Addressing the climate change challenge in APEC

1. Addressing the climate change challenge in APEC Melanie Ford & Don Gunasekera Australian Bureau of Agricultural and Resource Economics

2. Framework for analysis -GTEM • Global Trade and Environment Model • multiregion (bilateral trade flows) • multisector • dynamic • computable • general equilibrium • model of the world economy

3. GTEM • Core economic systems • Population module • Emissions module

4. Regions in GTEM87, aggregated for particular application 1 Argentina 10 Korea, Republic of 2 Australia 11 Mexico 3 Brazil 12 Russian Federation 4 Canada 13 South Africa 5 China 14 United States 6 European Union (25) 15 Rest of SE Asia 7 India 16 Rest of CIS 8 Indonesia 17 Chinese Taipei 9 Japan 18 Rest of the world

5. Sectors/commodities in GTEM 67, aggregated for particular application 1 Brown coal 13 Food processing 2 Coking coal 14 Other manufacturing 3 Thermal coal 15 Electricity 4 Oil 16 Water transport 5 Gas 17 Air transport 6 Other minerals 18 Other transport 7 Iron & steel 19 Other services 8 Nonferrous metals 20 Agriculture 9 Nonmetallic minerals prod. 21 Forestry & fisheries 10 Chemicals, rubber & plastic 11 Wood, pulp & paper 12 Petroleum & coal products

6. General equilibrium Optimising behaviour Commodity markets clear; globally Factor markets clear; regionally Financial markets clear; globally

7. Numerical implementation flexible model closures enhanced GTAP database 2001 base year – historical numbers to 2005 GEMPACK implementation

8. Greenhouse module carbon dioxide nitrous oxide methane HGWPs energy & non-energy emissions

9. Interpretation of GTEM results

10. Key results • Macro: Carbon price/Emissions outcome, GNP, GDP, exchange rate, real wage • Sectoral: Output, employment, exports, imports • Other: Policy interaction effects, sources of welfare gains/losses

11. Overview • 1. Assess the role of cleaner technologies in mitigating emissions and addressing other economic, energy security and social development goals in APEC • no land use change emissions • 2. Potential role of emissions mitigation in forestry

12. APEC economies • APEC economies currently account for: • 61 per cent of global economic output • 60 per cent of global energy consumption • 58 per cent of global GHG emissions • 41 per cent of global population • APEC actions are driving regional and global economic, social and environmental outcomes.

13. Technology – addressing the climate change challenge in APEC • Aim of analysis – What is the role of advanced, cleaner technologies in APEC on: • energy consumption & fuel mix • electricity generation & fuel mix • greenhouse gas emissions

14. Scenario assumptions • developed plausible APEC and global technology pathways to 2050 in a world committed to reducing emissions • enhanced development and uptake: • more energy efficient currently available & future technologies • advanced lower emissions technologies • APEC, global and economy-wide uptake from ~ 2010

15. Key technologies • pathway differs by region and sector

16. Full range of measures needed • address barriers to uptake & development of currently available and plausible future advanced technologies • carbon pricing • RD&D funding • regulatory arrangements • technology partnerships • international collaboration • IP regimes • information • education and training campaigns • adaptation strategies • better understanding of costs and benefits

17. APEC energy consumption, reference case

18. APEC emissions, reference case total APEC low income APEC high income APEC Gt CO2-e

19. APEC energy consumption

20. APEC electricity fuel mix

21. APEC emissions reference case -49 per cent enhanced technology Gt CO2-e short term: currently available techs long term: advanced techs

22. Emissions in low income APEC reference case enhanced technology Gt CO2-e

23. Emissions in high income APEC reference case enhanced technology Gt CO2-e

24. APEC electricity emissions reference case enhanced technology Gt CO2-e

25. APEC emissions abatement – enhanced technology scenario 470 Gt CO2-e 28% decline Gt CO2-e electricity emissions allocated to end users

26. APEC GHG emissions by end use sector at 2050, percentage contribution Enhanced technology

27. Mitigation potential in forestry • Globally, deforestation accounts for about 18-25 per cent of anthropogenic emissions • However, carbon sequestration in forestry can play an important role in reducing GHG emissions through: afforestation, reforestation, reduced deforestation and improved forest management • APEC accounts for 54 per cent of world’s total forest area • APEC has recently experienced a net increase in forest area, which is a reversal of historical trends • Investment in forest plantations in China is driving this trend –also United States, Viet Nam, Chile and New Zealand • Largest recent declines in forest area have occurred in Indonesia and Mexico – agriculture, infrastructure expansion and logging

28. Emissions from forestry in APEC,reference case – Mt CO2 ABARE projections

29. ABARE’s analysis • Focus is on reducing deforestation in tropical forest areas in APEC • trees in tropical forests hold about 50 per cent more carbon per hectare than trees outside the tropics • What is the impact of halving the deforestation rate in tropical south east Asian APEC economies over the period 2009-2050? • Indonesia, Malaysia, Philippines, Thailand and Viet Nam

30. Change in forestry emissions in tropical south east Asian APEC region, reduced deforestation scenario relative to reference case %

31. Key messages • Technology will play the key role in: • reducing energy consumption • decarbonising energy supply • reducing GHG emissions • addressing energy security • allowing simultaneous achievement of other economic and social development goals

32. Key messages • By 2050, emissions in high income APEC economies could be well below current levels with enhanced technologies • Need concerted policy action in developed & developing economies • Need portfolio of policy options and technologies • Reducing emissions from land use change will also play an important role in reducing growth in APEC emissions

35. OECD/transition country emissions reference case enhanced technology Gt CO2-e

36. Developing country emissions reference case enhanced technology Gt CO2-e

37. OECD/transition country emissions reference case enhanced technology Gt CO2-e

38. Global emissions abatement – enhanced technology scenario 765 Gt CO2-e 26% decline Gt CO2-e electricity emissions allocated to end users

39. Global GHG emissions by end use sector at 2050, percentage contribution

40. Change in APEC energy consumption at 2050, enhanced technology scenario relative to reference case positive energy security implications