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Denmark's Fourth National Communication on Climate Change

Annex E Results and supplementary information concerning greenhouse gas projections

• E1: THE RESULTS OF DENMARK'S MAY 2005 `WITH MEASURES' PROJECTION OF GREENHOUSE GAS EMISSIONS 2004-2030
• E2: A BRIEF DESCRIPTION OF THE WORK INVOLVED IN PREPARING THE ENERGY PROJECTIONS.

This Annex consists of the following 2 sub-annexes:

Annex E1: The results of Denmark's May 2005 `with measures' projection of greenhouse gas emissions 2004-2030, cf. Memorandum from NERI, May 2005.

Note to Tables E1-1 to E1-8: The tables show the historical and projected greenhouse gas emissions in ’000 tonnes CO₂ equivalents for CO₂, methane (CH₄), nitrous oxide (N₂O) and the F-gases (HFCs, PFCs and SF₆) respectively. Calculation of the emissions for the various IPCC categories are described in chapters 2-9 in Projection of greenhouse gas emissions 2004 to 2030, Memorandum to the Danish EPA, NERI, May 2005 – except for emissions from the use of solvents (6). CO₂ emissions from the use of solvents are based on a new method developed by NERI for calculation of the NMVOC emissions. The conversion factor from NMVOC to carbon is assumed to be 0.85 and the historical emissions in 2003 have been used for the projection of the NMVOC emissions. Emissions from storage of coal have previously been included in the historical inventories, however they are not included in the projections now. In the same magnitude, projections for industrial processes do not yet include sources that have not been implemented in the historical inventories. It is therefore expected that in the next reporting of the historical inventories to the Climate Convention, the sources included in the historical inventories will fully concur with the sources included in the projections. In total these changes will correspond to less than 0.1 million tonnes CO₂ equivalents.

ANNEX E1: THE RESULTS OF DENMARK'S MAY 2005 `WITH MEASURES' PROJECTION OF GREENHOUSE GAS EMISSIONS 2004-2030

Notes to Table E1-8:

* Include process emissions – that is corresponding to the IPCC category Industry, in that industry's energy consumption is included under Energy – as well as emissions from the use of organic solvents.

** Only includes methane and nitrous oxide from agriculture, that is corresponding to the IPCC category Agriculture – in that agriculture's energy consumption is included under Energy.

*** Includes the total net emissions from land-use, land-use change and forestry in accordance with the Climate Convention, which is different from what can be included under Articles 3.3 and 3.4 of the Kyoto Protocol.

**** Also includes emissions from wastewater treatment, cf. the IPCC guidelines.

Click here to see Table E1-E7

TABLE E1-8: THE RESULT OF DENMARK'S 'WITH MEASURES' GREENHOUSE PROJECTION 2004-2030 IN THE FORMAT RECOMMENDED UNDER THE UNFCCC

ANNEX E2: A BRIEF DESCRIPTION OF THE WORK INVOLVED IN PREPARING THE ENERGY PROJECTIONS.

A brief description of the work involved in preparing the energy projections.

The work involved in preparing the energy projections goes through the following stages:

1. Final energy consumption of businesses and the domestic sector (except transport)
    
2. Energy consumption for production of electricity and district heating
    
3. Own consumption by refineries and gas works
    
4. Own consumption by the North Sea, including flaring
    
5. Industrial cogenerated heating and power, mini cogenerated heating and power, biogas etc.
    
6. Energy consumption by transport

The economic macro model EMMA is calculated in item 1. Ramses, which is a technical/economic optimisation model, is used for calculations in item 2 based on input of the energy consumption from the housing models and EMMA. Item 3 is automatically projected based on the latest statistics. Item 4 is projected on the basis of the information from Mærsk and statements of the Danish oil and gas reserves. Item 5 is projected on the basis of current plans to expand – after which it remains unchanged. The Danish Road Directorate has provided the main part of the transport projection (item 6), however the Danish Energy Authority has prepared the very simple projections of international shipping, military transport and the size of cross-border trading. Moreover, the Danish Road Directorate's tender for electric trains is adjusted to the statistics. The different parts of the projection are collected in the Danish Energy Authority's collective model, which can be used to calculate gross energy consumption and energy-related CO₂ emissions. Extracts from this model are given to NERI, and NERI has calculated emissions from the energy sector.

As mentioned, projections of the final energy consumption in the business and domestic sectors are based on an ADAM/EMMA projection. EMMA is a macro model that describes the final energy consumption broken down into a number of sectors and seven types of energy. It is based on historical experience with the behaviour of businesses and households and is documented in Environmental satellite models for ADAM, NERI Technical Report no. 148, NERI 1995.

In EMMA, energy consumption is determined by three factors: production, energy prices/taxes and energy efficiencies/ trends. Increased economic activity will increase the demand for energy input, whereas increased energy prices and taxes will pull in the direction of a more limited demand for the fuels. Improved energy efficiency will mean that pro-duction can be maintained using less energy, and in EMMA this results in reduced energy consumption.

The EMMA system is structured based on the link between five energy-specific models developed at NERI and Risø National Laboratory. These models determine the use of seven types of energy (liquid fuels, solid fuels, gas, biofuels, transport energy, electricity and district heating) in the domestic and business sectors, conversion of fuels (solid fuels, liquid fuels, gas, biomass) by the supply sector to electricity and district heating, and it calculates the emissions this use of energy entails. EMMA is structured as a satellite model to ADAM, which is a widely used Danish macro-economic model that covers the entire economy.

The ADAM/EMMA system can calculate the effect of a number of initiatives. One of the most important aspects though, is that energy prices play an important role. The overall level for energy prices affects the total energy consumption, and the relationship between the prices of different types of energy affects the composition of energy consumption. Therefore the model can estimate the effect of CO₂ taxes, which in part raise all energy prices and in part change the relative energy prices, so that e.g. coal, which emits a lot of CO₂, is more expensive than natural gas that emits less CO₂.

The projection of production in the business sector and inflation is based on ADAM projections prepared by the Ministry of Finance.

Projection of the production of electricity and district heating (item 2 above) has been calculated using the Danish Energy Authority's Ramses-model based on the demand for electricity and district heating as calculated in the projection of the consumer sectors. In the projection, the production of electricity and heating is broken down into existing and possibly new production facilities based on the facilities' technical specifications, price of fuel and CO₂ emissions trading prices. The model also determines electricity prices on the Nordic market and the scope of electricity exchange with the other Nordic countries and takes account of the limits to the trading capacity. The production of electricity has been liberalised throughout the Nordic countries and therefore there is no close link to Denmark's demand, rather, it is based on the characteristics of the individual facility and the market prices. Industrial and local mini combined heat and power production are not projected in the Ramses model, therefore a separate (bottom-up) projection of this production has been prepared.

A more detailed description of Ramses can be found in the following.

Ramses (version 6) is a technical-economic model that describes the production of electricity and district heating in a random number of electricity areas, at present in the Nordic countries. It is a partially linear optimisation model that can calculate the production and fuel consumption at a great number of installations on a hourly basis. As the model is mainly designed for analysing the effects in Denmark, at present the Danish installations are described in more detail than utilities in the other Nordic countries.

The model calculates the price of electricity that creates equilibrium on the market. As regards electricity, the Nordic countries are divided into five areas separated by transmission connections with a maximum transfer capacity. If the need for transmissions exceeds the capacity, the price of electricity differs in the areas. The five areas are Finland, Sweden, Norway, western Denmark and eastern Denmark. As regards district heating there are far more isolated areas that each have their own price.

In addition to information concerning the transmission connections and detailed information on the type, efficacy and size of installation, the following input are used in the model: fuel prices, CO₂ allowances prices, fuel taxes as well as the demand for electricity and district heating in the area. Output from the model includes production, fuel consumption and emissions from each installation, and the price of electricity in each area.

In the model, all installations in each area are sorted according to the short-term, marginal production costs for electricity. Production is set in motion at the utilities one after another – starting with the cheapest one, and this continues until the demand (including any need for exports or imports) in each operational hour is met. The marginal costs of the most expensive producing installations thus set the price of electricity in the area. The largest hydropower plants have been given special treatment because they can adjust the time of production for strategic reasons using the water reservoirs.

The decision concerning investments in new utilities is kept separate from the model. Investments are only made if model calculations show that the installation can recover the investment, assuming specific rates of subsidies for RE (particularly wind turbines) are given, and free CO₂ allowances for fossil-based installations, etc. Installations placed in an area where district heating is needed typically have a competitive advantage due to income from the sale of heat.

In addition to prices and amounts, the model can estimate the overall system's security of supply as regards electricity. This is done on the basis of stochastic input on the probability of damage to installations and transmission connections, time series for production from wind turbines and hydropower as well as the variation in consumption.

Ra mses is used both for projection and analysis purposes. For example, it has been used to analyse the effect of new transmission connections, new wind turbine farms, changes in electricity consumption or changes in the prices of fuels and CO₂ allowances.

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Version 1.0 December 2005, © Danish Environmental Protection Agency