• Energy Research

Given uncertainty in long-term carbon reduction goals, how much non-carbon generation should be developed in the near-term? This research investigates the optimal balance between the risk of overinvesting in non-carbon sources that are ultimately not needed and the risk of underinvesting in non-carbon sources and subsequently needing to reduce carbon emissions dramatically. We employ a novel framework that incorporates a computable general equilibrium (CGE) model of the U.S. into a two-stage stochastic approximate dynamic program (ADP) focused on decisions in the electric power sector. We solve the model using an ADP algorithm that is computationally tractable while exploring the decisions and sampling the uncertain carbon limits from continuous distributions. The results of the model demonstrate that an optimal hedge is in the direction of more non-carbon investment in the near-term, in the range of 20-30% of new generation. We also demonstrate that the optimal share of non-carbon generation is increasing in the variance of the uncertainty about the long-term carbon targets, and that with greater uncertainty in the future policy regime, a balanced portfolio of non-carbon, natural gas, and coal generation is desirable.

Abstract We explore short- and long-term implications of several energy scenarios of China's role in efforts to mitigate global climate risk. The focus is on the impacts on China's energy system and GDP growth, and on global climate indicators such as greenhouse gas concentrations, radiative forcing, and global temperature change. We employ the MIT Integrated Global System Model (IGSM) framework and its economic component, the MIT Emissions Prediction and Policy Analysis (EPPA) model. We demonstrate that China's commitments for 2020, made during the UN climate meetings in Copenhagen and Cancun, are reachable at very modest cost. Alternative actions by China in the next 10 years do not yield any substantial changes in GHG concentrations or temperature due to inertia in the climate system. Consideration of the longer-term climate implications of the Copenhagen-type of commitments requires an assumption about policies after 2020, and the effects differ drastically depending on the case. Meeting a 2 °C target is problematic unless radical GHG emission reductions are assumed in the short-term. Participation or non-participation of China in global climate architecture can lead by 2100 to a 200–280 ppm difference in atmospheric GHG concentration, which can result in a 1.1 °C to 1.3 °C change by the end of the century. We conclude that it is essential to engage China in GHG emissions mitigation policies, and alternative actions lead to substantial differences in climate, energy, and economic outcomes. Potential channels for engaging China can be air pollution control and involvement in sectoral trading with established emissions trading systems in developed countries.

AbstractThe field of MultiSector Dynamics (MSD) explores the dynamics and co‐evolutionary pathways of human and Earth systems with a focus on critical goods, services, and amenities delivered to people through interdependent sectors. This commentary lays out core definitions and concepts, identifies MSD science questions in the context of the current state of knowledge, and describes ongoing activities to expand capacities for open science, leverage revolutions in data and computing, and grow and diversify the MSD workforce. Central to our vision is the ambition of advancing the next generation of complex adaptive human‐Earth systems science to better address interconnected risks, increase resilience, and improve sustainability. This will require convergent research and the integration of ideas and methods from multiple disciplines. Understanding the tradeoffs, synergies, and complexities that exist in coupled human‐Earth systems is particularly important in the context of energy transitions and increased future shocks.

Marginal abatement cost (MAC) curves, relationships between tonnes of emissions abated and the CO2 (or greenhouse gas (GHG)) price, have been widely used as pedagogic devices to illustrate simple economic concepts such as the benefits of emissions trading. They have also been used to produce reduced-form models to examine situations where solving the more complex model underlying the MAC is difficult. Some important issues arise in such applications: (1) Are MAC relationships independent of what happens in other regions?, (2) are MACs stable through time regardless of what policies have been implemented in the past?, and (3) can one approximate welfare costs from MACs? This paper explores the basic characteristics of MAC and marginal welfare cost (MWC) curves, deriving them using the MIT Emissions Prediction and Policy Analysis model. We find that, depending on the method used to construct them, MACs are affected by policies abroad. They are also dependent on policies in place in the past and depend on whether they are CO2-only or include all GHGs. Further, we find that MACs are, in general, not closely related to MWCs and therefore should not be used to derive estimates of welfare change. We also show that, as commonly constructed, MACs may be unreliable in replicating results of the parent model when used to simulate GHG policies. This is especially true if the policy simulations differ from the conditions under which the MACs were simulated.

Abstract Multi-region multi-sector energy-economic models are often used to analyze long-term scenarios of energy development, however, these models usually rely on a simplified representation of technological details in power generation. To strengthen this representation, we develop a method for modeling the economic competition between different advanced technologies in multi-region multi-sector dynamic energy-economic models based on a markup approach, which represents the measure of the cost of a technology relative to the price received for electricity generation. The markup includes capital costs, fixed and variable operating and maintenance (O&M) costs, fuel costs, and transmission and distribution (T&D) costs. For intermittent technologies, it also includes a backup requirement to make these technologies effectively dispatchable. For carbon capture and storage (CCS) technologies, it also includes the costs of CO2 capture, transportation and storage. We provide a standardized markup calculation for generation technologies for different regions of the world, including USA, China, India, EU, Japan and others. Then we analyze the sensitivity of the calculation to critical inputs, including capital costs, fuel costs, carbon prices and capacity factors. We provide a detailed calculation of the relative costs of the following technologies: new pulverized coal, new pulverized coal with CCS, natural gas combined cycle, natural gas with CCS, biomass-fueled plant, biomass with CCS, advanced nuclear, wind (for small and medium penetration levels), solar, wind with backup (for large penetration levels), co-firing of coal and biomass combined with CCS, and advanced CCS on natural gas. For illustration, we incorporate the markups into the MIT Economic Projection and Policy Analysis (EPPA) model, a global multi-sector multi-sector dynamic energy-economic model with a detailed representation of power generation technologies, and run several scenarios. Our analysis and results provide insight on the deployment of different low-carbon power generation technologies depending on assumptions about carbon policy stringency.

AbstractFuture configurations of the power system in the central region of the USA are dependent on relative costs of alternative power generation technologies, energy and environmental policies, and multiple climate-induced stresses. Higher demand in the summer months combined with compounding supply shocks in several power generation technologies can potentially cause a “perfect storm” leading to failure of the power system. Potential future climate stress must be incorporated in investment decisions and energy system planning and operation. We assess how projected future climate impacts on the power system would affect alternative pathways for the electricity sector considering a broad range of generation technologies and changes in demand. We calculate a “potential supply gap” metric for each pathway, system component, and sub-region of the US Heartland due to climate-induced effects on electricity demand and power generation. Potential supply gaps range from 5% in the North Central region under mild changes in climate to 21% in the Lakes-Mid Atlantic region under more severe climate change. We find increases in electricity demand to be more important in determining the size of the potential supply gap than stresses on power generation, while larger shares of renewables in the power system contribute to lower supply gaps. Our results provide a first step toward considering systemic climate impacts that may require changes in managing the grid or on potential additional capacity/reserves that may be needed.

This report outlines a vision for MultiSector Dynamics (MSD) as an emerging transdisciplinary field that seeks to advance our understanding of how human-Earth systems interactions shape the resources, goods, and services on which society depends. The core objective of this MSD Vision Report is to clarify core definitions, share research questions, highlight scientific opportunities, and provide steps for improving the MSD community���s capacity to support needed scientific progress. The report has several technical audiences in mind. These include current MSD researchers, scientists working in complementary fields who wish to learn more about opportunities for engagement, and research program managers at the US Department of Energy (DOE). Additionally, the research-to-operations (R2O2R) and community building elements of the report hold value for a broad array of US federal agencies as well as other governments and international organizations. As a transdisciplinary endeavor, the vision presented here should have elements that directly interest sectoral analysts engaged in energy, water, agriculture, transportation, health, etc. We hope these audiences will find the report a helpful reference and a source of opportunities for shaping the future of MSD science. The report incorporates ideas and insights from the members of the recently established MSD Community of Practice (CoP). MSD finds its roots in a number of research fields and communities, including integrated assessment; impacts, adaptation, and vulnerability; Earth system science; and complex adaptive systems. However, the MSD CoP draws its conceptual basis from a 2016 workshop sponsored and led by the DOE, "Understanding Dynamics and Resilience in Complex Interdependent Systems: Prospects for a Multi-Model Framework and Community of Practice," organized with other federal agencies and hosted by the US Global Change Research Program. The rationale for the CoP is that research on understanding risks and opportunities arising from tightly connected human and natural systems is fragmented across several fields, requiring improved collaboration and synthesis to accelerate needed scientific advances. A CoP Facilitation Team and a Scientific Steering Group (SSG) were launched in 2019 to advance the needed collaborations and scientific synthesis. Since that time, an initial core group of projects supported by DOE���s MSD research program has provided input to the development of the CoP through activities including a community questionnaire to identify current tools and research interests, regular meetings of technical working groups (WGs), MSD community briefings, research workshops, and the MSD CoP website. The members of the MSD SSG and Facilitation Team are responsible for drafting this report, based on the above community inputs as well as a formal review of recent research within related fields such as Earth system science, integrated assessment modeling, economics, decision science, socio-ecological systems, socio-environmental systems, complexity science, systems engineering, energy transitions, urban systems, and coastal dynamics. Members of the major projects in the DOE MSD research program provided extensive comments on a first draft of the report (see Chapter 2.2 for descriptions and links to projects' websites for additional information). Robert Vallario, program manager for the DOE Earth and Environmental Systems Modeling MSD research program area, has provided insights, perspectives, and comments that have been critically important throughout the process. The SSG and the Facilitation Team thank these individuals for their many contributions and ongoing support. In addition, the Facilitation Team thanks the DOE Office of Science, Earth and Environmental System Modeling program for financial support of its activities through the Integrated Multisector Multiscale Modeling (IM3) project. In the supplemental material folder you will find: All figures and images used in the report. Figures created by the report's authors also include editable vector file formats (.ai) and may be reused with attribution. Figures and images reused from other sources should be reused with original source permission and/or citation. Sample powerpoint presentation of main concepts from the report A copy of the report with tracked changes, resulting from an internal review and comment process with the major projects in the DOE MSD research program.

Abstract Carbon dioxide removal (CDR) is crucial to achieve the Paris Agreement’s 1.5 °C–2 °C goals. However, climate mitigation scenarios have primarily focused on bioenergy with carbon capture and storage (BECCS), afforestation/reforestation, and recently direct air carbon capture and storage (DACCS). This narrow focus exposes future climate change mitigation strategies to technological, institutional, and ecological pressures by overlooking the variety of existing CDR options, each with distinct characteristics—including, but not limited to, mitigation potential, cost, co-benefits, and adverse side-effects. This study expands the scope by evaluating CDR portfolios, consisting of any single CDR approach—BECCS, afforestation/reforestation, DACCS, biochar, and enhanced weathering—or a combination of them. We analyse the value of deploying these CDR portfolios to meet 1.5 °C goals, as well as their global and regional implications for land, energy, and policy costs. We find that diversifying CDR approaches is the most cost-effective net-zero strategy. Without the overreliance on any single approach, land and energy impacts are reduced and redistributed. A diversified CDR portfolio thus exhibits lower negative side-effects, but still poses challenges related to environmental impacts, logistics or accountability. We also investigate a CDR portfolio designed to support more scalable and sustainable climate mitigation strategies, and identify trade-offs between reduced economic benefits and lower environmental impacts. Rather than a one-size-fits-all scaling down, the CDR portfolio undergoes strategic realignment, with regional customization based on techno-economic factors and bio-geophysical characteristics. Moreover, we highlight the importance of nature-based removals, especially in Brazil, Latin America, and Africa, where potentials for avoided deforestation are the greatest, emphasizing their substantial benefits, not only for carbon sequestration, but also for preserving planetary well-being and human health. Finally, this study reveals that incentivizing timely and large-scale CDR deployment by policy and financial incentives could reduce the risk of deterring climate change mitigation, notably by minimizing carbon prices.