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Japan’s marginal abatement cost 

curve analysis and mitigation 
measures

Go Hibino
Mizuho Information & Research Inst.
Japan's 2nd National Workshop on
Economics of Climate Change and Low Carbon Growth
Strategies in Northeast Asia
4 November 2010
Yamato Minami Room, Hilton Hotel
Tokyo, Japan
Content

1. Japan’s GHG emission target

2. Modeling analysis of long‐term (2050) emission target 

3. Modeling analysis of mid‐term (2020‐2030) emission 
target 

4. Relationship between abatement cost and reduction

5. Conclusion
2
2010.3 Cabinet approval → Submission to the Diet

2010.6 Scrapped by dissolution of the House of Representatives

2010.10 Resubmission to the Diet

4
1400

1200
GHG emissions (MtCO2eq)

15% (vs 90's)

20% (vs 90's)


1000
25% (vs 90's)

800

600

400
80% (vs 90's)
1st oil crisis
200 Japan's
2nd oil crisis Lehman's fall
high economic
growth period Bubble boom
0
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

CO2 emission from fuel combustion (source: USDOE)

CO2 emission from fuel combustion (source: IEA)

CO2 emission from fuel combustion (source: MOEJ)

GHG emission (source: MOEJ)


5
Emission pathway in the case that improvement 
energy intensity and carbon intensity remain at 
approximately at the present level
1600
GHG emission (MtCO2eq)

1400
GHG(MOEJ)
1200
▲15%
1000 CO2(MOEJ) ▲20%
800 ▲25%
CO2(IEA)
600

400

200
▲80%

0
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

year-on-year
percentage changes
'73-'90 '90-'08 '08-'20 '08-'50
GDP +3.9% +1.0% +1.6% +0.4~+1.0%
Energy intensity ▴2.2% ▴0.5% ▴2.0~▴2.3% ▴1.4~▴1.7%
Carbon intensity ▴0.7% ▴0.1% ▴1.4~▴2.3% ▴2.7%~▴3.0%
CO2 +0.8% +0.4% ▴1.9~▴3.0% ▴3.7%
CO2=GDP × Energy intensity (ENERGY/GDP)×Carbon intensity (CO2/ENERGY)

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CO2=GDP × Energy intensity (ENERGY/GDP)×Carbon intensity (CO2/ENERGY)


 Japan’s manufacturing
Japan’s manufacturing 
 Achieving
Achieving balance
balance between
between
contributes
contributes creating
creating comfortable
comfortable daily
daily life
life and
and
global
global LCS
LCS energy
energy reduction
reduction
・・・insulated building, compact ・・・solar, wind, geothermal,
city, industrial structure, … hydro, biomass…

 Energy efficient
Energy efficient technology
technology 
 Nuclear
Nuclear increase
increase based
based on
on
have
have considerable
considerable currency
currency the basic premise of safety
the basic premise of safety
operation
operation
・・・next generation vehicles, heat
pump technology, efficient 
 RDD&D
RDD&D ofof innovational
innovational
lighting, … technology
technology
・・・photovoltaic, CCS, efficient
coal / gas power generation, ..

7
2010.3 2010.11

Manufacturing Manufacturing
WG WG

Automobiles WG Automobiles WG
Simulation model

Simulation model
Stakeholders
interview
Residences
Residences
and Buildings

Simulation model
and Buildings

General publication

General publication
WG
WG
Area
Local development
development WG
WG

Energy supply
Energy supply WG
WG
Public
comments
Macro-frame
WG

Communication
& Marketing
WG

8
400

350
Transportation
300
Transportation
250 Residential &
Commercial
200 Transportation Residential &
Commercial
150 Residential &
Long-range
Long-range freight
freight in
in
Commercial
transportation
transportation
100 Industrial
Industrial Industrial Transportation
50
Industrial
0
2005 2050 2005 2050
Demand
Demand of
of high
high
Final energy consumption CO2 emission temperature
temperature heat
heat in
in
manufacturing
manufacturing
(Million toe) (Million tC)

Source : Snapshot model of LCS2050 project (NIES)

40% Zero
Zero emission
emission from
from residential,
residential, commercial,
commercial, power
power
40% reduction
reduction of
of end-use
end-use
generation, passenger vehicle and close-range
generation, passenger vehicle and close-range
energy
energy consumption
consumption freight
freight vehicle
vehicle
10
: The penetration rate of low carbon device and the energy efficiency will remain at
the same level.
: The trend of efficiency improvement of recent years will continue.

: 15% reduction in 2020 compared to 1990’s emission by domestic countermeasure


: 20% reduction in 2020 compared to 1990’s emission by domestic countermeasure
: 25% reduction in 2020 compared to 1990’s emission by domestic countermeasure

:same as the 2020.

:The countermeasure for achieving the 2020’s reduction target will continue from
2021 to 2030.

12
1,500
GHG emissions (MtCO2eq)

1,344 1,355 1,379 1,363


1,261 1,282 1,254 1,072 1,014 944 1,202 879 798 718 Reduction vs 1990
▲ 15% ▲ 20% Non energy
▲ 25% ▲ 30% ▲ 37%
1,000 ▲ 43%
Energy
Transformation
Transportation
500 Commercial
Residential
0 Industrial

meausre (L)
1990

2000

2005

2008

15%

20%

25%

meausre (M)
Technology

Technology

meausre (H)
Reference

Reference

Counter-

Counter-
Counter-
Base year's
Frozen

Frozen
emission

Toward 80%
reduction in 2050

0
Non energy
200
Energy Transf ormation
GHG reduction

400 306
(MtCO2eq)

364 Transportation
435 483
600 Commercial
565
645 Residential
800
▲15%

▲20%

▲25%

meausre (M)
meausre (L)

meausre (H)
Industrial
Counter-

Counter-
Counter-

13
) 482 467 459
2 500 444 437 395 390 377 437 431 358 349 331
O
C
t 400
M Others
( 300
n Machinery
o
i Steel Ceramics
s 200 Non ferrous
s
i Paper
m 100 Chemicals
e Food
2
O 0
C 0 0 5 y e y e ) ) )
9 0 0 % % % L H
9 0 0Agriculture g
o n
c
n 5
1
0
2
5
2
g
o n
c
n r- ( -r (M -r (
1 2 2 l
o e e
r
l
o e e
r te e
r e
t e
r te e
r
n z e n z e n s n s n s
h o
r f h o
r f u u u u u u
c F e c F e o a o a o a
e R e R C e C e C e
T T m m m Low carbon
manufacturing

15% 20% 25%


) 0
2
O
C
t
M
(
n
o
it
c
u 20
d
e
r
2 24 24
O
C 29

40

14
) 200 174 185 165 120 107 89 176 156 78 59 43
2 158
O 150 127
C
t
(M 100 Appliance Cooking
n Lighting
o
i 50 Hot water
s Cool
s Warm
i 0
m 0 0 5 y e y e ) ) )
e 9 0 0 g c % % % g c -r L
( -r M -r (H
9 0 0 o n n 5 0 5 o n n (
2 1 2 2 l e e 1 2 2 l e e e
t e e e e
t e
o z r o z r r t r r
O n o e
f n o e
f
n
u
s
u
n
u s n
u s
C h r e h r e o a u o u Toward zero
c F R c F R e o a a
e e C C e C e
T T m m m emission
house 100%

15% 20% 25%


)
2 0
O
tC
M
( 20
n
o
it
c 40
u 39
d
e
r 48
2 60
O
C 61

80

15
) 300 262 218 166 146 124 248 200 111 81 57
2 236
O 250 206
C
t 200 164 Appliance
M
( 150
Cooking
n 100 Lighting
o
i
s 50 Hot water Warm Cool
s
i 0
m 0 0 5 y e % % % y e ) ) )
e 9
9
0
0
0
0 g c 5 0 5 g c -r L
( r- M
( -r H
(
2 o
l n n 1 2 2 o
l n n e
1 2 2
o e e
r o e e
r t e
r e
t e te e
r
O n z
o e n z
o e n s n r
s n s
C h r f h r f u u u u u uToward zero
c F e c F e o a o a o a
e R e R C e C e C e
T T m m m emission
building 100%

15% 20% 25%


)
2 0
O
C
t
M 20
(
n
o
it 40
c
u
d
e
r 60
2 66
O
C 80
81
100 94

16
) 265
2 300 254
O250 Air 233 191 177 170 163 227 167 137 126 116
C 217
t
( 200
M Ship
n 150 Rail
io 100 Freight vehicle
s
is 50
m Passenger vehicle
e 0
2 ) ) )
O 0 0 5 y e % % % y e
C 9 0 0 g c 5 0 5 g c -r L
( -r M
( -r H
(
9 0 0 o
l n n 1 2 2 o
l n n e e e e e
1 2 2 o e e
r o e e
r t r t e
r t r
n z e n z e n s n s n s
h o
r f h o
r f u u u u u u
c F e c F e o a o a o a Toward next
e R e R C e C e C e
T T m m m generation
vehicle100%

15% 20% 25%


) 0
2
O
tC 10
(M 20
n
o 30
ti
c
u 40
d
e
r 50
2
O 60 54
C 60
70 66
80

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1.4 1.3  1.2  Other
1.2 
1.2 1.1  renewables
1.0  1.0  1.0  1.0  1.0 
0.9  1.0  1.0  PV
1012 kWh

1.0
0.8 Geothermal
0.6 Pumped
0.4
Hydro
0.2
発電電力量(億kWh)

0.0 Nuclear
0 5 y e y e ) ) )
0 0 g c % % % g c -r L
0 0 lo n n 5 0 5 lo n n ( -r M
( -r (H Oil
2 2 o e
z e
r 1 2 2 o e
z e
r te e
rs e
t re
e
t e
rs
n o e n o e n n s n
h r f h r f u u u u u u LNG
c F e c F e o a o a o a
e R e R C e C e C e
T T m m m Coal

100% 5% 6% 7% Other
8% 7% 6% 7% 6% 6% 10% 11% 13%
8% 8% 9% renewables
80% 8% 10% 11%
31% 7% 8%
PV
34% 38% 41% 40% 44% 8%
60% 45% 46% 47%
Pumped
51% 53%
40% 24% 56% Pumped
26% 22% 23% 28%
発電構成

20% 27%
19% Hydro
20% 17%
26% 23% 20%
18% 16% 14% 11% 17% 15%
0% Nuclear
0 5 y e y e ) ) )
0 0 g c % % % g c -r L
( -r M -r H Oil
0 0 o
l n n 5 0 5 o
l n n ( (
e e 1 2 2 e e e e e e
2 2 o
n z r
e
o
n z r
e
t
n rs t
n
e
rs t
n re
s
h o
r f h o
r f u u u u u LNG
c F e c F e o a o u o a
e R e R C e a C e
T T C e Coal
m m m

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GHG abatement cost 
= (Fixed cost  + Reduction of annual energy cost * Payback period) 
/ annual GHG reduction  
Abatement cost
Technology A

Technology B

Technology C

Technology G
Technology D
Technology E

Technology F
GHG Reduction

20
Discount rate Payback period
Life-
Sector
time
Subjective Social Subjective Social

energy-
intensive 30 10% 5% 9 yrs. 15 yrs.
Industrial industries

Others 20 33% 5% 3 yrs. 12 yrs.

Appliance 10 33% 5% 3 yrs. 8 yrs.


Residential &
Commercial
Building 30~40 33% 5% 3 yrs. 15~17 yrs.

Transportation Vehicle 10 15% 5% 5 yrs. 8 yrs.

Renewables 20 10% 5% 9 yrs. 12 yrs.

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Abatement cost (JPYT/tCO2)

100,000 [TRN] Next generation vehicle (Passenger)


[COM] Efficient lighting
[TRN] Fuel mileage improvement
[TRN] Next generation vehicle (freight)
80,000 [IND] Alternative energy Industrial sector
[COM] Efficient air conditioner Residential sector
[ELE] Biomass / Waste power generation
[RES] Efficient lighting Commercial sector
[COM] BEMS
Transportation sector
60,000 [IND] Motor efficiency improvement
[IND] Energy saving / recovery device Electricity generation sector
[COM] Efficient water heater
[IND] Efficient boiler
[RES] HEMS
40,000
[ELE] Small hydro
[IND] Efficient construction device
[COM] Efficient electric device
[IND] Innovation technology
20,000

Reduction (ktCO2)

[RES] Insulated house


[RES] Efficient air conditioner
[RES] Efficient water heater
[COM] Photovoltaic
[RES] Photovoltaic
-20,000 [IND] Efficient power generation
[IND] Industrial furnace
[IND] Heat pump
[ELE] Shift to natural gas
[RES] Efficient home appliance
[IND] Shift to natural gas
-40,000 [COM] Insulated building
[ELE] Wind
[ELE] Geothermal
0 40,000 80,000 120,000 160,000 200,000 240,000 280,000 320,000 360,000

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100,000
Subjective discount rate
Abatement cost (JPYT/tCO2)

80,000

60,000

40,000

20,000

Reduction (ktCO2)
0 40,000 80,000 120,000 160,000 200,000 240,000 280,000 320,000 360,000

-20,000
Social discount rate
-40,000
100,000
Top -runner Approach
Top-runner Approach for
for improving
improving
Abatement cost (JPYT/tCO2)

energy efficiency in energy -using


energy efficiency in energy-using
product
product
80,000

Institution
Institution for
for reducing
reducing of
of payback
payback
period and initial investment
period and initial investment
60,000

40,000 Visualization
Visualization

20,000 Industrial sector


Residential sector
Commercial sector
Transportation sector
- 20,000
Electricity generation sector
Carbon
Carbon pricing
pricing
- 40,000

0 40,000 80,000 120,000 160,000 200,000 240,000 280,000 320,000


Reduction (ktCO2)

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1. Figure of relation between reduction cost and GHG reduction is
very useful on the study of countermeasure for reduction of GHG
emission.

2. Countermeasure is different among technologies whose


reduction cost is relatively cheap or high.

3. The cheaper device should be introduced by regulatory measure,


information measure and economic measures.

4. The higher devices should be introduced by R&D measure. They


are expected to decrease the fixed cost according to the increase of
cumulative production.

5. The payback period influence GHG reduction. The


countermeasure for expanding the payback period is very important.

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