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8/11/2019 Lecture 2- Emission Reduction and Taxation
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KXGM 6302ENERGY EFFICIENCY
Chapter 2:
Emission Reduction
and Taxation
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Introduction
• Rising concentrations of greenhouse gases including carbon
dioxide, methane, nitrous oxide (NOx) and sulfur oxide (SOx)
has increased the average earth surface temperature over
time. This has given rise to climate change phenomena.
• Carbon dioxide is one of the main greenhouse gases (GHG)
that is widely blamed for climate change.
• Carbon dioxide (CO2) increase the atmosphere is primarilyattributed to fossil fuel burning.
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Introduction
• Among the South East Asian countries, Malaysia is the highest
emitter of CO2 .
• Total carbon dioxide emissions has increased by 221% from
the year 1990 – 2004 in Malaysia.
• In view of the rapid growth in power generation capacity and
the corresponding rise in global CO2 emission
• There is a need for the authority to plan the electricity
generation capacity expansion to meet the electricity demandas well as to achieve an overall reduction in CO2 emissions.
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Emission reduction
Change the energy sources
• Hydropower is power derived from the energy of falling waterand running water, which may be utilized for useful purposes.
• Wind energy is the energy from a wind turbine device thatconverts kinetic energy from the wind.
• Solar energy is radiant light and heat from the sun and utilizedusing a range of ever-evolving technologies such as solarheating, solar photovoltaic, solar thermal electricity, solararchitecture and artificial photosynthesis.
• Biomass energy is the energy derived from biological material,
living, or recently living organisms. It also from plants or plant-derived materials.
• Geothermal energy is thermal energy generated and stored inthe Earth. Thermal energy is the energy that determines thetemperature of matter.
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Kyoto Protocol
• The United Nations Framework Convention on Climate Change
(UNFCC) has developed the Kyoto Protocol in 1998 to stabilize
the GHG emissions in the atmosphere by having industrialized
countries commit to reduce their GHG emissions.
• The legal binding accord was signed by 195 countries to
reduce GHG emissions.
• Many developed countries have agreed to legally bindinglimitations/reductions in their emissions of greenhouse gases in
two commitments periods.
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Kyoto Protocol
Kyoto Protocol participation map(commitment period: 2013 –20)
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Kyoto Protocol
• The first commitment period applies to emissions between
2008-2012, and the second commitment period applies to
emissions between 2013-2020
• The 2008-2012 commitments (% of base year) reduction
of CO2 based on 1990 emission levels.
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Case study-
Emission reduction and taxation for
electricity
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Introduction
• The electricity generation is one of the main contributors for
emission.
• Due to fossil fuel prices increase and environmental
consciousness, this has forced many countries to change thetype of energy sources to generate electricity.
• Another policy is introducing CO2 taxation for electricity
generation company to replant trees.
• This case study presented an example of proposed policy that
changing type of energy sources and with apply the taxation
scenario which will help to reduce emission.
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Survey data
Year Total (GWh)
0 2175
10 7912
20 19 469
21 21 442
27 49 080
30 52 300
40 105 762
50 195 253
Table 1
Electricity generation data
The data used for this study are the electricity consumption data,percentage fuel type for electricity generation data and fossil fuel
CO2 emission for a unit electricity generation data. All of the survey
data are shown in Tables 1, 2, 3 and 4
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Survey data
Table 2Percentage of electricity generation based on fuel types
In the proposed policy, the electricity generation company haschanged fuel use gradually from 70% of gas, 15% of coal, 10% of
hydro, and 5% petroleum in year the starting policy to 40% of gas,
30% hydro, 29% of coal, and only 1% of petroleum in the final year.
Fuels Year 30th Year 40th Year 50th
BAU NP
BAU
NP
BAU
NP
Coal
15%
15%
15%
18%
15%
29%
Petroleum
5%
5%
5%
2%
5%
1%
Natural Gas
70%
70%
70%
50%
70%
40%
Hydro 10% 10% 10% 30% 10% 30%
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Survey data
Table 3Fossil fuel CO2 emission for a unit electricity generation
Fuels CO2 per kWh
(kg)
Coal 1.18
Petroleum 0.85
Natural Gas 0.53
Hydro
0.00
Other
0.00
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Survey data
Table 4CO2 taxation, cost of replanting and survival factor of trees
Description Values
CO2 taxation RM 57 /ton
Cost of replanting RM 3.04 /tree
Survival factor 60%
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Methodology
• None of the existing policy models captures the full effects to
climate change strategies. For this reason, this study uses the
scenario approach for the analysis.
• The scenarios are tools for ordering one’s perceptions aboutalternative future environments and can help to foresee the
decisions.
• No matter how things might actually turn out, both the analystand the policy maker will have a scenario that resembles a
given future and that will have helped us think through both the
opportunities and the consequences of that future.
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Methodology
• Initially, the electricity pattern and percentage type of fuel use
for electricity generation should be identified. Some of the data
are already available but others have to be calculated with
respect to the electricity consumption trend.
• The method used to estimate the rest of the calculation data is
polynomial curve fitting.
• Mathematically, a polynomial of order k in x is expressed in thefollowing form:
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Methodology
• Number of trees replanting is a function of CO2 production,
taxation and the survival factor of the trees divided the cost of a
tree replanting which can be calculated by the following
equation:
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Data Analysis
• Based on the data shown in Table 1, using Eq. (1), the total
energy consumption in a county from the starting to end of the
policy can be predicted by the following equation:
• Based on data shown in Table 2, using Eq. (1), the fuel mix of
electricity generation from the year 30th to 50th can be predicted. The
percentage of coal used for electricity generation can be predicted by
the following equation:
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Data Analysis
• The percentage of petroleum used for electricity generation can be
predicted by the following equation:
• The percentage of gas uses of electricity generation can be predicted
by the following equation:
• The percentage of hydropower uses of electricity generation can be
predicted by the following equation:
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Data Analysis
• The predicted results data based on Equations (3) - (7)
from the year 30 to 50 are tabulated in Table 4
Table 4Predicted electricity consumption andpercentage fuel mix of electricitygeneration
Year
Total(GWh)
Coal(%)
Petroleum
(%)
Gas(%)
Hydro(%)
30
52300
15.00
5.00
70.00
10.00
31
61151
14.94
4.61
67.55
12.90
32
66159
14.96
4.24
65.20
15.60
33
71368
15.06
3.89
62.95
18.10
34
76779
15.24
3.56
60.80
20.40
35 82390 15.50 3.25 58.75 22.50
36 88203 15.84 2.96 56.80 24.40
37
94217
16.26
2.69
54.95
26.10
38
100433
16.76
2.44
53.20
27.60
39 106850 17.34 2.21 51.55 28.90
40
113468
18.00
2.00
50.00
30.00
41
120287
18.74
1.81
48.55
30.90
42
127308
19.56
1.64
47.20
31.60
43
134530
20.46
1.49
45.95
32.10
44 141954 21.44 1.36 44.80 32.40
45 149578 22.50 1.25 43.75 32.50
46
157404
23.64
1.16
42.80
32.40
47
165431
24.86
1.09
41.95
32.10
48
173660
26.16
1.04
41.20
31.60
49
182090
27.54
1.01
40.55
30.90
50 190721 29.00 1.00 40.00 30.00
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Fig 1.1. Predicted electricity consumption and percentage fuel mix forelectricity generation
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
Hydro
Gas
Petro
Coal
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Data Analysis
• The fuel percentage trend will be used to predict future
potential CO2 reduction.
• The potential CO2 savings is computed from the carbon
burden of each fuel. CO2 produced from fuel burden for
generating electricity is calculated in term kg/kWh
electricity generation.
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Results (change of energy sources)
Year BAU(Ton)
NP(Ton)
CO2 Reduction(Ton)
31
36 109 666
35 069 609
1 040 056
32 39 066 890 36 925 190 2 141 699
33 42 142 804 38 853 310 3 289 494
34 45 338 000 40 871 919 4 466 081
35
48 651 295
42 999 341
5 651 954
36 52 083 872 45 258 018 6 825 854
37
55 635 139
47 670 787
7 964 351
38 59 305 687 50 263 503 9 042 184
39 63 094 925 53 062 992 10 031 933
40 67 002 854 56 098 579 10 904 275
41 71 029 474 59 401 570 11 627 904
42
75 175 374
63 005 748
12 169 626
43 79 439 965 66 945 895 12 494 070
44 83 823 837 71 259 772 12 564 065
45 88 325 809 75 985 624 12 340 185
46 92 947 062 81 165 687 11 781 375
47
97 687 006
86 842 673
10 844 333
48 102 546 230 93 062 310 9 483 920
49
107 524 145
99 871 266
7 652 879 50 112 620 751 107 318 707 5 302 044
Table 5 Potential CO2 reduction by fuel substitution for electricity generation
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Results (change of energy sources)
Fig. 3.Potential CO2 reduction due to the changes of energy sources for
electricity generation
0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
C a r b o n D i o x i d e R e d u c t i o n ( T o n
)
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Results (change of energy sources)
• The results compare the potential CO2 production for Business as
Usual (BAU) situation to the New Policy (NP) sources of fuel used is
shown
0
20000000
40000000
60000000
80000000
100000000
120000000
30 32 34 36 38 40 42 44 46 48 50
C a r b o n D i o
x i d e P r o d u c t i o n ( T o n )
BAU NP
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Results (taxation policy)
• The carbon trees replanting is a function of CO2 emitted
by fossil fuel from every unit of electricity generation.
• The potential trees replanting is a function of CO2
production in the particular year.
• The CO2 production, potential CO2 taxation and trees
replanting are tabulated in Table 6 and shown in Fig. 4 &
5.
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Year
CO2 Production(Ton)
Tax(MR$)
TreesReplanting
33 38 853 310 2 214 638 678 437 099 739
34 40 871 919 2 329 699 362 459 809 085
35 42 999 341 2 450 962 437 483 742 586
36 45 258 018
2 579 707 011
509 152 700
37
47 670 787
2 717 234 862
536 296 354 38
50 263 503 2 865 019 651 565 464 405
39 53 062 992 3 024 590 555 596 958 662
40 56 098 579
3 197 619 014
631 109 016
41 59 401 570 3 385 889 478 668 267 660
42 63 005 748 3 591 327 617 708 814 661
43 66 945 895
3 815 916 006
753 141 317
44
71 259 772
4 061 807 025
801 672 439
45 75 985 624 4 331 180 568 854 838 270
46 81 165 687 4 626 444 182 913 113 983
47 86 842 673 4 950 032 338 976 980 067
48 93 062 310 5 304 551 675 1 046 950 988
49 99 871 266 5 692 662 189 1 123 551 748
50
107 318 707
6 117 166 282
1 207 335 450
Table 6 Potential CO2 reduction by fuel substitution for electricitygeneration
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Results (taxation policy)
0
10000000
20000000
30000000
40000000
50000000
60000000
70000000
80000000
90000000
100000000
110000000
120000000
3 4 5 6 7 8 9 1 0
1 1
1 2
1 3
1 4
1 5
1 6
1 7
1 8
1 9
2 0
C O
2 P r o d u c t i o n ( T o
n )
Fig 4. Predicted CO2 production from electricity generation
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Results (taxation policy)
0
1,000,000,000
2,000,000,000
3,000,000,000
4,000,000,000
5,000,000,000
6,000,000,000
7,000,000,000
8,000,000,000
9,000,000,000
10,000,000,000
0
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
700,000,000
800,000,000
900,000,000
1,000,000,000
1,100,000,000
1,200,000,000
1,300,000,000
T a x a t i o n ( M R $ )
T r e e s r e p l a n t i n g )
Tree
Tax
Fig. 5: Potential CO2 taxation and trees replanting
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Conclusion
• This study shows that fuel substitution for electricity generation
from fossil fuel to renewable fuel and taxation policy offers a
solution to the environment protection.
• The analysis found that the savings are quite large by fuel
switching and CO2 taxation for replanting tree .• In addition, it has also reduced other emission which is not
discussed in this study.
• CO2 taxation for tress replanting has been introduced in some
developed countries such as U.S. but relatively very limited in
developing countries have implement this strategy.