The GAINS Model for Greenhouse Gases - Version 1.0: Carbon Dioxide (CO2)

Many of the traditional air pollutants and greenhouse gases have common sources, offering a cost-effective potential for simultaneous improvements of traditional air pollution problems and climate change. A methodology has been developed to extend the RAINS integrated assessment model to explore synergies and trade-offs between the control of greenhouse gases and air pollution. With this extension, the GAINS (GHG-Air pollution INteraction and Synergies) model will allow the assessment of emission control costs for the six greenhouse gases covered under the Kyoto Protocol (CO2, CH4, N2O and the three F-gases) together with the emissions of air pollutants SO2, NOx, VOC, NH3 and PM. This report describes the first implementation (Version 1.0) of the model extension model to incorporate CO2 emissions. GAINS Version 1.0 assesses 230 options for reducing CO2 emissions from the various source categories, both through structural changes in the energy system (fuel substitution, energy efficiency improvements) and through end-of-pipe measures (e.g., carbon capture). GAINS quantifies for 43 countries/regions in Europe country-specific application potentials of the various options in the different sectors of the economy, and estimates the societal resource costs of these measures. Mitigation potentials are estimated in relation to an exogenous baseline projection that is considered to reflect current planning, and are derived from a comparison of scenario results for a range of carbon prices obtained from energy models. A critical element of the GAINS assessment refers to the assumptions on CO2 mitigation measures for which negative life cycle costs are calculated. There are a number of options for which the accumulated (and discounted over time) cost savings from reduced energy consumption outweigh their investments, even if private interest rates are used. If the construction of the baseline projection assumes a cost-effectiveness rationale, such measures would be autonomously adopted by the economic actors, even in the absence of any CO2 mitigation interest. In practice, however, it can be observed that various market imperfections impede the autonomous penetration. Due to the substantial CO2 mitigation potential that is associated with such negative cost options, projections of future CO2 emissions and even more of the available CO2 mitigation potentials are highly sensitive towards assumptions on their autonomous penetration rates occurring in the baseline projection. Assuming that all negative cost measures would form an integral part of the Energy Outlook developed in 2003 by the Directorate General for Energy and Transport of the European Commission that has been developed with a cost-minimizing energy model, CO2 emissions in Europe would approach 1990 levels in 2020, even in absence of any specific climate policy. Beyond that, GAINS estimates for 2020 an additional reduction potential of 20 percent. With full application of all mitigation measures contained in the GAINS database, the power sector could reduce its CO2 emissions by 550 Mt, the transport sector by 400 Mt, industry by 190 Mt, and the residential and commercial sector by 50 Mt below the baseline projection. Total costs of all these measures would amount to approximately 90 billion Euro/year.