Appendix G: Key Assumptions for the IEO2005 Kyoto Protocol Case

Energy-Related Emissions of Greenhouse Gases

The System for the Analysis of Global energy Markets (SAGE)—the model used by the Energy Information Administration (EIA) to prepare the International Energy Outlook 2005 (IEO2005) mid-term projections—does not include non-energy-related emissions of greenhouse gases, which are estimated at about 15 to 20 percent of total greenhouse gas emissions, based on inventories submitted to the United Nations Framework Convention on Climate Change (UNFCCC). SAGE models global energy supply and demand and, therefore, does not address agricultural and other non-energy-related emissions.

EIA implicitly assumes that percentage reductions of non-energy-related emissions and their associated abatement costs will be similar to those for energy-related emissions. Non-energy-related greenhouse gas emissions are likely to grow faster than energy-related emissions; however, the marginal abatement costs for non-energy-related greenhouse gas emissions are not known and cannot be estimated reliably. In SAGE, each region’s emissions reduction goal under the Kyoto Protocol is based only on the corresponding estimate of that region’s energy-related carbon dioxide emissions, as determined by EIA data. It is assumed that the required reductions will also be proportionately less than if all gases were included.

Carbon Dioxide Emissions

For IEO2005, EIA modeled only energy-related carbon dioxide emissions. Energy-related emissions of other greenhouse gases, such as methane, nitrous oxide, and sulfur hexafluoride, are not included in the analysis. The current SAGE framework uses historical data on fuel consumption and emissions from EIA’s International Energy Annual 2002 to calibrate the base year for the model’s Reference Energy System (RES). The International Energy Annual does not provide historical data for methane and nitrous oxide emissions, and currently there are no plans to do so in the future.

EIA assumes that emissions reduction proportions and abatement costs for energy-related methane and nitrous oxide will be sufficiently similar to those for carbon dioxide that—given their lesser share of total emissions (approximately 15 percent from energy and non-energy sources combined)—the per-unit carbon price derived by modeling carbon dioxide alone is representative of the abatement costs for all energy-related greenhouse gas emissions. The UNFCCC estimates that total Annex I emissions of greenhouse gases (in carbon dioxide equivalents) in 2002 had the following composition: energy-related carbon dioxide, 78.1 percent; non-energy-related carbon dioxide, 3.8 percent; methane, 10.0 percent; nitrous oxide, 6.4 percent; and other gases, 1.7 percent.¹⁹

Table G1.  Differences Between IEO2005 and UNFCCC Regional Emissions Reduction Targets for 2010 Printer friendly version SAGE Region EIA Target (Thousand Metric Tons) UNFCCC Target (Thousand Metric Tons) Difference Thousand Metric Tons Percent of IEO2005 Target Canada    444,375    396,591   47,784 10.75 Eastern Europe 1,056,157    967,862   88,295   8.36 Former Soviet Union 3,091,752 3,080,200   11,552   0.37 Japan    930,230    985,432  -55,202  -5.93 Western Europe 3,122,701 2,936,310 186,391   5.97

Emissions Reduction Targets

The emissions reduction targets modeled in SAGE were derived from EIA’s historical data on greenhouse gas emissions, not on UNFCCC data. Similarly, the historical values for fuel consumption used in SAGE are based on EIA data. For methodological reasons, the EIA and UNFCCC data on emissions differ; therefore, the emissions targets used for the IEO2005 analysis differ from those used by the UNFCCC, as shown by the examples in Table G1.