Impact of the Climate Change Programme on Industrial Carbon Dioxide Emissions

Abstract:

<p>This document is the final report for the project titled 'Impact of the Climate Change Programme on Industrial Carbon Dioxide Emissions'.</p> <p>The UK has a legally binding target under the Kyoto Protocol to reduce its greenhouse gas emissions to 12.5% below 1990 levels by 2008-2012. The UK government has also set a domestic goal of a 20% reduction in carbon dioxide (CO₂) emissions below 1990 levels by 2010. A key requirement of the Kyoto Protocol is that countries show demonstrable progress in meeting their commitments. The work presented in this report contributes to meeting this requirement by providing estimates of the likely impact of selected policies and measures aimed at reducing the direct and indirect emission of CO₂ resulting from industrial energy consumption. The report also extends the availability of industrial sectors for which technologically disaggregated carbon abatement cost curves exist. Entec UK Ltd and Cambridge Econometrics have worked together to undertake this study.</p> <p>In order to estimate the likely impact of the policies and measures to be analysed, a combination of 'bottom-up' and 'top-down' modelling was employed. ENUSIM (Industrial Energy End-Use Simulation Model), a technology-based, 'bottom up' industrial energy end-use simulation model, was used to partially evaluate the effect of the Climate Change Levy (CCL) on selected industrial sectors. ENUSIM is designed to model the uptake or retrofit of energy saving and/or fuel switching technologies in selected industrial sectors, taking into account both economic factors and assumptions about investment in new technology. The industry-specific abatement cost curves contained in ENUSIM do not, however, include combined heat and power (CHP) stations. The estimated impact of the selected policies and measures on CHP, and the resulting emissions savings, thus had to be estimated using the MDM-E3 (Multi-sectoral Dynamic Model Energy-Environment-Economy) model, which is a 'top-down' model of the UK economy, with fully integrated energy-environment sub-models. Likewise, the impact of the Climate Change Agreements (CCAs) on carbon emissions was calculated 'off-model' using ENUSIM data. Every effort was made to ensure consistency between the different modelling approaches, but care should still be exercised when aggregating the estimates from the different policy measures.</p> <p>The overall effect of the policies and measures modelled to date is anticipated to be about a 4.5 MtC reduction in 2010 from a baseline (with none of these policies in place). CHP contributes approximately 1.7 MtC to this figure. To put these estimates in context, the estimated impact of a similar set of policies and measures targeted at reducing carbon emissions from business, as presented in the Climate Change Programme (CCP) and Third National Communication (3NC), were 7.0 MtC and 5.8 MtC, respectively. </p> This report is divided into the following sections: <ol> <li>Introduction</li> <li>Modelling Techniques</li> <li>Policy Impacts</li> <li>Cost Curves and Structural Change in the Economy</li> <li>Conclusions and Discussion</li> <li>Glossary of Terms and Abbreviations</li> </ol>

Author(s):

Hedges, N., Luscombe, D., Lewney, R., McCalman, S.,and Junankar, S.