ABSTRACT

In the context of updating the 2015 Nationally Determined Contribution (NDC), the government of Chile has updated its estimates of compliance costs for a series of mitigation actions with an emphasis on the energy sector as the main source of its greenhouse gas emissions. Using the information developed in this process, we assess the impact on compliance costs of increasing the flexibility for sources by introducing different emissions trading schemes. For this we develop a detailed optimization model that represents the operational and investment decisions that could be taken by the energy generation, industrial and mining sectors if an Emissions Trading System (ETS) was implemented. An ETS with two cap and trade options is analysed together with an offset mechanism for sources not included in the ETS. Also, two policy goals are considered: a stringent 76% sectoral reduction goal in 2050 similar to Chile’s current strict NDC, and a more lax 46% goal similar to Chile’s initial 2015 NDC proposal. The results show that (i) cost reductions from increased flexibility for Chile’s current strict NDC are significant, and that offsets can play an important role; (ii) the stringency of the reduction goal affects the magnitude of the cost savings related to flexibility and, surprisingly, total abatement costs are negative (i.e. there are benefits) for the 46% reduction goal. In this latter case, the most significant cost reductions result from compelling firms to comply with their allowances in each sector, not increased flexibility. These results highlight the policy relevance of case by case analysis using a modelling approach similar to the one we develop here.

Key policy insights

• ETS implementation can help Chile meet its mitigation commitment for 2050. The compliance costs can vary significantly depending on the flexibility implemented in the emissions trading schemes.

• Optimization models can help decision-makers define the attributes of an ETS, such as the sectors that should participate, the cap, and the percentage of offsets.

• The proposed methodology also highlights and quantifies the offsets that can be acquired from sectors that are not part of an ETS, such as forestry, agriculture, and the waste sector. The possibility to acquire of offsets could reduce significantly the cost for industries that participate of an ETS.

摘要

在更新 2015 年国家自主贡献 (NDC) 的背景下，智利政府更新了一系列缓解行动的合规成本估算，重点是能源部门是其温室气体排放的主要来源。使用在此过程中开发的信息，我们评估了通过引入不同的排放交易计划来增加来源灵活性对合规成本的影响。为此，我们开发了一个详细的优化模型，该模型代表了在实施排放交易系统 (ETS) 的情况下能源生产、工业和采矿部门可以采取的运营和投资决策。具有两个限额和交易选项的 ETS 与未包含在 ETS 中的来源的抵消机制一起进行分析。此外，还考虑了两个政策目标：2050 年严格的 76% 部门减排目标，类似于智利目前严格的 NDC，以及更宽松的 46% 目标，类似于智利最初的 2015 年 NDC 提案。结果表明，(i) 智利目前严格的 NDC 增加灵活性所带来的成本降低是显着的，并且抵消可以发挥重要作用；(ii) 减排目标的严格程度会影响与灵活性相关的成本节约幅度，令人惊讶的是，46% 的减排目标的总减排成本是负的（即有收益）。在后一种情况下，最显着的成本降低来自迫使公司遵守每个部门的配额，而不是增加灵活性。这些结果使用与我们在此开发的建模方法类似的建模方法，突出了个案分析的政策相关性。

关键政策见解

• ETS 的实施可以帮助智利实现其 2050 年的减排承诺。遵守成本可能会有很大差异，具体取决于排放交易计划中实施的灵活性。

• 优化模型可以帮助决策者定义 ETS 的属性，例如应该参与的部门、上限和抵消百分比。

• 提议的方法还强调并量化了可以从不属于 ETS 的部门（例如林业、农业和废物部门）获得的抵消。获得抵消的可能性可以显着降低参与 ETS 的行业的成本。