A framework to assess the economic and uncertainty implications for technologies for use in decarbonization

Abstract

The accumulation of greenhouse gasses is causing climate change on a global scale. From simulations of warming scenarios, it appears that complete replacements of fossil fuels within the global energy economy must occur within about 60 years if warming is to be limited to 2°C (Prinn et al., 2011). This means that the discussion about which pathways to decarbonization to pursue will need to occur soon, and will likely be difficult to correct later. This thesis developed and demonstrated two frameworks that can be used to guide discussions on decarbonization pathway choices. The first framework determines the economic usefulness of a technology by finding the difference in total system cost with and without that technology (the opportunity cost of not utilizing the technology).

The second framework quantifies uncertainties in proposed decarbonization pathways, propagates them through to target variables (such as carbon emissions), and calculates the probability of failing (or succeeding) to meet a target. Each framework is demonstrated with an example case set in the year 2050. The first framework assessed the economic usefulness of nuclear technology in regions in the United States, China and the United Kingdom at carbon emission constraints from 500 g/kWh to 1 g/kWh. It was found that the economic usefulness of nuclear technology depends upon the capital cost of nuclear as well as the renewable resources of the region. The second framework is used to assess the probability of meeting carbon emission targets at different carbon prices. It is found that nuclear technology increases the probability of succeeding to meet a carbon emission target (as compared to a scenario where nuclear technology is unavailable).

In addition, it is found that cases that benefit nuclear technology (such as electrification of space heating or a flexible, low-price electricity market) further increase the probability of succeeding to meet a carbon emission target. It is also found that the uncertainty in discount rate and nuclear capital cost have the biggest influence upon the distribution of possible carbon emissions in 2050. The development and demonstration of these frameworks show how discussions on decarbonization pathway choices can be guided. As the timeline to decarbonize diminishes, the choice of which decarbonization pathway to choose will shift from optimizing based on cost to a balance of optimizing cost and risk.