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FUTURE CARBON DIOXIDE EMISSIONS FROM FOSSIL FUELS
Pages 87-185

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From page 87...
... 2.l.l Overview There is widespread agreement that anthropogenic carbon dioxide emissions have been rising steadily, primarily driven by the combustion of fossil fuels. There is, however, enormous uncertainty about the future emission rates and atmospheric concentrations beyond the year 2000; and even greater uncertainty exists about the extent of climatic change and the social and economic impacts of possible future trajectories of carbon dioxide.
From page 88...
... Particular care is given not only to assure that the energy and production sectors are integrated but also to respect the cost and availability of fossil fuels. In addition, the analysis presented here attempts to recognize the intrinsic uncertainty about future economic, energy, and carbon cycle developments.
From page 89...
... (the output) , on the one hand, and labor, fossil fuels, and nonfossil fuels (the inputs)
From page 90...
... The data are gathered from diverse sources and are of quite different levels of precision. In general, we have surveyed the recent literature on energy and economic modeling to determine what are commonly held views of such variables as future population growth or productivity growth.
From page 91...
... Perhaps more importantly, we also include the tendency to substitute nonfossil for fossil fuels as a result of the increasing relative prices of fossil fuels. This is an important effect that has frequently been ignored.
From page 92...
... . Outcomes of l00 randomly chosen runs; the numbers on the right-hand side indicate the mean projected yearly emission for the year 2l00 and the extreme high and low outcomes.
From page 93...
... . Outcomes of l00 randomly selected runs; the numbers on the right-hand side indicate the mean concentration for the year 2l00 and the extreme high and low outcomes.
From page 94...
... In one case, shown in column (2) , the contribution is calculated as the uncertainty introduced when a variable takes its full range of uncertainty and all other variables are set equal to their most likely
From page 95...
... In both cases, we have created index numbers with the variable that induces the most uncertainty set equal to l00, and other variables are scaled by their ratio of uncertainty added to that of the variable with the largest contribution. The two indices are used because they convey different information.
From page 96...
... j 3l 24 Population growth [L(t) l 22 36 Trends in relative costs of fossil and nonfossil fuels [h,(t)
From page 97...
... The particular policy we investigate is the imposition of fossil fuel taxes, set, for illustrative purposes, at $l0 per ton of coal equivalent and at a more stringent level. Taxes were not chosen for any reason other than modeling ease.
From page 98...
... 90801 70603 50 o -6 S = 40J X 30 J 20 100 TlME Pulse 1980 Pulse 2025 Stringent Permanent 1980 Permanent 2025 1975 2000 2025 2050 2075 2100 YEAR FIGURE 2.5 Taxation on carbon fuel price (l975 dollars per ton coal equivalent)
From page 99...
... 99 S 8 UJ CD tr Or -ir -2-3i -4-6-7-8-9-10 Permanent Beginning in 1980 V Permanent Beginning in 2020 Temporary Beginning in 1980 Temporary Beginning in 2020 Pulse 1980 Permanent 1980 Stringent Pulse 2025 Permanent 2025 1975 2000 2025 2050 2075 2100 YEAR FIGURE 2.6 Plot of carbon emission versus time for taxed runs. Deviation in emissions from the base run for various taxes.
From page 100...
... . Deviation of run from base run without carbon taxes .
From page 101...
... The key exogenous variables (or zt) are economic "events," such as population growth or fossil fuel reserves.
From page 102...
... » consumption of fossil fuels at time t in metric tons of coal equivalent; En(t) = consumption of nonfossil fuel at time t in metric tons of coal equivalent; r « a parameter reflecting the ease of substitution between Ec(t)
From page 103...
... = E(t) represent total energy demand and - P(t)
From page 104...
... . Still, the point is this: by specifying the production function, we fully specify the underlying structure of demand for all three of our inputs -- labor, fossil fuel, and nonfossil fuel.
From page 105...
... Thus, the unitary price and income elasticities of aggregate energy demand already noted from Equation (2b) were to be expected.
From page 106...
... We are, in other words, out of our theoretical bind. With this final step completed, we are able to set both the elasticity of substitution between fossil and nonfossil fuels and the elasticity of substitution between energy and labor equal to whatever the data suggested were appropriate values without overburdening the model with unnecessary complication.
From page 107...
... The bias in the rate of technological change reflects the possibility that technical change and innovation will not proceed at the same rate in both energy sectors. If innovation were more rapid in the nonfossil fuel sector, for instance, then the bias would favor that sector, and h2(t)
From page 108...
... dollars per metric ton of coal equivalent; g0 = initial production costs in l975 dollars per metric ton of coal equivalent; R = a measure of the world's remaining carbon-based fuel reserves in metric tons of coal equivalent in l975; T(t - t) » a tax policy parameter used to reflect taxation of fossil fuels; R(t)
From page 109...
... . Nonfossil fuels are presumed to provide energy without adding to carbon emissions.
From page 110...
... The supply conditions from fossil and nonfossil fuels are meanwhile determined by * See Bolin (l98l)
From page 111...
... Table 2.2 records the estimates for world GNP, world population, and world fossil and nonfossil fuel in l975. Since these initial conditions are based on historical evidence, consensus is not difficult to achieve.
From page 112...
... ll2 O u 41 00 • d §
From page 113...
... 8.l x l09 mtce D Nonfossil fuel Consumption in l975 IIASA (l98l, p.
From page 114...
... Coal and electricity (generated from nonfossil fuels) were assumed to remain constant over the 6-year period.
From page 115...
... I Primary Fossil fuelSL $ 76/mtce Nonfossil fuel0- $ ll8/mtce II.
From page 116...
... Thus, the rate of productivity growth in energy is thought to be independent of the difference in productivity growth between fossil and nonfossil fuels.
From page 117...
... parameters of population growth equation. ^Sources: OECD Interfutures Project (l979)
From page 118...
... Many studies have identified productivity growth as a critical parameter for energy and carbon dioxide projections. The common presumption about the growth of world trade, ironically, has caused otherwise independent studies to project estimates of output growth that converge over time.
From page 119...
... . Since technological change can continue in the fossil fuel sector as well, these estimates are also used to frame the difference in the rate of advance between the two sectors [h2(t)
From page 120...
... l20 TABLE 2.9 Aggregate Carbon Emissions A Fuel Proportions Proportions Carbon Emissions Year Source A Oil Gas Coal Shale l975 Table 2.3 0 .50 0 .20 0 .30 0 .00 580 2025 1 1 AS A (high)
From page 121...
... 2050 2075 2100 There are by now a wide variety of studies of the elasticity of substitution between energy and nonenergy inputs. To a first approximation, this parameter is equal to the price elasticity of the derived demand for energy [this is shown in Nordhaus (1980a)
From page 122...
... , estimates for gj_, g2, and R are required. Estimates of world fossil fuel reserves vary widely according to the assumptions that are made about economic feasibility.
From page 123...
... For simplicity, first of all, g2 is set equal to l; manipulating gl provides more than enough flexibility. A range of prices for fossil fuel in some future time after an arbitrary Ri mtce of fossil fuel had been consumed, is then constructed.
From page 124...
... price of fossil fuel as a function of cumulative fossil fuel extraction. Prices are l975 dollars per metric ton of coal equivalent.
From page 125...
... The second gives society enough foresight to prepare for the imminent exhaustion of fossil fuel supplies.
From page 126...
... and the lower l975 prices is employed to slow the rate of growth of fossil fuel prices; the result is a reduction in the reaction to higher fossil fuel prices mandated by Equation (3)
From page 127...
... The multiple is selected to match current estimates of the cost of generating hydrogen from conventional sources; the subsequent rate of decline of fossil fuel consumption is assumed to be roughly 6% per year and is estimated from preliminary runs in which the supply of fossil fuel was exhausted in the absence of the backstop. Consideration of the airborne fraction is the final order of business.
From page 128...
... / [Pc(t>] ' 1975 2000 2025 2050 2075 2100 YEAR FIGURE 2.ll Price of fossil fuel (l975 dollars per ton of coal equivalent)
From page 129...
... . We differentiate between a marginal airborne fraction (the fraction of current emissions that remain in the atmosphere during their first year)
From page 130...
... Notice that these rates of growth, particularly those for energy consumption and GNP, conform well with * See Arrow (l982)
From page 131...
... C Nonfossil Fuel Price Growth High 2.0%(l.3%)
From page 132...
... l32 « -U 4 kl « i CO a cd 2 O» i A « ui I o o o O • co 4 n £ H 9 CO in o o in o CN o m o M in o o o o in O\ -« in CN CO CN o oo CN CO m r- (N H ao o roi-too Hrom mm r~ «ri oo in -*
From page 133...
... l33 1000.0 H > 100.0= 10.0J 1.00.1 1975 2000 2025 2050 2075 2100 YEAR FIGURE 2.l2 Fossil fuel consumption for l00 randomly drawn runs (billion metric tons of coal equivalent per year)
From page 134...
... emissions and concentrations for critical years are referred to Figures 2.l7 and 2.l8. The model presented here finds that carbon dioxide emissions are likely to grow steadily over the next century or so, with an atmospheric concentration reaching 600 ppm, in our most likely case, shortly after 2065.
From page 135...
... This slower buildup arises primarily because we estimate a greater sensitivity of fossil fuel consumption to rising fossil fuel prices. But while this average result suggests a considerable time before a CO2 doubling, our analysis also shows a substantial probability that doubling will occur much more quickly.
From page 136...
... l36 ISO8040c S I § o E I K H1 Z 10 UJ 201975 274 57.9 2000 2025 2050 2075 2100 YEAR FIGURE 2.l5 Energy consumption for l00 randomly drawn runs (billion metric tons of coal equivalent per year)
From page 137...
... l37 500.001 100.00 I I o iA I •J: 20.00CO Z O o o m cr 4.000.800.16 1975 2000 2025 2050 YEAR 209 31.1 2.3 2075 2100 FIGURE 2.l6 Nonfossil fuel consumption for l00 randomly drawn runs (billion metric tons of coal equivalent per year)
From page 138...
... usually requires a combination of variables that include low fossil fuel reserves, high productivity growth, high population growth, and small substitution possibilities out of carbon-based fuel. The share of GNP devoted to energy always rises sharply during the period immediately preceding transition to the backstop and thus conforms well to the notion that the conversion to a backstop technology will be expensive.
From page 139...
... Second in both lists is the rate of productivity growth, but the importance of this variable is intuitively clear and has been apparent for some time. Below these two, a second echelon grouping of four variables appears in both columns: ease of substitution between labor and energy, extraction costs of fossil fuels, technological change in the energy sector, and the airborne fraction.
From page 140...
... l40 KXXXX>0 s 1 s01 z iu o> O > » I - S CO O ,I" CM "I" O s O 8 0 S 0 Ainiavaodd 0O o co d o o 8 o 8 O S o 04 q O 5 8 00 S CM s 5 3 ^ w 2 I 1 s Ainiavaodd
From page 141...
... l4l 3 0) g 41 > ja 4J M C J3 H^WWW^^ T" • ^ o CD O rrp-i CM -rp-i O -i-p-1 ° e> -rp-, ° O ..i S O s e Ainiavaoud
From page 142...
... l42 9 d s d < ec 8 S rrjn e in z > E § ptHIMi i[i1 $ ? d o njn » d a d Ainiavaoud
From page 144...
... -^Calculated as the standard deviation of log (emissions) for l00 randomly selected runs.
From page 145...
... There are clearly a wide variety of approaches to discouraging fossil fuel combustion and CO2 emissions. Some might take the form of taxes on production or
From page 146...
... Notice there that while the pulse taxes accomplish very little, the permanent tax initiated in 2025 is the most effective among the first four alternatives. This paradox is explained as follows: burning more fossil fuel early and postponing CO2 reductions lowers the eventual C02 concentration because it allows the atmosphere to cleanse itself slowly.
From page 147...
... . The time tracks of a stringent tax and four alternative $l0 per ton of coal equivalent taxes; the temporary taxes peak at $20 to accommodate the model.
From page 148...
... . taxes, which would place 60% surcharges on the prices of fossil fuels, did not prevent doubling before 2l00 in our most likely case.*
From page 149...
... l49 0-1-2-3» -4i -5UJ z -6 2 K -7-8-9-10-3 Permanent Beginning in 2020 Temporary Beginning in 1980 Permanent Beginning in 1980 V Temporary Beg1nn1ng in 2020 Pulse 1980 Permanent 1980 Stringent Pulse 2025 Permanent 2025 1975 2000 2025 2050 2075 2100 YEAR FIGURE 2.20 Plot of carbon emission versus time for taxed runs. Deviation in emissions from the base run for various taxes.
From page 150...
... Nevertheless, the conclusions about the potency of policy are sobering. They suggest that a significant reduction in the concentration of C02 will require very stringent policies, such as hefty taxes on fossil fuels.
From page 151...
... . Dimensions of energy demand.
From page 152...
... . Determinants of Global Energy Supply to the Year 2050.
From page 153...
... those based on relatively detailed examination of global energy supply and demand in which CO2 emissions are largely incidental; (C) projections deriving from analysis of the energy system in which changing levels of CO2 are themselves taken into account.
From page 154...
... . The projections consist of little more than extrapolating rates of fossil fuel emissions growth from recent decades out a century and more into the future.
From page 155...
... Most prominent are assumptions about rates of population growth, economic growth, the ratio of energy demand to economic activity, and the mix of supply sources that will meet energy demand. Brief descriptions of the major projections in the three categories follow.
From page 156...
... , in which energy demand grows at an average of about 4% in coming decades and all of this high projected energy demand is covered by fossil fuels. It is worth noting that the highest projections of CO2 emissions have generally come from the simple extrapolative models and rarely from studies that incorporate explicit supply and demand models for energy.
From page 157...
... assembled projections of world energy consumption and emissions to the year 2025 for the HAS report, Energy and Climate. The projections are for ll geographic regions, which are sometimes large nations and sometimes groups of nations.
From page 158...
... 2.2.3.2.2 The IIASA Energy Models IIASA used a set of extremely detailed models to delineate two scenarios, a "high" and a "low" case culminating in 2030 with world energy consumption at 35 and 22 TW yr/yr, respectively. The models are oriented toward engineering and technical considerations for specific demand sectors and global consistency of supply among the seven regions TABLE 2.l9 Reserves of Fossil Fuels Used in Different Outcomes (l975-2l00)
From page 159...
... Both the high and low IIASA scenarios are hybrids, with expanded use of many supply sources, so that in 2030 ll TW yr/yr are coming from nonfossil fuel sources in the high case and 7 TW yr/yr in the low case. In the high case emissions are above l6 Gt of C in 2030, and in the low case they are nearing l0 Gt of C
From page 160...
... . Nordhaus's approach was fundamentally based on economic modeling and assumptions -- with interaction of forces of supply and demand leading to a path of prices and energy consumption over time.
From page 161...
... In the uncontrolled case, annual emissions are at l8 Gt of C in 2020 and steeply increasing, so they reach 40 Gt of C in 2040. Global energy demand is about 40 TW yr/yr in 2030.
From page 162...
... energy sources, the slope of the fitted curve of energy demand implies an annual growth of 2.3%. [This contrasts strongly with Rotty (l979b)
From page 163...
... On the basis of an assumed stable cyclical structure, Stewart projects world energy consumption to the year 2025. For the period l975-2000 a 40% growth is indicated; this breaks down into zero energy growth in the United States and a 60% growth for the world outside the United States.
From page 164...
... Thus, in these approaches, rather than begin from high- and low-energy scenarios, the approach is to work backward from a desired or specified terminal condition to defining energy demand and fuel mix patterns that satisfy it. 2.2.4.l Nordhaus Along with estimating the uncontrolled path described earlier, Nordhaus (l977, l979)
From page 165...
... The framework consists of four simple equations. These are a description of the carbon cycle and climatic effects of COo elevation, estimates of the costs of reducing or abating CO2 emissions, an equation that incorporates estimates of economic impacts of CO2 buildup, and an equation that represents intertemporal choice between consumption paths.
From page 166...
... reduction owing to the fact that decreased U.S. energy demand resulting from the CO2 tax lowers world energy prices, which in turn spurs energy consumption in other regions.
From page 167...
... Thus, Perry (l982) proposes anticipatory scenarios, which involve a gradual slowing of growth of fossil fuel use, followed by an eventual slow decline.
From page 168...
... If emissions are growing by 3% in the coming decade and we wish to meet a limit of 500 ppm, policies to discourage use of fossil fuels might need to become effective as early as l990. These action initiation times are for transitions away from fossil fuels judged by Perry to be of intermediate difficulty.
From page 169...
... To effect a significant reduction of CO2 emissions in an orderly and efficient way probably requires planning and policy measures decades in advance, for the infrastructure and capital stock associated with fossil fuels cannot quickly be scrapped and replaced without high economic cost. Also, it is probably necessary to consider policies with regard to climatic change on the basis of possible combined effects of CO2 and other greenhouse gases.
From page 170...
... CH4 is also a conversion product of CO, and its presence is thus correlated with burning of fossil fuels.
From page 171...
... With some exceptions, methods developed independent of CO2 studies in energy modeling, statistics, and econometrics should be adequate for the task of projecting future anthropogenic CO2 emissions, when brought together with knowledge from geology, engineering, and other relevant fields. 2.2.7.l.2 Nature of Modeling Exercises Modeling is a way of organizing thinking about a problem, one that should allow improved scrutiny of data, assumptions, and relationships.
From page 172...
... For example, we might have a good estimate of global energy production and, therefore, consumption but not of the distribution of global consumption. Second, there may be interdependence across regions that would be taken into account in aggregate models but not in disaggregated models.
From page 173...
... 2.2.7.2.l Energy Growth Figure 2.22 summarizes the energy consumption forecasts to the year 2030. Projections of CO2 emissions are basically products of projections of energy demand and fuel mix.
From page 174...
... or high GDP growth in Nordhaus (l977) , explain much of the resulting projection of world energy consumption.
From page 175...
... l75 c o CO CM -n UP O m CM ro en te • 81 ro CM ro CM CM iH ro rH rH I Ol kl S *
From page 176...
... Average Annual PopulaAverage Rate of Total Energy tion at Annual Growth, in Final End of Growth, ConsumpYear of Energy Period of Period GNP tion Projection Study Projection (millions)
From page 177...
... Estimates for shares of nonfossil fuel 40 to 50 years hence range from l0% (Rotty, l978) , to l3% (World Energy Conference)
From page 178...
... l78 563 24 542 60 18 513 60 16 486 60 19 464 60 18 49 4O0 Thousand Megawatts 202 12 184 175 41 331 13 318 203 30 13 212 167 35 259 10 141 27 214 125 12 Other 107 18 Japan 84 Western Europe 277 2BO 260 204 165 180 147 145 115 100 United States 9-70 8-73 1-74 475 1275 2-76 8-76 1-77 12-77 12-78 Date o< OECD Projection FIGURE 2.23 OECD: Past projections of year-end l985 nuclear generating capacity. (Source: CIA, l980.)
From page 179...
... l79 (0 4J S o ~3 CM 00 en u H ft r a •rl 4J k l I *
From page 180...
... Here the fossil shares are 96% and 53%, respectively. In conjunction with discussion of fuel shares, one other prominent feature of long-range energy studies should be mentioned: it is assumed or calculated that virtually all easily accessible oil and gas will be consumed.
From page 181...
... . Global energy consumption and production in 2000.
From page 182...
... . A long-term global energyeconomic model of carbon dioxide release from fossil fuel use.
From page 183...
... . Projected world energy consumption.
From page 184...
... . Growth in global energy demand and contribution of alternative supply systems.
From page 185...
... . World Energy Resources l985-2020, An Appraisal of World Coal Resources and Their Future Availability; World Energy Demand (Report to the Conservation Commission)


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