether there are any consistent insights that emerge across MGA iterations while at the same time highlighting that energy systems that are very similar in cost can look very different. It is critical that the results of such an uncertainty analysis are communicated to policy makers to aid in robust decision making. To demonstrate the technique we apply it to two scenarios, a business as usual (BAU) case and a climate policy run. For the former we find significant variability in primary energy carrier consumption across the MGA iterations which then projects further into the energy system leading to, for example, large differences in the portfolio of fuels used in and emissions from the electricity sector. When imposing a global emissions constraint we find, in general, less variability than the BAU case. Consistent insights do emerge with oil use in transport being a robust finding across all MGA iterations for both scenarios and, in the mitigation case, the electricity sector is seen to reliably decarbonise before transport and industry as total system cost is permitted to increase. Finally, we compare our implementation of MGA to the so-called Hop-Skip-Jump formulation, which also seeks to obtain maximally different solutions, and find that, when applied in the same way, the former identifies more diverse transition pathways than the latter

The potential of marine energy technologies in the UK – Evaluation from a systems perspective

Accelerated technological change plays a crucial role in enabling the low-carbon energy transition. Quantitative energy modelling exploring alternative long-term decarbonisation pathways can support policy-makers in choosing the most important areas for technology promotion. This study analyses the potential contribution of marine energy in the UK from an energy systems perspective considering the trade-offs between local lead markets and global learning, the uncertainty in the learning potential, competition with alternative technologies and impacts on system balancing. The results indicate that only under very favourable conditions, i.e. with learning rates above 15% and high global deployment, marine energy w ill have a significant contribution to the UK decarbonisation pathway. Alternatively, marine energy could constitute a hedging strategy against multiple failure in other low-carbon options. The early strategic investments into marine energy lead, in most cases, to a slight rise in societal welfare costs compared to the respective cases without attempts to induce marine learning and brings benefits to the electricity system. Thus, on the whole, we conclude that marine energy has the potential to contribute to the UK energy system, but there is a substantial risk that strategic investments in a national lead market will not directly pay off in the long term

Limited emission reductions from fuel subsidy removal except in energy exporting regions

Hopes are high that removing fossil fuel subsidies could help to mitigate climate change by discouraging inefficient energy consumption and levelling the playing field for renewables1–3. In September 2016, the G20 countries re-affirmed their 2009 commitment (at the G20 Leaders’ Summit) to phase out fossil fuel subsidies4,5 and many national governments are using today’s low oil prices as an opportunity to do so6–9. In practical terms, this means abandoning policies that decrease the price of fossil fuels and electricity generated from fossil fuels to below normal market prices10,11. However, whether the removal of subsidies, even if implemented worldwide, would have a large impact on climate change mitigation has not been systematically explored. Here we show that fossil fuel subsidy removal would have a small impact on global energy demand and carbon dioxide emissions and would not increase renewable energy use by 2030. Subsidy removal would reduce the carbon price necessary to stabilize greenhouse gas concentration at 550 parts per million by only 2–12 per cent under low oil prices. Removing subsidies in most regions would deliver smaller emission reductions than the Paris Agreement (2015) climate pledges and in some regions global subsidy removal may actually lead to an increase in emissions, owing to either coal replacing subsidized oil and natural gas or natural-gas use shifting from subsidizing, energy-exporting regions to non-subsidizing, importing regions. Our results show that subsidy removal would result in the largest CO2 emission reductions in oil- and gas-exporting regions, where reductions would exceed their climate pledges and where subsidy removal would also affect fewer people below the poverty line than in lower-income regions

Exploring the possibility space: taking stock of the diverse capabilities and gaps in integrated assessment models

Integrated assessment models (IAMs) have emerged as key tools for building and assessing long term climate mitigation scenarios. Due to their central role in the recent IPCC assessments, and international climate policy analyses more generally, and the high uncertainties related to future projections, IAMs have been critically assessed by scholars from different fields receiving various critiques ranging from adequacy of their methods to how their results are used and communicated. Although IAMs are conceptually diverse and evolved in very different directions, they tend to be criticised under the umbrella of 'IAMs'. Here we first briefly summarise the IAM landscape and how models differ from each other. We then proceed to discuss six prominent critiques emerging from the recent literature, reflect and respond to them in the light of IAM diversity and ongoing work and suggest ways forward. The six critiques relate to (a) representation of heterogeneous actors in the models, (b) modelling of technology diffusion and dynamics, (c) representation of capital markets, (d) energy-economy feedbacks, (e) policy scenarios, and (f) interpretation and use of model results

Limited emission reductions from fuel subsidy removal except in energy-exporting regions

Hopes are high that removing fossil fuel subsidies could help to mitigate climate change by discouraging inefficient energy consumption and levelling the playing field for renewable energy. In September 2016, the G20 countries re-affirmed their 2009 commitment (at the G20 Leaders' Summit) to phase out fossil fuel subsidies and many national governments are using today's low oil prices as an opportunity to do so. In practical terms, this means abandoning policies that decrease the price of fossil fuels and electricity generated from fossil fuels to below normal market prices. However, whether the removal of subsidies, even if implemented worldwide, would have a large impact on climate change mitigation has not been systematically explored. Here we show that removing fossil fuel subsidies would have an unexpectedly small impact on global energy demand and carbon dioxide emissions and would not increase renewable energy use by 2030. Subsidy removal would reduce the carbon price necessary to stabilize greenhouse gas concentration at 550 parts per million by only 2-12 per cent under low oil prices. Removing subsidies in most regions would deliver smaller emission reductions than the Paris Agreement (2015) climate pledges and in some regions global subsidy removal may actually lead to an increase in emissions, owing to either coal replacing subsidized oil and natural gas or natural-gas use shifting from subsidizing, energy-exporting regions to non-subsidizing, importing regions. Our results show that subsidy removal would result in the largest CO 2 emission reductions in high-income oil- and gas-exporting regions, where the reductions would exceed the climate pledges of these regions and where subsidy removal would affect fewer people living below the poverty line than in lower-income regions

A case study on risk and return implications of emissions trading in power generation investments

This paper explores quantitative implications of the European Union Emissions Trading Scheme (EU ETS) on power capacity investment appraisal in a deregulated market. Risk and return of three different types of power plants, a gas-fired condensing power plant; a hydro power plant with a reservoir; and an off-shore wind power farm, are studied and compared in the regulatory environment of Finland. A single-firm exogenous and stochastic price model is used to simulate possible market outcomes. The model runs suggest that emissions trading increases the expected return of all three power plant technologies. The increase in risk is significant only in the case of the gas-fired power plant. Keywords

Trends of European research and development in district heating technologies

There is a considerable diversity of district heating (DH) technologies, components and interaction in EU countries. The trends and developments of DH are investigated in this paper. Research of four areas related to DH systems and their interaction with: fossil fuels, renewable energy (RE) sources, energy efficiency of the systems and the impact on the environment and the human health are described in the following content. The key conclusion obtained from this review is that the DH development requires more flexible energy systems with building automations, more significant contribution of RE sources, more dynamic prosumers׳ participation, and integration with mix fuel energy systems, as part of smart energy sustainable systems in smart cities. These are the main issues that Europe has to address in order to establish sustainable DH systems across its countries.This research was conducted in collaboration between Wrocław University of Technology (Poland) and Brunel University London (UK). The support for the Polish team was by the Ministry of Science and HigherEducationunderGrantno.50532

Pricing multiple exercise American options by linear programming

We consider the problem of computing the lower hedging price of American options of the call and put type written on a non-dividend paying stock in a non-recombinant tree model with multiple exercise rights. We prove using a simple argument that an optimal exercise policy for an option with h exercise rights is to delay exercise until the last h periods. The result implies that the mixedinteger programming model for computing the lower hedging price and the optimal exercise and hedging policy has a linear programming relaxation that is exact, i.e., the relaxation admits an optimal solution where all variables required to be integral have integer values. © Springer International Publishing Switzerland 2017