Energy scenarios in global economic models of greenhouse gas reduction

The results of economic models of greenhouse gas reduction depend sensitively on the assumptions embedded in the energy scenarios chosen, both for business-as-usual and emission reduction scenarios. In this paper, some of the basic requirements of useful scientific models are reviewed and then, as a case study, applied to the MEGABARE computer model of greenhouse response in the global economy. At the Conference of the Parties to the Framework Convention on Climate Change, held in Kyoto, Japan, in December 1997, the Australian Government used MEGABARE as a basis for its successful demand that Australia, as a fossil fuel "dependent" country, should be permitted to increase its greenhouse gas emissions. However, it is shown here that several of MEGABARE's basic assumptions fail to meet basic criteria for useful modelling. Two alternative, low-cost, emissions reduction scenarios for Australia, which contain fewer ad hoc assumptions than MEGABARE, are presented: 1. A "moderate" reduction scenario that is equivalent to the pre-Kyoto European Union target stretched out to 2020. In this scenario, improvements in the efficiency of energy use per person compensate for population increase. The additional reduction in emissions is achieved by a modest 15% reduction of the greenhouse intensity (emissions per unit of energy generation) of the electricity sub-sector; 2. A "strong" (50% reduction in CO22 emissions) scenario, which is achieved by reducing energy use per person by 40% and greenhouse intensity by 38%, the latter being achieved mainly in the electricity sub-sector, with significant reductions also coming from the transport and non-electrical heating sub-sectors. This scenario offers a feasible pathway to a sustainable energy system, based on small improvements to existing technologies. Its additional costs, compared with those of business-as-usual, are likely to be much smaller than those of the two less effective MEGABARE scenarios.