sectoral economic costs and benefits of ghg mitigation - IPCC

Ron Knapp
"Because of the high carbon content of coal, total domestic coal consumption is significantly
reduced in the carbon reduction cases, by between 18 and 77 percent relative to the reference
case in 2010. Most of the reductions are for electricity generation, where coal is replaced by
natural gas, renewable fuels, and nuclear power; however, demand for industrial steam coal and
metallurgical coal is also reduced because of a shift to natural gas in industrial boilers and a
reduction in industrial output.”
Coal provides the largest fuel share, nearly 31%, of US domestic energy production. Electric
utilities and independent power producers generate more that 55% of all electricity via coal-fired
technology and account for approximately 89% of domestic coal consumption. (p.110)
European Energy Outlook to 2020
The European Commission Directorate-General for Energy [now Directorate-General for Energy
and Transport] has released a special report entitled 'European Energy Outlook to 2020'
(Brussels, November 1999). This report brings together projections for the EU Energy Outlook
and the emissions that would be related to the use for energy – and the implications of certain
greenhouse gas (GHG) emission targets on these energy projections.
The analysis starts from a baseline scenario that reflects current policies and trends without
including specific efforts to reduce CO 2 emissions. Starting from this baseline, the model was
then run in order to compute the least-cost solution corresponding to the level of CO 2 emissions
in 2010 or 2020 for each scenario.
Under the baseline projections, solid fuels (coal, etc) production is shown to continue a
downward trend over the period, almost halving by 2020 from the level in 1995 (1995: 137 Mtoe
down to 70 Mtoe in 2020). This is different to the outcome predicted for the primary energy
demand for solid fuels, which is projected to decline from 238 Mtoe in 1995 down to 207 Mtoe
in 2000 and 182 Mtoe in 2010 – but then rising again to 218 Mtoe by 2020. The share of primary
energy demand contributed by solid fuels falls from 17.4 % in 1995 to 11.7 % in 2001 before
rising to a new level of 13.5 % by 2020.
In applying the three GHG reduction scenarios, there is a very significant decline in the
consumption of solid fuels from both the 2010 baseline and the 2020 baseline. The solid fuels
consumption decline from baseline in 2010 ranges from a reduction of 23.3 % for holding GHG
emissions at the 1990 level up to a 40.4 % reduction for GHG emissions reduced by 6 % on the
1990 levels. For the 2020 projection, the decline in consumption of solid fuels over the 2020
baseline would be 53.5 % for a GHG emissions scenario of zero reduction on 1990 levels up to a
reduction of 67.1 % for the GHG emissions reduction scenario of 6 % on 1990 levels.
The report notes that solid fuels face a negative effect from both the reduction and overall energy
consumption and also because their use is replaced by less carbon intensive fuels.
It is important to bear in mind that the EU scenario modelling results (as with all economic
models) depend critically on the model's assumptions and capacity to reflect with any accuracy
the market response to specific GHG emission restrictions or 'shocks'. No consideration is given
in the study to a three (or six) gas situation (i.e. it is a CO 2 only analysis) nor is there any
inclusion of the potential moderating influence (benefits) from Kyoto Mechanisms – both these
factors would reduce the impact on solid fuels.
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