Addressing climate change impact on the energy system: a technoeconomic and environmental approach to decarbonisation

Emodi, Nnaemeka Vincent (2019) Addressing climate change impact on the energy system: a technoeconomic and environmental approach to decarbonisation. PhD thesis, James Cook University.

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Abstract

Background:

The provision of energy services is a vital component of the energy system. This is often considered emission-intensive and at same time, highly vulnerable to climate change conditions. This forms the fundamental objective of this thesis, poised to examine technoeconomic and environmental implications of policy intervention, targeted at cushioning impacts of climate change on the energy system.

Aims:

Four research queries are central to this work: (1) Review literature on impacts of CV&C on the energy system; (2) Estimate influence of seasonal climatic and socioeconomic factors on energy demand in Australia; (3) Model dynamic interactions between energy policies and climate variability and change (CV&C) impacts on the energy system in Australia and exploring the technoeconomic and environmental implications; and (4) Identify least-cost combination of electricity generation technologies and effective emissions reduction policies under climate change conditions in Australia.

Methods:

A systematic scoping review method was first applied to identify consistent pattern of CV&C impacts on the energy system, while spotting research gaps in studies that met the inclusion criteria. Databases consisting of Scopus and Web of Science were searched, and snowballing references in published studies was adopted. Data was collated and summarised to identify the characteristic features of the studies, consistent pattern of CV&C impacts, and locate research gaps to be filled by this study.

The second study applied an autoregressive distributed lag (ARDL) model to estimate temperature sensitive electricity demand in Australia. Estimates were used with projected temperatures from global climate models (GCMs) to simulate future electricity demand under climate change scenarios. The study further accounted for uncertainties in electricity demand forecasting under climate change conditions, in relation to energy efficiency improvement, renewable energy adoption and electricity price volatility. The estimates from the ARDL model and projections from GCMs were used for energy system simulation using the Long-range Energy Alternative and Planning (LEAP) system. It considered climate induced energy demand in the residential and commercial sector, alongside linking the non-climate sensitive sector with energy supply sector. This model was vital to justifying policy options under investigation.

Further, LEAP modelling analysis was extended by identifying effective emission reduction policies considering CV&C impacts. Here, the Open Source Energy Modelling System (OSeMOSYS) was used for optimisation analysis to identify least-cost combination of electricity generation technologies and GHG emission reduction policies. Whereas, in the third and final study, cost-benefit analysis and estimation of long run marginal cost of electricity were conducted, while decomposition analysis of GHGs were analysed in the third study alone. Data used in the ARDL model included socioeconomic data which includes gross state product, as well as population and electricity prices from 1990-2016. The LEAP and OSeMOSYS model as used, was dated to 2014 as the base year, while several technological (power plant characteristics, household technologies), economic (energy prices, economic growth, carbon price) and environmental (emission factors, emission reduction target) variables were used to develop Australia's energy model.

Results:

The literature search generated 5,062 articles in which 176 studies met the inclusion criteria for the final literature review. Australian studies were scarce compared to other developed countries. Also, just few articles made attempt to examine decarbonisation under climate change. The ARDL model estimates and GCMs simulation of future electricity demand under CV&C show that Australia had an upward sloping climate-response functions, resulting to an increase in electricity demand. However, the researcher identified an annual increase in projected electricity demand for states and territory in Australia, which calls for the need to scale up RET.

The LEAP model results showed substantial impacts on energy demand, as well as impacts on power sector efficiency. Under the BAU scenario, CV&C will result in an increase in energy demand by 72 PJ and 150 PJ in the residential and commercial sectors, respectively. Induced temperature enlarges the non-climate BAU demand, which will increase threefold before 2050. Under the non-climate BAU, there is an expansion of installed capacity to 81.8 GW generating 524.6 TWh. Due to CV&C impacts, power output declines by 59 TWh and 157 TWh in Representative Concentration Pathways (RCP) 4.5 and 8.5 climate scenarios. This leads to an increase in generation costs by 10% from the base year, but a decrease in sales revenue by 8% and 21% in RCP 4.5 and RCP 8.5, respectively. The LEAP-OSeMOSYS model suggests renewables and battery storage systems as least-cost option. However, the configuration varied across Australia. Carbon tax policy was observed to be effective in reducing Australia's emission and foster huge economic benefits when compared to the current emission reduction target policy in the country. Also, renewable energy technologies increase electricity sales and decrease fuel cost better than fossil fuel dominated scenarios.

Conclusions:

Data from this study reveals that seasonal electricity demand in Australia will be influenced by warmer temperatures. Also, the study identified the possibility of winter peaking which is somewhat higher than summer peak demand in some states located in the southern regions of Australia. However, winter peaking is projected to decline by mid-century across the RCPs, while summer peak load is projected to increase, thereby, causing power companies to expand their generation capacity which may become underutilised. Owing to increase in cooling requirements up to 2050, policy uncertainties analysis recommend renewables to match an increasing future electricity demand.

The energy model indicates that ignoring the influence of CV&C may result in severe economic implications which range from increased demand, higher fuel cost, loss in revenue from decreased power output, as well as increased environmental externalities. The study concludes that policy options to reduce energy demand and GHG emissions under climate change may be expensive on the short-run, though, may likely secure long-run benefits in cost savings and emission reductions. It is envisaged that this could provide power sector management with initiatives that could be used to overcome cost ineffectiveness of short-term cost. The modelling results makes a case for renewable energy in Australia as lower demand for energy and increased electricity generation from renewable energy source presents a win-win case for Australia.

Item ID: 60812
Item Type: Thesis (PhD)
Keywords: ARDL model, Australia, climate change impact, climate change, climate variability, electricity demand, emission reduction policy, energy policies, LEAP, optimisation, OSeMOSYS, scenario analysis, simulation
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Copyright Information: Copyright © 2019 Nnaemeka Vincent Emodi.
Additional Information:

Three publications arising from this thesis are stored in ResearchOnline@JCU, at the time of processing. Please see the Related URLs field. The publications are:

Chapter 3: Emodi, Nnaemeka Vincent, Chaiechi, Taha, and Beg, Rabiul Alam (2018) The impact of climate change on electricity demand in Australia. Energy and Environment, 29 (7). pp. 1263-1297.

Chapter 4: Emodi, Nnaemeka Vincent, Chaiechi, Taha, and Beg, A.B.M. Rabiul Alam (2019) A techno-economic and environmental assessment of long-term energy policies and climate variability impact on the energy system. Energy Policy, 128. pp. 329-346.

Chapter 5: Emodi, Nnaemeka Vincent, Chaiechi, Taha, and Beg, A.B.M. Rabiul Alam (2019) Are emission reduction policies effective under climate change conditions? A backcasting and exploratory scenario approach using the LEAP-OSeMOSYS Model. Applied Energy, 236. pp. 1183-1217.

Date Deposited: 04 Nov 2019 04:29
FoR Codes: 14 ECONOMICS > 1403 Econometrics > 140305 Time-Series Analysis @ 33%
14 ECONOMICS > 1402 Applied Economics > 140205 Environment and Resource Economics @ 34%
05 ENVIRONMENTAL SCIENCES > 0502 Environmental Science and Management > 050209 Natural Resource Management @ 33%
SEO Codes: 85 ENERGY > 8598 Environmentally Sustainable Energy Activities > 859803 Management of Greenhouse Gas Emissions from Energy Activities (excl. Electricity Generation) @ 100%
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