2019 CSCE Annual Conference - Laval (Greater Montreal)

2019 CSCE Annual Conference - Laval (Greater Montreal) Conference


Title
Energy-Related Economic Modeling to Support the Environmental Policy-Making, Case Study of the Province of Saskatchewan

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Author(s)
Ms. Lirong Liu, University of Regina (Presenter)
Dr. Gordon Huang
Dr. Brian Baetz
Abstract

Knowledge area:

Recently, global climate change has emerged as one of the most challenging environmental issues and has gained considerable attention worldwide. Canada targets to achieve an economy-wide emissions objective by 2030. Facing these challenges, the Province of Saskatchewan is actively seeking effective way in order to realize GHG emission reduction targets in the most economical efficient manner.

Problem or purpose:

The objective of this study is to develop a systematic approach to gain more insights into the energy-environment-economy system and support the related policy-making.

Underlying methodological approach:

The systematic approach is composed of three models. In detail, Environmentally-Extended Input-Output Model is developed to facilitate the analysis of direct and indirect GHG emissions, emission relationships of different industries, as well as the integrated emission performance of the system. Bi-Level Energy Optimization Model is proposed to optimize the energy-related activities for supporting identification of policies for integrated energy system and Mining industry. Two-Stage Programming and Chance-Constrained Programming are introduced to tackle the uncertain input data described as probability distributions. Saskatchewan Computable General Equilibrium is developed to simulate a series of direct and indirect socio-economic impacts of various environmental policies.

Results:

The total GHG emissions of all sectors in Saskatchewan is 251.9 Mt, with the direct and indirect GHG emissions being 74.8 Mt and 177.1 Mt respectively. Exploitation relationships account for a large proportion of all scenarios. Mutualism relationships account for 15% to 28% of the total relationships, which indicates a need to improve the overall system. When carbon tax reaches C$ 40/tonne, the GDP will decrease by 0.96%. Decreasing the consumption of coal and petroleum products makes up for approximately 93.6% of the emission reduction.

Conclusions:

All emission sources and GHG types should be considered to comprehensively identify the characteristics of emissions flows in the socio-economic system. A resource-intense economy such as Saskatchewan, where there is little opportunity for fuel switching, a carbon tax will simply result in decisions to contract economy activity, rather than adjust to it.

Significance:

This research provides direct support for the environmental policy-making in Saskatchewan. The Environment Minister held a press conference to announce the modeling results and how they were used for formulating provincial carbon mitigation policies. The systematic approach is expected to be applied in other areas in Canada.

Intended audience:

The research may be interested for environmental and economic researchers, industrial stakeholders, as well as government agents.