Research at the HEC E3-Hub: An overview of E3 and IA ... · Introduction Models and applications...

IntroductionModels and applications

Conclusion

Research at the HEC E3-Hub:An overview of E3 and IA models and results

Olivier Bahn1

1E3-HUB and GERAD, HEC Montréal, Canada

CRM Networking Industrial Workshops - EnergyMontreal, October 24, 2016

O. Bahn Research at the HEC E3-Hub


Conclusion

Outline

1 IntroductionE3-HubE3 modelsIA modelsClimate changes

2 Models and applicationsGeoengineering: Insights from BaHaMaAdaptation: Insights from AD-MERGEMitigation: Insights from MERGEMitigation: Insights from TIMES

3 Conclusion



Conclusion

E3-HubE3 modelsIA modelsClimate changes

Outline



3 Conclusion



Conclusion


Research at the HEC E3-Hub

The E3-Hub was created in 2010 as a centre forconnecting HEC Montréal with businesses in the energysector, namely energy producers and major consumers.

Its partners:Industries: Hydro-Québec, Rio Tinto, Suncor;Others: AQME, HEC Chair in ESM, IET, IQC.

Its research priorities: analyzing and documenting issuesand solutions associated with managing environmental andenergy challenges in a business context.

Research project: accounting, business analytics,management, operations management, human resources, ...

Education projects: development of courses and seminars(e.g., on energy efficiency management).



Conclusion


E3 model classification

Bottom-up:A techno-economic approach that leads to disaggregatedmodels representing the energy sector with great details;Example: TIMES (Loulou et al., 2005).

Top-down:A macro-economic approach that leads to aggregatemodels in the sense that they use aggregate economicvariables;Example: GEM-E3 (Capros et al., 1997).

Hybrid:Models that incorporate within the same framework bothmodeling approaches;Example: MARKAL-MACRO (Manne and Wene, 1992).



Conclusion


Integrated assessment models

Integrated assessment (IA) is an interdisciplinaryapproach that uses information from different fields ofknowledge, in particular economy and climatology.Integrated assessment models (IAMs) are tools forconducting an integrated assessment, as they typicallycombine key elements of the economic and biophysical systems,elements that underlie the anthropogenic global climate changephenomenon.Examples of IAMs are BaHaMa (Bahn et al., 2008, 2010,2012, 2015), DICE (Nordhaus, 1994, 2007), MERGE (Manneet al., 1995; Manne and Richels, 2005), RICE (Nordhaus andYang, 1996) and TIAM (Loulou and Labriet, 2008).



Conclusion


Strategies to address climate changes

Human activities release greenhouse gases (GHGs) thattrigger climate changes with negative impacts on theenvironment and human societies.

Different strategies to address these threats:

Mitigation measures are options to reduce GHGemission levels (e.g., use renewables instead of fossil fuels).

Adaptation measures provide strategies to reduceimpacts of climate changes (e.g., crops for new climateconditions, dykes to protect against sea level rises or medicalpreventions against spreading tropical diseases).

Geoengineering measures are options to modify theclimate system (e.g., solar radiation management).



Conclusion

Geoengineering: Insights from BaHaMaAdaptation: Insights from AD-MERGEMitigation: Insights from MERGEMitigation: Insights from TIMES

Outline



3 Conclusion



Conclusion


Geoengineering strategy: A study with BaHaMa

Is there room for geoengineering in the optimalclimate policy mix?

O. Bahn a, M. Chesney b,*, J. Gheyssens d, R. Knutti c, A.C. Pana b

aGERAD and Department of Decision Sciences, HEC Montreal, Canadab Institute of Banking and Finance, University of Zurich, Switzerlandc Institute for Atmospheric and Climate Science, ETH Zurich, SwitzerlanddUNEP Financial Initiative, Geneva, Switzerland

1. Introduction

Climate change due to anthropogenic greenhouse gas (GHG)

emissions is viewed as one of the most serious challenges

faced by humankind (Stern, 2006). Strategies for dealing with

climate change enter three main categories: mitigation,

adaptation, and climate geoengineering. International agree-

ments call for reductions in GHG emissions – the mitigation

approach. Despite its direct impact on temperature levels, its

technical feasibility, and its ethical appeal, several factors

limit the implementation of mitigation: (i) the strong inertia in

the carbon cycle creates a gap between present abatement

costs and future climate benefits (Keller et al., 2007); (ii) the

decades-to-millennia-long lifespan of GHG render mitigation

ineffective in case of abrupt climate changes; (iii) the

atmosphere is a common good and unilateral actions are

discouraged by the possibility of free riding (Millard-Ball, 2012).

An alternative for dealing with climate change is adapta-

tion, the development of strategies that effectively reduce

climate change impacts (Tol, 2005). Adaptation covers a large

array of sectors, and can be ‘proactive’ or ‘reactive’ (de Bruin,

2011). While proactive adaptation is directed towards infra-

structure and medium-to-long-term economic transforma-

tions (Agrawala et al., 2011), reactive adaptation can be

deployed almost instantaneously to mitigate unforeseen or

underestimated damages. Several features distinguish adap-

tation from mitigation: (i) adaptation can be implemented

e n v i r o n m e n t a l s c i e n c e & p o l i c y 4 8 ( 2 0 1 5 ) 6 7 – 7 6

a r t i c l e i n f o

Article history:

Available online 14 January 2015

Keywords:

Climate change

Integrated assessment

Adaptation

Mitigation

Geoengineering

JEL classification:

Q43

Q48

Q54

Q58

a b s t r a c t

We investigate geoengineering as a possible substitute for mitigation and adaptation

measures to address climate change. Relying on an integrated assessment model, we

distinguish between the effects of solar radiation management (SRM) on atmospheric

temperature levels and its side-effects on the environment. The optimal climate portfolio

is a mix of mitigation, adaptation, and SRM. When accounting for uncertainty in the

magnitude of SRM side-effects and their persistency over time, we show that the SRM

option lacks robustness. We then analyse the welfare consequences of basing the SRM

decision on wrong assumptions about its side-effects, and show that total output losses are

considerable and increase with the error horizon. This reinforces the need to balance the

policy portfolio in favour of mitigation.

# 2014 Elsevier Ltd. All rights reserved.

* Corresponding author. Tel.: +41 44 634 45 80.E-mail address: [email protected] (M. Chesney).

Available online at www.sciencedirect.com

ScienceDirect

journal homepage: www.elsevier.com/locate/envsci

http://dx.doi.org/10.1016/j.envsci.2014.12.0141462-9011/# 2014 Elsevier Ltd. All rights reserved.



Conclusion


BaHaMa: Modelling of an SRM strategy

BaHaMa includes a Solar Radiation Management (SRM)measure that targets the reduction of incoming solar radiation byinjection of sulfur in the stratosphere.

Possible advantages of SRM:Ability to keep temperature levels artificially low, insteadof reducing GHG emissions, at a low cost;Provide quick and effective temperature backstop in caseof abrupt climate changes, with rare but catastrophicimpacts.

SRM brings along important risks:Cause ozone depletion;Alter ecosystems and trigger regional imbalances;Achieves only an ‘artificial’ reduction in temperature: Adisruption in sulphur injections would lead to a significant jump intemperatures (at the corresponding concentration level).



Conclusion


BaHaMa: Overview



Conclusion


Modelling the impacts of geoengineering

We rely on a binomial tree representation in order to model the evolution ofside-effects over time (αGE ) and capture the uncertainty and variability in theirsize:

αGE (t)αGE (t + 1) = (1 + u) · αGE (t) with probability p

αGE (t + 1) = (1 + d) · αGE (t) with probability (1 − p)



Conclusion


Scenarios

Five policy scenarios are analyzed:

‘Mitigation’ where mitigation is the only strategy available.

‘Mitigation and Adaptation’ where both mitigation andadaptation are available, but not geoengineering.

‘Mitigation, Adaptation, SRM’ where all strategies areavailable. Here we consider three illustrative cases for SRMside-effects:

- ‘Mild side-effects’: constant side-effects (αGE(t) = 0.015);

- ‘Strong side-effects’: αGE increases monotonically to αGE ;

- ‘Weak side-effects’: αGE decreases monotonically to αGE .



Conclusion


Results: Transition to the low-carbon economy



Conclusion


Results: Adaptation vs. SRM



Conclusion


Results: Temperature and GHG concentrations



Conclusion


Results: Distributional analysis for SRM side-effects



Conclusion


Results: Impacts of unexpected SRM side-effects



Conclusion


Adaptation policies: A study with AD-MERGE

Les Cahiers du GERAD ISSN: 0711–2440

Will adaptation delay the transitionto clean energy systems?

O. Bahn, K.C. de Bruin,C. Fertel

G–2015–79

September 2015

Les textes publies dans la serie des rapports de recherche LesCahiers du GERAD n’engagent que la responsabilite de leursauteurs.

La publication de ces rapports de recherche est rendue possiblegrace au soutien de HEC Montreal, Polytechnique Montreal,Universite McGill, Universite du Quebec a Montreal, ainsi quedu Fonds de recherche du Quebec – Nature et technologies.

Depot legal – Bibliotheque et Archives nationales du Quebec,2015.

The authors are exclusively responsible for the content of theirresearch papers published in the series Les Cahiers du GERAD.

The publication of these research reports is made possi-ble thanks to the support of HEC Montreal, PolytechniqueMontreal, McGill University, Universite du Quebec a Montreal,as well as the Fonds de recherche du Quebec – Nature et tech-nologies.

Legal deposit – Bibliotheque et Archives nationales du Quebec,2015.

GERAD HEC Montreal3000, chemin de la Cote-Sainte-Catherine

Montreal (Quebec) Canada H3T 2A7

Tel. : 514 340-6053Telec. : 514 [email protected]



Conclusion


MERGE: Overview

Cost-Benefit Analyses

Climate

Module

Energy

Module

Macroeconomic

Module

Damage

Module

Energy

Energy costs

Temperaturechanges

Damagecosts

Non-Energyrelated GHG

emissionsEnergy-related GHG

emissions

Cost-Effectiveness Analyses



Conclusion


MERGE: ETA



Conclusion


ScenariosAD-MERGE database corresponds to version 5 of the MERGEmodel except: i) key parameters of the climate module have been revised;ii) damage module has been revised and re-calibrated; and iii) adaptationoptions are modelled.

Five scenarios are analyzed:A counterfactual ‘Baseline’ where climate change damages are not feltand consequently where GHG emissions are not limited.

In the next four policy scenarios, climate change damages are felt andregions react following a cost-benefit approach. Mitigation is always a possibleoption, but adaptation may only be available on a limited basis:

- ‘No-adapt.’: adaptation is not possible;

- ‘Proactive’: only proactive (stock) adaptation is available;

- ‘Reactive’: only reactive (flow) adaptation is available;

- ‘Full-adapt.’: all forms of adaptation are available.



Conclusion


Results: World energy-related CO2 emissions

0

2

4

6

8

10

12

14

16

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 2110

GtC

Baseline

No adapt.

Full adapt.

Proactive

Reactive



Conclusion


Results: Temperature increase (from 2000)

0.0

0.5

1.0

1.5

2.0

2.5

2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 2110

˚C

Baseline

No adapt.

Full adapt.

Proactive

Reactive



Conclusion


Results: Net damages

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 2110

% of G

DP

Baseline

No adapt

Full adapt.

Proactive

Reactive



Conclusion


Results: World primary energy supply

0

200

400

600

800

1000

1200

1400

1600

1800

Baselin

e

Baselin

e

No ad

apt.

Full ad

apt.

Proa

ctive

Reactive

Baselin

e

No ad

apt.

Full ad

apt.

Proa

ctive

Reactive

2010 2050 2100

EJ / year

Nuclear & Renewable

Gas

Oil

Coal



Conclusion


Results: World electricity generation in 2100

0

20

40

60

80

100

Baseline No adapt. Full adapt. Proactive Reactive

TkW

h

lbde

hydro

nuc

gas-‐a

gas-‐r

gas-‐n

igcc

coal-‐a

coal-‐r

coal-‐n



Conclusion


THC preservation policies: A study with MERGE

Energy policies avoiding a tipping point in the climate system

Olivier Bahn a,�, Neil R. Edwards b, Reto Knutti c, Thomas F. Stocker d

a GERAD and Department of Management Sciences, HEC Montreal, Montreal (Qc), Canada H3T 2A7b Earth and Environmental Sciences, CEPSAR, Open University, Milton Keynes MK7 6AA, UKc Institute for Atmospheric and Climate Science, ETH Zurich, CH-8092 Zurich, Switzerlandd Climate and Environmental Physics, Physics Institute, and Oeschger Centre for Climate Change Research, University of Bern, CH-3012 Bern, Switzerland

a r t i c l e i n f o

Article history:

Received 2 November 2009

Accepted 1 October 2010Available online 25 October 2010

Keywords:

Climate tipping points

GHG emission reduction

Integrated assessment modeling

a b s t r a c t

Paleoclimate evidence and climate models indicate that certain elements of the climate system may

exhibit thresholds, with small changes in greenhouse gas emissions resulting in non-linear and

potentially irreversible regime shifts with serious consequences for socio-economic systems. Such

thresholds or tipping points in the climate system are likely to depend on both the magnitude and rate

of change of surface warming. The collapse of the Atlantic thermohaline circulation (THC) is one

example of such a threshold. To evaluate mitigation policies that curb greenhouse gas emissions to

levels that prevent such a climate threshold being reached, we use the MERGE model of Manne,

Mendelsohn and Richels. Depending on assumptions on climate sensitivity and technological progress,

our analysis shows that preserving the THC may require a fast and strong greenhouse gas emission

reduction from today’s level, with transition to nuclear and/or renewable energy, possibly combined

with the use of carbon capture and sequestration systems.

& 2010 Elsevier Ltd. All rights reserved.

1. Introduction

While it remains extremely difficult to define the level of‘dangerous anthropogenic interference with the climate system’as referred to in Article 2 of the United Nations FrameworkConvention on Climate Change (UNFCCC, 1992), it is becomingincreasingly clear that certain elements of the climate system maybe particularly vulnerable to human activities (in particulargreenhouse gas—GHG—emissions), with relatively small changesin emissions above a certain threshold potentially resulting inirreversible regime shifts and significant losses to human welfare.Such elements are referred to by Lenton et al. (2008) as tippingelements, and the associated thresholds as tipping points.Examples include dieback of the Amazon rainforest, loss ofArctic summer sea ice, melting of the West Antarctic ice sheet,and a collapse of the Atlantic thermohaline circulation (THC).Here we choose to focus on the latter possibility, the dynamics ofwhich are relatively well understood, if not well quantified, butour approach could equally well be applied to any other tippingpoint for which a threshold could be identified in a climate model.

The present-day circulation of the Atlantic features a strongsurface current, the Gulf Stream and its extension, whichtransports warm water into high northern latitudes and is largelyresponsible for the relatively mild climate of western Europe. This

wind-driven circulation pattern is strongly connected with theformation and sinking of dense water in the North Atlantic, drivenby strong heat loss to the atmosphere and by changes in salinitydue to precipitation and ice formation, hence the term ‘thermoha-line circulation’. Changes in surface density in the North Atlantic,driven by anthropogenic surface warming, increased precipitationand glacial meltwater runoff from Greenland, thus have thepotential to cause a drastic reduction in the strength of thisthermohaline circulation on a decadal timescale, with ensuingchanges in climate in the North Atlantic region and beyond, asindicated by paleodata (Stocker, 2000) and model simulations(Stouffer and Manabe, 1999; Vellinga and Wood, 2002; Knuttiet al., 2004; Stouffer et al., 2006; Meehl et al., 2007).

The potential impacts of a collapse in the THC could includeregional changes in climate of the order of several degrees (Schaefferet al., 2002; Vellinga and Wood, 2002), and global and local changesin sea level of up to 25–80 cm (Knutti and Stocker, 2000; Levermannet al., 2005; Vellinga and Wood, 2008; Kuhlbrodt et al., 2009; Yinet al., 2009). Initial estimates of THC-induced changes in oceancarbon uptake and in oceanic and terrestrial primary productivity(Joos et al., 1999b; Obata, 2007; Swingedouw et al., 2007; Zickfeldet al., 2008; Kuhlbrodt et al., 2009) suggest that these would besmall compared to warming-induced changes, but changes inregional current patterns could lead to the collapse of certainAtlantic fish stocks (Kuhlbrodt et al., 2009).

A comprehensive risk analysis must weigh the potentiallydrastic impacts of a collapse of the THC against its relatively lowprobability according to the IPCC (Meehl et al., 2007). However,

Contents lists available at ScienceDirect

journal homepage: www.elsevier.com/locate/enpol

Energy Policy

0301-4215/$ - see front matter & 2010 Elsevier Ltd. All rights reserved.

doi:10.1016/j.enpol.2010.10.002

� Corresponding author. Tel.: +1 5143406503; fax: +1 5143405634.

E-mail address: [email protected] (O. Bahn).

Energy Policy 39 (2011) 334–348



Conclusion


Thermohaline circulation



Conclusion


Rupture of the THC



Conclusion


Preservation of the THC



Conclusion


THC scenarios

Different levels of climate sensitivity:

‘Low CS’, with low climate sensitivity (1.5 ◦C) and short lag for oceanwarming (45 years);‘Medium CS’, with medium climate sensitivity (3 ◦C) and mean lag (57years), that is our original parameterization;‘High CS’, with high climate sensitivity (4.5 ◦C) and long lag (77 years).

Three scenarios:

A counterfactual ‘Baseline’ where climate change damages are notfelt and consequently where GHG emissions are not limited.‘Post-Kyoto’ scenarios where constraints on CO2 emissionsare imposed (AI: 2010 Kyoto, then -10% per decade; Non-AI: -5% perdecade from 2030).‘THC preservation’ scenarios where constraints on maximumabsolute warming and maximum warming rate are imposed.



Conclusion


THC: Temperature increase (from 2000)

0.00

0.50

1.00

1.50

2.00

2.50

3.00

2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

[deg C]

BH BM BL Condi6on on THC KH KM KL



Conclusion


THC: Temperature increase rate

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

[deg

C per decad

e]



Conclusion


THC: CO2 emissions

0

2

4

6

8

10

12

14

16

18

20

22

2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

[Gt carbo

n pe

r year]

B.

K.

PL

PM

PH



Conclusion


THC: World primary energy use

0

200

400

600

800

1000

1200

1400

1600

1800

B. B. K. PL PM PH B. K. PL PM PH

[EJ/year]

nuclear&renewables

gas

oil

coal

2010

2050

2100



Conclusion


Mitigation policies: A study with TIMES

Transformations for major reductions in GHG emissions

CANADA’S CHALLENGEOPPORTUNITY

&This project was made possible

through the generous financial support of the Trottier Family Foundation.

The Canadian Academy of Engineering300 – 55 Metcalfe Street

Ottawa, Ontario, K1P 6L5, CanadaPhone: (613) 235-9056

www.cae-acg.ca

David Suzuki Foundation219 – 2211 West 4th Avenue

Vancouver, BC V6K 4S2, CanadaPhone 604-732-4228

or toll free at 1-800-453-1533www.davidsuzuki.ca

Trottier Energy Futures Project Partners

April 2016

TrottierFondation familialeFondation familiale

Family Foundation



Conclusion


TIMES: Overview of the RES in NATEM



Conclusion


TEFP: Scenarios



Conclusion


TEFP: GHG emission targets



Conclusion


TEFP S3a-R60: GHG emission reductions by sector



Conclusion


TEFP S3a-R60: GHG emissions by sector



Conclusion


TEFP S3a-R60: Decarbonization of electricity supply



Conclusion


TEFP S3a-R60: Strategies for deep decarbonization

The main transformations needed to achieve deepdecarbonization can be grouped into three main categories:

1 Electrification of end-use sectors: Electricity is mainlyused for space and water heating, road transportation andindustrial and agricultural processes.

2 Decarbonization of electricity supply: Massiveinvestments in renewable (hydro, but also wind) and nucleargeneration.

3 Efficiency improvements: The biggest gains are achieved inthe transport sector (EV for road transportations); the second onesin residential and commercial buildings (e.g., efficient appliancesand improved building envelopes).



Conclusion

Outline



3 Conclusion



Conclusion

Conclusion

Geoengineering (SRM measure) brings along importantrisks (it may produce unintended consequences and harmfulside-effects): It does not appear to be a robust componentof an optimal climate policy.Adaptation is an important complement to mitigation: thecombination of both strategies is efficient to reduce GDPlosses, but may delay the needed transition to ‘clean’energy systems.Avoiding abrupt climate changes may require a fasterdecarbonization path (precautionary principle).In Canada, deep decarbonization can be achievedthrough massive electrification coupled with adecarbonized electricity supply and significant efficiencygains.


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