MONGOLIA, 2ND NATIONAL WORKSHOP

ECONOMICS OF CLIMATE CHANGE AND LOW CARBON GROWTH

STRATEGIES IN NORTHEAST ASIA

13 OCTOBER 2010
CORPORATE HOTEL, ULAANBAATAR, MONGOLIA

COUNTRY LEVEL MARGINAL

ABATEMENT COST CURVE ANALYSIS

Dr. DORJPUREV JARGAL

EEC Mongolia
CONTENTS

 Marginal abatement cost curve (MACC)?

 Mongolia’s present GHG Emissions
 Methodology of GHG Abatement analysis
 Mongolia’s GHG Emission projections up to 2030
 GHG Cost-benefit analysis and the marginal
abatement cost curvy
 Conclusion
 MARGINAL ABATEMENT COST CURVE ?

A marginal abatement cost curve is defined as a graph that indicates the cost, usually in $/t CO2,
associated with the last unit (the marginal cost) of emission abatement for varying amounts of emission
reduction (in general in million tons of CO2).
 MARGINAL ABATEMENT COST CURVE ?

What is the Marginal abatement cost ?

Source: Marginal Abatement Cost Curves for Policy Making – Expert-Based vs. Model-Derived Curves
Fabian Kesicki, Energy Institute, University College London
 Mongolia’s GHG Emissions
Total Greenhouse gas emissions

In 1990, Mongolia’s net GHG emissions were 22532 thousand tones CO2-eq. and the net GHG
emissions were reduced up to 14850 thousand tones in 1995. The reduction of net GHG emissions
is mostly due to socio-economic slowdown during the transition period from socialism to market
economy. But during this period the methane emissions are increased due to increase of livestock
population. The HFCs are increased for the period 1990-2006 due to increase of refrigerators and
vehicles with air conditions.
 Mongolia’s GHG Emissions

PER CAPITA EMISSIONS

CO2/GDP, kg CO2 per US$ (2000)

8

7 7.50
6.97
6

4 4.41

3
2.68
2

1 0.70 0.75
0.24
0

If compare with the other developed and developing countries, the total GHG emissions
is small, but per capita and per GDP emissions is high. Mongolia’s per capita emissions
were 6.0 tons /person, which is almost 2 times more than developing countries average.
Per GDP CO2 emissions are 10 times more than world average
 Methodology of GHG Abatement analysis
MODELS FOR MITIGATION ANALYSIS IN THE UNFCCC CONTEXT
Top--Down and Bottom
Top
up models
Both Top-Down and Bottom
up models can yield useful
insights on mitigation.
 Top-down models are most useful for
studying broad macroeconomic and
fiscal policies for mitigation such as
carbon or other environmental taxes.
 Bottom-up models are most useful
for studying options that have
specific sectoral and technological
implications.
The most mitigation assessment has so
far focused on bottom-up
approaches.
• LEAP
– Long-range Energy Alternatives Planning system
– Primary Developer: Stockholm Environment
Institute
• ENPEP
– Energy and Power Evaluation Program
– Primary Developers: Argonne National
Laboratory and the International Atomic Energy
Authority (IAEA)
• EFOM
– Energy and Power Evaluation Program
– Primary Developers: Asian Institute of
Technology (AIT)
• MARKAL
– MARKet Allocation model
– Primary Developers: IEA/ETSAP
• RETSCREEN
– Renewable Energy Technology Screening
– Primary Developers: Natural Resources Canada
• All are integrated scenario modeling tools
except RETSCREEN, which screens
renewable and CHP technologies.
• Modeling can also use spreadsheets
and/or other tools.
 Methodology of GHG Abatement analysis
LEAP STRUCTURE • Key Assumptions: independent variables
(demographic, macroeconomic, etc.)
• Demand: energy demand analysis (including
transport analyses).
• Statistical Differences: the differences
between final consumption values and energy
demands.
• Transformation: analysis of energy
conversion, extraction, transmission and
distribution. Organized into different
modules, processes and output fuels.
• Stock Changes: the supply of primary
energy from stocks. Negative values indicate
an increase in stocks.
• Resources: the availability of primary
resources (indigenous and imports) including
fossil reserves and renewable resources.
• Non-energy sector effects: inventories and
scenarios for non-energy related effects.
 Methodology of GHG Abatement analysis
TYPICAL DATA REQUIREMENTS
Macroeconomic Sectoral driving variables GDP/value added, population, household
Variables size
Energy Demand Sector and subsector totals Fuel use by sector/subsector
Data
Energy Supply Characteristics of energy Capital and O&M costs, performance
Data supply, transport, and (efficiencies, capacity factors, etc.)
conversion facilities

Energy supply plans New capacity on-line dates, costs,

characteristics;
Energy resources and Reserves of fossil fuels; potential for
prices renewable resources
Technology Technology costs and Capital and O&M costs, foreign exchange,
Options performance performance (efficiency, unit usage,
capacity factor, etc.)

Penetration rates Percent of new or existing stock replaced

per year
Emission Factors Emissions per unit energy consumed,
produced, or transported.
Mongolia’s GHG Emission projections up to 2030

20000
GHG emissions from
18000 energy demand by sectors
16000
1000 tons CO2-eq Agriculture
14000
12000 Commercial
10000
Transport
8000
6000 Industry
4000 Household
2000
0
2006 2010 2015 2020 2025 2030

20000 GHG emissions from

18000 energy demand by fuels
16000
1000 tons CO2-eq

14000
12000
Solid Fuels
10000
Oil Products
8000
Biomass
6000
4000
2000
0
2006 2010 2015 2020 2025 2030
 Mongolia’s GHG Emission projections up to 2030

6
Index (year 2006=1)

0
2006 2010 2015 2020 2025 2030

Household Industry Transport Commercial

Projected GHG emission trend index

 Mongolia’s GHG Emission projections up to 2030

In order to meet the growing energy demand, it is planned to construct new

energy sources such as:
• Combined Heat and Power Plant (CHP) in UB with capacity 300MW,
• Wind farm in Salhit Uul near UB with capacity 50MW,
• Mogoin gol thermal power plant of 60 MW,
• Hushuut thermal power plant of 36 MW and

• Tavan Tolgoi thermal power plant of 300-600 MW are expected to be

established according to the infrastructure development program of the
Government for the next years.
• It is also assumed to rehabilitate and increase capacity of existing power
plants.
 Mongolia’s GHG Emission projections up to 2030
30000
New Coal Fired PP

25000
New small Coal fired
PP
20000
1000 tons CO2-eq

CHP5
15000

Diesel
10000

Heating Stations
5000

Existing CHPs
0
2006 2010 2015 2020 2025 2030

GHG emissions from electricity and heat generation, 1,000 tons of CO2-eq

GHG emissions from the energy generation are estimated to

rise by 2.27 times above 2006 level by 2020 and 3.52 by 2030.
 Mongolia’s GHG Emission projections up to 2030

45 GHG emissions from energy

40 24.13 generation and energy demand
Million tons CO2-eq
35
30 19.15

25
15.56
20
12.45
15 17.69
9.03 13.65
10
6.85 10.37
5 7.78
3.97 5.00
0
2006 2010 2015 2020 2025 2030

Transformation Demand

GHG emissions from energy

45
sector by fuels
40 32.18
35 25.62
Million tons CO2-eq

30
20.65
25
16.26
20
15 10.93
8.4 8.78
10 6.33
4.45
5 2.33 3.16
1.67
0
2006 2010 2015 2020 2025 2030
Solid Fuels Oil Products Biomass
 GHG Cost-
Cost-benefit analysis and the marginal abatement cost curvy

GHG Mitigation scenarios

Demand site management Scenario

Efficient lighting
Transmission and Distribution losses
Station own use
Building energy efficiency

Renewable Scenario
Hydropower plant
Wind parts
Solar PV

For Each Scenario:

• Technology Penetration: how many of the new (efficient) types of devices will be
installed in the policy scenario?
• Technology Performance: how efficient are the new devices or technology
• Technology cost: how much do the new devices cost?
GHG Cost-
Cost-benefit analysis and the marginal abatement cost curvy

41.82
32.8 36.51

25.93 29.57
20.23 23.99

14.03 19.54

10.82 13.85

2006 2010 2015 2020 2025 2030

Reference DSM
 GHG Cost-
Cost-benefit analysis and the marginal abatement cost curvy

Marginal abatement Mitigation potential (Cumulative

GHG Abatement options cost, Emission Abatement),
US$/tCO2 million tons of CO2
Lighting efficiency improvement -2.48 4.35
Building Insulation Improvement -1.73 9.08
District heating system losses reduction -1.71 12.74
Small combustion efficiency improvement -1.43 6.34
Vehicle fuel consumption efficiency improvement -0.39 12.77
Electricity Transmission losses reduction -0.33 3.31
Biomass energy system -0.22 0.70
Motor Efficiency Improvement 0.31 21.53
Coal benefication 2.26 10.17
Wind power system 2.41 0.36
Photovoltaic Solar System 4.46 0.19
Hydro power development 10.32 1.47

Source: ALGAS Mongolia, Manila Philippines, 1998

GHG Cost-
Cost-benefit analysis and the marginal abatement cost curvy

2020 Cost Curve

$12.00

$10.00

$8.00
Cost ($/T CO2e)

$6.00

$4.00

$2.00

$0.00
- 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0
-$2.00

-$4.00
CO2 Avoided
(Millions TCO2e)
Conclusion

Future needs:
For GHG mitigation of Energy sector
1. Future improvement of Cost benefit analysis

For GHG mitigation of other sectors

(industry, forestry, waste, agriculture)
1. Selection of appropriate of methodology
2. Cost benefit analysis
Thank you for attention