Mid-term target in Japan and

contribution of AIM model

Kazuya Fujiwara
Mizuho Information & Research Institute

Climate Policy Simulation Tool (CPST)

Brainstorming Meeting
Bangkok, Thailand
15-16 July 2010
 Content

1. Policy making Process of Japan’s mid-term

target on GHG reduction

2. AIM/Enduse model and Its contribution of

the process

3. MAC curve of Japan, Korea and China

4. Template of the AIM/Enduse[MAC]

2
 Content

1. Policy making Process of Japan’s mid-term

target on GHG reduction

2. AIM/Enduse model and Its contribution of

the process

3. MAC curve of Japan, Korea and China

4. Template of the AIM/Enduse[MAC]

3
Japan’s emission target

2009.6.10
92nd Prime Minister,
ASO, Taro

“I deliberately chose the target of a 15

percent reduction from the 2005 level
(by2020). ”

2009.9.22
93rd Prime Minister, 94th Prime Minister,
HATOYAMA, Yukio KAN, Naoto

Japan will aim to reduce its emissions by 25% by 2020, New Prime minister has not come out
if compared to the 1990 level, consistent with what his attitude to the global warming.
the science calls for in order to halt global warming.
The commitment of Japan to the world is premised on
agreement on ambitious targets by all the major
economies. 4
Process of Japan’s middle-term target on
GHG reduction
Oct. 2008 • Based on three types of models (global technology models, Japan
technology models and Japan economy models), options of Japan’s middle-
term target on GHG reduction had been calculated.
• Responding to criticism against the closed process at COP3 (Kyoto Protocol), open and
academic process was introduced.
• 6 options were finalized.
Apr. 2009 • Former Prime Minister Aso, announced 15% reduction from 2005 level
Jun. 2009 (=8% reduction from 1990 level) as domestic reduction target.
• Former Prime Minister Hatoyama, announced 25% reduction (including
international carbon credit and forest sink) from 1990 level.
Sep. 2009 • On 12 March 2010, bill of the “Basic Act for Global Warming
Countermeasures” was decided by the cabinet.
• On 31 March 2010, Minister of the Environment announced officially his
Mar. 2010 draft proposal, “Mid-term and Long-term Roadmap to realize Low Carbon
Society”.

5
 Content

1. Policy making Process of Japan’s mid-term

target on GHG reduction

2. AIM/Enduse model and Its contribution to

the process

3. MAC curve of Japan, Korea and China

4. Template of the AIM/Enduse[MAC]

6
Contribution of AIM to discussion of mid-
term target

AIM/Enduse Comparison with other

regions through marginal RITE
[Global]
abatement cost

AIM/Enduse Detailed options with policy

IEEJ
[Japan]
Energy efficiency
Additional cost

AIM/CGE Economic impact

JCER, KU
[Japan]

Models by
AIM Models other researchers
7
 What is AIM/Enduse model?

• AIM/Enduse is a bottom-up model of

technology selection within a country’s energy-
economy-environment system

• System costs include fixed costs, the operating

costs of technologies, energy costs, etc.

• AIM/Enduse model can analyze various

scenarios, including policy countermeasures
 Structure of AIM/Enduse

Energy Energy technology Energy service

• Oil • Blast furnace • Crude steel products

• Coal • Power generation • Electricity demand
• Gas • Air conditioner • Cooling demand
• Solar • Fluorescent • Lighting
• Electricity etc. • Automobile etc. • Transport volume etc.

Energy consumption Technology Energy service

CO2 emissions selection demands

Energy database Technology database Socioeconomic scenario

• Energy type • Technology price • Population growth
• Energy price • Energy consumption • Economic growth
• Energy constraints • Supplied service • Industrial structure
• CO2 emission factor amounts • Employment
• Technology share • Lifestyle
• Lifetime
AIM/Enduse[global]

10
Overview of AIM/Enduse[Global]
◆ Target Regions : 32 geographical world regions
◆ Time Horizon : 2005 – 2020
◆ Target Gas : CO2, CH4, N2O, HFCs, PFCs, SF6
◆ Target Sectors : multiple sectors
(Power generation / Industry / Residential / Commercial /
Transport / Agriculture / F-gas emissions sector )

Requested Information

Information for policy makers to compare the
required reduction level to various countries.

Abatement cost under various cases
 Regional classification

World
32 regions

Annex I OECD
JPN (Japan) USA (United States) CAN (Canada) KOR (Korea)
AUS (Australia) XE15 (Western EU-15) TUR (Turkey) MEX (Mexico)
NZL (New Zealand) XE10 (Eastern EU-10) XEWI (Other Western EU in Annex I) BRA (Brazil)
RUS (Russia) XE2 (Other EU-2) XEEI (Other Eastern EU in Annex I) ARG (Argentine)
CHN (China) XSA (Other South Asia) XENI (Other EU) XLM (Other Latin America)
IND (India) XEA (Other East Asia) XCS (Central Asia) ZAF (South Africa)
IDN (Indonesia) XSE (Other South-East Asia) XOC (Other Oceania) XAF (Other Africa)

ASEAN
THA (Thailand) MYS (Malaysia) VNM (Viet Nam) XME (Middle East)
 Target gas and sectors
GHG Sector
Power generation Coal power plant, Oil power plant, Gas power plant, Renewable
(Wind, Biomass, PV)

Industry ，Cement
Iron and steel，
Other industries （Boiler, motor etc） ）
CO2
CH4
N2O Transportation Passenger vehicle, Truck，Bus，Ship, Aircraft，Passenger train，
Freight train (except for pipeline transport and international
transport)
Residential and ，Cooking，
Cooling, Heating, Hot-water， ，Lighting，
，Refrigerator,
& Commercial TV

CH4 Agriculture Livestock rumination, Manure management, Paddy field, Cropland

N2O MSW Municipal solid waste
CH4 Fugitive Fugitive emission from fuel

HFCs, Fgas emissions By-product of HCFC-22, Refrigerant, Aerosol, Foams, Solvent,

PFCs,SF6 Etching, Aluminum production, Insulation gas, others.

Note)
 Nuclear power, hydro power, and geothermal power generation are included in the baseline
and they are not considered as mitigation options in this study.
 There are some mitigation options which are not able to be considered in this study due to
the lack of data availability, for example, CO2 mitigation options in petrochemical, N2O
mitigation options in waste water, CO2 mitigation options in agriculture etc.
Technology options for mitigation measures
This study is based on realistic and currently existing technologies, and
future innovative technologies expected in 2020 are not taken into account.
Sector Category Technology options
Coal power Efficient coal power plant, PFBC (Pressurized fluidized bed combustion),
combustion),
plant IGCC (Integrated Gasification Combined Cycle)
Energy
Gas power Efficient gas power plant, ACC (Advanced Combined Cycle)
supply
plant
Renewables Wind power, Photovoltaics, Biomass power plant
Coke oven (Coke gas recovery, Automatic combustion, Coal wet adjustment ,
Coke dry type quenching, COG latent heat recovery, Next generation coke
oven),, Sinter furnace (Automatic igniter, Cooler waste heat recovery, Mainly
waste heat recovery, Efficient igniter),, Blast furnace (Large size blast
furnace, Blast furnace gas recovery, Wet top pressure recovery turbine, Dry
Steel top pressure recovery turbine, Heat recovery of hot blast stove, Coal
injection, Dry top pressure gas recovery),, Basic oxygen furnace (LDG
recovery, LDG latent heat recovery),, Casting & rolling (Continuous caster,
Hot charge rolling, Hot direct rolling, Efficient heating furnace, Heat
Industry
furnace with regenerative burner, Continuous annealing lines),, Electric
furnace (DC electric furnace, Scrap pre-heat)
Mill (Tube mill, Vertical mill),, Kiln (Wet kiln, Semi-wet kiln, Dry long kiln,
Cement
Dry shaft kiln, SP/NSP)
Boiler (Efficient boiler [coal, oil, gas], Boiler with combustion control [coal,
Other oil, gas], Cogeneration [coal, oil, gas], Regenerative gas boiler), Process heat
industries (Efficient industrial furnace [oil, gas]),, Motors (Motor with Inverter control,
Efficient motor)
Results

15
 Example of equitable emission allocation
to achieve 25% reductions in Annex I

Imposing equal marginal abatement cost (left figure) and equal total abatement
costs per GDP (right figure) across Annex I countries to achieve a 25 % reduction
target in Annex I countries.

Equal marginal abatement cost Equal total abatement cost per GDP
MAC: 131 US$/tCO2 eq Abatement cost per GDP: 0.74%
0% 0%
GHG emissions in 2020 (%)

-2%
-3%
-5% -5% -11% -11%
to 1990 level]
GHG emissions in 2020 (%) [compare to

-5% -17%
-10% -21% -19% -10% -19%
-1% -23%
-3% -11% -28%
-15% -31% -15% -15%

-20% -20%
1990 level]

-1% -9%
-6% -6%
-25% -25%
-22%
-25% -9% -25%
-30% -25% -30%
[compared

-32% -9%
-35% -9% -35%
NonCO2 + CO2 (non fuel) -37%
-40% NonCO2 + CO2 (non fuel) -40%
-40%
CO2 (Fuel Combustion) CO2 (Fuel Combustion)
-45% -45%
GHG GHG
-50% -50%
Japan USA EU27 Russia Annex I Japan USA EU27 Russia Annex I
 Example of equitable emission allocation
reduction target in Japan and comparable efforts in Annex I

Imposing equal marginal abatement cost (to achieve 15% reduction target in left
figure, 20% reduction target in right figure in Japan) across Annex I countries.

Equal marginal abatement cost Equal marginal abatement cost

MAC: 270 US$/tCO2 eq MAC: 544 US$/tCO2 eq
0% 0%
GHG emissions in 2020 (%)

-5% -12% -5%

to 1990 level]
GHG emissions in 2020 (%) [compare to

GHG emissions in 2020 (%) [compare to

-16%
-10% -10%
-23% -25% -25%
-3% -27%
-15% -15% -29% -31% -15% -31% -33%
-4% -20%
-20% -20%
1990 level]

1990 level]
-25% -25%
-30% -9% -6%
-30% -2% -30% -33% -9% -6%
[compared

-2%
-35% -32% -31% -35%
-9% -34% -33%
-9%
-40% -40% NonCO2 + CO2 (non fuel)
NonCO2 + CO2 (non fuel) -40%
CO2 (Fuel Combustion) -42%
-45% CO2 (Fuel Combustion) -45%
GHG GHG
-50% -50%
Japan USA EU27 Russia Annex I Japan USA EU27 Russia Annex I

(Note: updates as of February 2010 in the case of Scenario A).

6 options of Japan’s mid-term target (as of
14 Aprilemission
2009) to
MAC continuing present
2005 level
emission to ±0% 0
efforts
1990 level photovoltaic > +4%
$/tCO2
+5% 6 mil. kW 25% reduction in Annex
1 50
-5% (4 times to I countries with equal
$/tCO2 present level) MAC
±0% > -5%
2
-10% 150 introducing all existing
-5% $/tCO2 countermeasures
14 mil. kW > -7%
3 200
-15% (10 times)
-10% $/tCO2
25% reduction in Annex
I countries with equal
4
-20% cost to GDP
37 mil. kW
5 -15% 300 > -17%
(25 times)
$/tCO2
-25% -15%
-20%

79 mil. kW -25%
6 -25% -30%
(55 times)
18
AIM/Enduse[Japan]

19
Overview of AIM/Enduse[Japan]
◆ Target Regions : Japan
◆ Time Horizon : 2005 – 2020
◆ Target Gas : CO2, CH4, N2O, HFCs, PFCs, SF6
◆ Target Sectors : multiple sectors (more detail than global model)
(Power generation / Industry / Residential / Commercial /
Transport / Agriculture / F-gas emissions sector )

Requested Information

Information for policy makers to determine what
kinds of targets are feasible for Japan

Abatement cost under various cases

Suggestions for designing effective institutes
What’s the differences between
global model and Japan model

For example…

• Industrial sector is divided into more detail sub

sectors

• Technologies assumed in Enduse[Japan] are

more suitable to Japanese situation

• The method of service demand estimation in

Enduse[Japan] is more detail than global
model
 Key technologies in Industry
Key technology in industrial sectors
100%
• Super coke oven
90%
Other industries • Efficient power generation
& SMEs
• Use of waste plastic as reducing agent
80%
Machinery
• Regenerative burner
Energy Consumption (2005)

• Direct current electric arc furnace etc.

70%
• Efficient coal mill
60% • Efficient clinker cooler
Steel • Waste heat power generation etc.
50%
• Efficient CHP
40% • Heat Integrated Distillation Column
Cement & Ceramics • Membrane distillation
30% • Biomass propylene etc.
Chemical
20% • Efficient black liquor boiler
• Use of wood residue and
10% Pulp & Paper
• Efficient manufacturing equipment
Non-Manufacturing of waste paper pulp
0%
• Efficient industrial furnace
• Efficient boiler
• Industrial heat pump
22
 Key technologies in residential and
commercial
100% Key technology in residential and Commercial sectors

90% Electric • Efficient Electric Appliance

Electric Office
Appliance Equipment • Efficient Electric Office Equipment
80%
Energy Consumption (2005)

70%
Lighting Lighting • Efficient Lighting Equipment
60% Cooking Cooking

50% Hot
• Heat pump water heater
Hot Water • Efficient gas / oil water heater
40% Water • Solar water heater
30%
Space
20% Heating
Space • Efficient air conditioner
Heating
10% • Shift to heat pump air conditioner
Cool • Insulated building
0%
Residential Commerical
• Photovoltaic
• Home energy management System
23
 Key technologies in Transportation
100% • Efficient rail
Air
Ship • Efficient ship
90%
Rail • Efficient air etc.
80%
• Efficient existing engine freight vehicle
Energy Consumption (2005)

70%
Freight Car • Hybrid freight vehicle
• Plug-in hybrid freight vehicle
60% • Electric freight vehicle
• Efficient freight traffic system etc.
50%

40%
• Efficient existing engine passenger vehicle
30%
• Hybrid passenger vehicle
Passenger Car • Plug-in hybrid passenger vehicle
20% • Electric passenger vehicle etc.
10%
• Intelligence transportation system
0% • Eco-driving
• Modal shift etc.

24
 Key technologies in Transformation
Renewables
100%
Hydro
90% • Mega-PV
• Wind power generation
80% • Geothermal power generation
Nuclear • Small hydro power generation
70% • Biomass and waste power generation
60%
Oil
50%
40%
LNG • Efficient LNG power generation
30% (Advanced combined cycle)
• Efficient coal power generation
20% (USC, IGCC)
Coal • Shift from coal to LNG
10%
0%

25
Macro-economic frame of simulation
Sector Item Unit 1990 2000 2005 2020
Industrial Material Crude steel Million ton 111.71 106.90 112.72 119.66
Ethylene Million ton 5.97 7.57 7.55 7.06
Cement Million ton 86.85 82.37 73.93 66.99
Paper and Paper board Million ton 28.54 31.74 31.07 32.44
Production Index Food 2005=100 102.9 102.8 99.5 87.2
Chemical 2005=100 84.0 97.1 99.5 116.6
Non ferrous 2005=100 90.6 98.9 100.7 103.3
Machinery 2005=100 89.2 95.7 101.5 136.2
Other 2005=100 84.7 108.8 100.0 94.0
Residential Number of households Million 41.16 47.42 50.38 51.31
Commercial Commercial floor space Million m2 1,286 1,655 1,764 1,957
Transportation Passenger transportation Total Billion person-km 1131.3 1296.9 1304.2 1291.8

Freight transportation Total Billion ton-km 546.8 578.0 570.4 622.5

Agriculture Live stock Cattle Million 4.87 4.53 4.39 4.51

Crop acreage Total Million ha 5.24 4.83 4.69 4.40
Waste Generation General waste disposal Million ton 51 55 53 51

26
 Scenario setting

• Fixed case

Technology share and energy efficiency will
be fixed after 2005.

• Policy case

CO2 emissions reduction policy will be
implemented as follows
・10% reduction case
・15% reduction case (with stronger actions)
・20% reduction case (with strongest actions)
Results

28
 GHG emissions in 2020

1,500 1,346 1,358 1,397

GHG emissions (MtCO2eq)

1,261 1,306 1,130 1,067 1,001 Emission from non-Energy

155 189
179
79 78 188 ▲ 10% ▲ 15% ▲ 21%
202 71
70 175 Energy Industry
68 240
1,000 265 257
225 57
171
162
217 52
196 47 Transport
206 237 265 186
164 222 176
173 156
127 158 174 176 159 136 Commecial
500 119 104 90

482 467 456 449 442 410 399 391 Residential

0 Industrys
Fixed BaU ▲ 10% ▲ 15% ▲ 20%

1990 2000 2005 2020

25% reduction could not be realized without

macro economic frame change (ex. lower activity level).
29
Macro-economic frame of simulation
Sector Item Unit 1990 2000 2005 2020
Industrial Material Crude steel Million ton 111.71 106.90 112.72 119.66
Ethylene Million ton 5.97 7.57 7.55 7.06
Cement Million ton 86.85 82.37 73.93 66.99
Paper and Paper board Million ton 28.54 31.74 31.07 32.44
Production Index Food 2005=100 102.9 102.8 99.5 87.2
Chemical 2005=100 84.0 97.1 99.5 116.6
Non ferrous 2005=100 90.6 98.9 100.7 103.3
Machinery 2005=100 89.2 95.7 101.5 136.2
Other 2005=100 84.7 108.8 100.0 94.0
Residential Number of households Million 41.16 47.42 50.38 51.31
Commercial Commercial floor space Million m2 1,286 1,655 1,764 1,957
Transportation Passenger transportation Total Billion person-km 1131.3 1296.9 1304.2 1291.8

Freight transportation Total Billion ton-km 546.8 578.0 570.4 622.5

Agriculture Live stock Cattle Million 4.87 4.53 4.39 4.51

Crop acreage Total Million ha 5.24 4.83 4.69 4.40
Waste Generation General waste disposal Million ton 51 55 53 51

30
Investment and reduction of energy cost
Investment / Reduction of Energy Cost

150

100 Low carbon Investment

(‘10-’20, Cumulative)
(Trillion Japan Yen)

50 98
76
50 Reduction of energy cost
0
-39 -43 ('10-'20, Cumulative)
-52
-50 -34 -39 Reduction of energy cost
-49
-100 ('21- '30, Cumulative)

-150
▲ 
10% ▲ 
15% ▲ 
20%

31
GHG abatement cost

How many years does the decision maker consider the reduction
of energy cost for ? The years is the payback period.
GHG abatement cost
= (Fixed cost + Reduction of annual energy cost * Payback
period)
/ annual GHG reduction
Abatement cost
Technology A

Technology B

Technology C

Technology D

Technology G
Technology E

Technology F
GHG Reduction

32
Abatement cost curve under 20% reduction case
1000

Building Energy Management System

Short
Efficient transportation system
Abatement cost (US$/t-CO2)

800 pay back period

Energy saving navigation

Efficient air conditioner
600 Mitigation of F-gas
Industry
Efficient lighting

Transport
400
Residential
Commercial
200 Agri& Waste
F-gas

Efficient electric

PV (residential)

Plug-in HV
Office electric

Hybrid vehicle
Efficient vehicle
PV (residential)

Electric vehicle
Insulated building
Efficient Lighting

PV (Commercial)
appliance
equipment

-200 Payback period = Short

Payback period = 3 years
PV: 10 years
-400 Building insulation : 10years

0 40 80 120 160 200 240 280 320 360

GHG reduction (Mt-CO2)
33
 Abatement cost (US$/t-CO2)

200
400
600
800

-400
-200
1000

0
Efficient air conditioner
Energy saving navigation

40
Efficient lighting
Building Energy Management System

PV: 12 years

80
Hybrid vehicle

Efficient electric appliance

120
Payback period = 8 years
Efficient Lighting

Building insulation : 15-17years

Long

160
Office electric equipment

200
Industrial cross-cutting device
Mitigation of F-gas Efficient transportation system

240
Efficient vehicle
heating
pay back period

280
Efficient water

GHG reduction (Mt-CO2) PV (residential)

320

PV (Commercial)
Plug-in HV
360

Electric vehicle
Insulated building
34
Abatement cost curve under 20% reduction case

F-gas
Industry
Transport
Residential
Commercial
Agri& Waste
 Abatement cost (US$/t-CO2)

200
400
600
800

-400
-200
1000

0
Efficient air conditioner
Energy saving navigation

40
Efficient lighting
Building Energy Management System

80
Hybrid vehicle

Efficient electric appliance

120
Efficient Lighting

160
Office electric equipment

200
Industrial cross-cutting device
Mitigation of F-gas Efficient transportation system

240
Efficient vehicle
heating Cost
280
Efficient water

GHG reduction (Mt-CO2) PV (residential)

Abatement cost and countermeasures

320

PV (Commercial)
Plug-in HV
360

Electric vehicle
Cumulative production

Insulated building
35
F-gas
Industry
Transport
Residential
Commercial
Agri& Waste
Conclusion
• Enduse[global] model
• Information of reduction potential and cost were
required for policy makers to discuss the national
target
• Model could provide information relating to
comparability by calculate MAC in various regions.
• Enduse[Japan] model
• Information of the national technological potential
and the cost for reduction were required.
• Model could provide these information, and
suggestion of required policies and actions to realize
the potential.

36
 Content

1. Policy making Process of Japan’s mid-term

target on GHG reduction

2. AIM/Enduse model and Its contribution of

the process

3. MAC curve of Japan, Korea and China

4. Template of the AIM/Enduse[MAC]

37
Example of abatement cost curves in 2020
in All sectors (Japan)

JPN
200.0
Marginal abatement cost (US$/tCO2eq)

150.0 Oil boiler

Efficient Gas boiler
100.0

50.0 Coal thermal plant

Efficient Gas thermal plant
0.0
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%
(50.0)

(100.0)
Reduction rate vs B.L. case

JPN
Example of abatement cost curves in 2020
in All sectors (China)

CHN
200.0
Marginal abatement cost (US$/tCO2eq)

Coal thermal plant

150.0
Efficient Gas thermal plant

100.0

50.0 ・Efficient motor with inverter

・Solar photovoltaic power
0.0 generation plant
0.0% 10.0% 20.0% 30.0% 40.0% 50.0%
(50.0)

(100.0)
Reduction rate vs B.L. case
CHN
Example of abatement cost curves in 2020
in All sectors (Korea)

KOR
200.0
Marginal abatement cost (US$/tCO2eq)

150.0

100.0

50.0 Coal thermal plant

Efficient Gas thermal plant
0.0
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%
(50.0)

(100.0)
Reduction rate vs B.L. case
KOR
From MAC curve of three countries,
• Power generation sector (gas thermal plant) has large
reduction potential.
• Reduction potential under 0 USD are about 5%.

And,
• Reduction potential under 200 USD in Japan and Korea
are about 25% from baseline.
• On the other hand, China has larger potential (40%)
under 200 USD.

41
 Content

1. Policy making Process of Japan’s mid-term

target on GHG reduction

2. AIM/Enduse model and Its contribution of

the process

3. MAC curve of Japan, Korea and China

4. Template of the AIM/Enduse[MAC]

42
Templates of AIM/Enduse[MAC]

• Ctrl
Basics of calculation

• Sector
Target sectors
• Gas
Target gases
• Energy
Energy type
• Service
Service type
• Region
Target region
• Device
Various technologies
• SHR
Service share
• SRV_DM
Service demand
• ENE_EMF
Emission factor of each energy
source
• ENE_PRC
Energy price of each energy
source
 Structure of AIM/Enduse

Energy Energy technology Energy service

• Oil • Blast furnace • Crude steel products

• Coal • Power generation • Electricity demand
• Gas • Air conditioner • Cooling demand
• Solar • Fluorescent • Lighting
• Electricity etc. • Automobile etc. • Transport volume etc.

Energy consumption Technology Energy service

CO2 emissions selection demands

Energy database Technology database Socioeconomic scenario

• Energy type • Technology price • Population growth
• Energy price • Energy consumption • Economic growth
• Energy constraints • Supplied service • Industrial structure
• CO2 emission factor amounts • Employment
• Technology share • Lifestyle
• Lifetime
 Service sheet

• Set services
• Resolution of sectors depend on data
availability
 SRV_DM sheet

• Set service demand

• Service demand for all services set in “service”
sheet are required.
 Device sheet

• Set Technologies
In Device Out
OLK RW_01OK_EXT RSD_RDM
1.1 toe 1.0 toe
Energy Service
 Thank you very much
for your kind attention.

48