Energy Transition

This paper explores the viability of a gas-to-liquids (GTL) technology and examines how GTL penetration could shape the evolution of the crude oil–natural gas price ratio. Much research has established the cointegrated relationship between crude oil and natural gas prices in the U.S. The persistently low U.S. natural gas prices in recent years seem to mark a shift in this relationship, and have led some in industry to begin considering investments in GTL capacity in the US. In order to look forward over decades when the underlying economic drivers may be outside of historical experience, we use a computable general equilibrium model of the global economy to evaluate the economic viability of GTL and its impact on the evolution of the crude oil–natural gas price ratio. Our results are negative for the potential role of GTL. In order to produce any meaningful penetration of GTL, we find it necessary to evaluate scenarios that seem extreme. With any carbon cap GTL is not viable. Moreover, even without a carbon cap of any kind, extremely optimistic assumptions about (i) the cost and efficiency of GTL technology and about (ii) the available resource base of natural gas and the cost of extraction, before the technology penetrates and it impacts the evolution of the crude oil–natural gas price ratio.

Application of the MIT Emissions Prediction and Policy Analysis (EPPA) model to assessment of the future of coal under climate policy revealed the need for an improved representation of load dispatch in the representation of the electric sector. A new dispatching algorithm is described and the revised model is applied to an analysis of the future of coal use to 2050 and 2100 under alternative assumptions about CO2 prices, nuclear expansion and prices of natural gas. Particular attention is devoted to the potential role of coal-electric generation with CO2 capture and storage. An appendix provides a comparison of a subset of these results with and without the more detailed model of electric dispatch.

We outline a benchmark carbon dioxide (CO2) intensity system with tradable permits for the aviation industry that will incent in-sector emission abatement opportunities that cost less than the social cost of carbon (SCC). The system sets benchmark emission intensities (CO2 emissions per revenue ton kilometer) by route group and facilitates flexibility in meeting the benchmarks by allowing airlines to sell permits if they operate more efficiently than the benchmarks, and buy permits if they do not meet the benchmarks. The CO2 benchmark system could operate concurrently with existing measures to mitigate aviation CO2 emissions, will reduce the number of offsets needed to achieve carbon-neutral growth, and provide another (optional) lever to address fairness issues in climate regulations. Moreover, by providing a blueprint for other industries to price marginal emissions at the SCC, a CO2 benchmark system could preserve the ‘carbon budget’ for use by high-cost abatement industries such as the aviation industry. 

Large power transformers (LPTs) are critical yet increasingly vulnerable components of the power grid. More frequent and intense heat waves or high temperatures can degrade their operational lifetime and thereby increase the premature failure risk. Without adequate preparedness, a widespread situation would ultimately lead to prolonged grid disruption and incur excessive economic costs. In this study, we investigate the impact of climate warming and corresponding shifts in heat waves on a selected LPT located in the Northeast corridor of the United States. We apply an analogue method, which detects the occurrence of heat waves based on the salient, associated large-scale atmospheric conditions (“composites”), to assess the risk of future change in heat wave occurrence. Compared with the more conventional approach that relies on climate model-simulated daily maximum temperature, the analogue method produces model medians of late twentieth-century heat wave frequency that are more consistent with observation and have stronger inter-model consensus. Under the future climate warming scenarios, multi-model medians of both model daily maximum temperature and the analogue method indicate strong decadal increases in heat wave frequency by the end of the 21st century, but the analogue method improves model consensus considerably. We perform a preliminary assessment on the decrease of transformer lifetime with temperature increase. Future work will focus on using more advanced algorithms to quantify the impact of more frequent heat waves on the transformer’s expected lifetime and associated additional costs. The improved inter-model consensus of the analogue method is viewed as a promising step toward providing actionable information for a more stable, reliable, and environmentally responsible national grid.

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