MENA-EDS

Short overview

The MENA-EDS model provides detailed projections of energy demand, supply, power generation mix, energy-related carbon emissions, energy prices and investment to the future covering the global energy system. MENA-EDS is a fully fledged energy demand and supply simulation model aiming at addressing energy system analysis, energy price projections, power generation planning and climate change mitigation policies. It contains relations and/or exogenous variables for all the main quantities, which are of interest in the context of general energy systems analysis. These include demographic and economic activity indicators, primary and final energy consumption by main fuel, fuel resources and prices, CO2 emissions, greenhouse gases concentrations and technology dynamics (for power generation, road transport, hydrogen production and industrial and residential end-use technologies).

MENA-EDS quantifies CO2 emissions and incorporates environmentally oriented emission abatement technologies (like RES, electric vehicles, CCS, energy efficiency) and policy instruments. The latter include both market based instruments such as cap and trade systems with differential application per region and sector specific policies and measures focusing on specific carbon emitting activities. Key characteristics of the model, that are particularly pertinent for performing the analysis of the implications of alternative climate abatement scenarios, include world supply/demand resolution for determining the prices of internationally traded fuels and technology dynamics mechanisms for simulating spill-over effects for technological improvements (increased uptake of a new technology in one part of the world leads to improvements through learning by experience which eventually benefits the energy systems in other parts of the World).

MENA-EDS is designed to provide medium and long term energy system projections and system restructuring up to 2050, both in the demand and the supply sides. The model produces analytical quantitative results in the form of detailed energy balances in the period 2015 to 2050 annually. The model can support impact assessment of specific energy and environment policies and measures, applied at regional and global level, including price signals, such as taxation, subsidies, technology and energy efficiency promoting policies, RES supporting policies, environmental policies and technology standards.

MENA-EDS consists of a large set of equations describing the time evolution of key variables, which are of interest in the context of a general analysis of the energy-environment-economic system.Equations in the model represent the model’s endogenous variables as a function of other endogenous variables, exogenous variables and parameters. It is a recursive dynamic (partial equilibrium energy system) model with annual resolution currently serviced to run up to the year 2050 (the process to extend model horizon to 2100 is ongoing). The MENA-EDS model has a triangular structure in order to avoid contemporaneous simultaneity. On the other hand, simultaneity is modelled through lagged instances of endogenous variables. Most of the model equations are specified in difference terms in order to avoid excessive early variability and adequately represent accumulation of uncertainty in the longer term. The model is currently used to develop NDC and low-emission pathways for South Mediterannean countries (Morocco, Algeria, Tunisia, Egypt, Luibya, Israel, Jordan, Lebanon, Turkey, Palestine), but can be expanded to other countries (this process is already implemented in NDC ASPECTS project)

Key features of the MENA-EDS model

The MENA-EDS model provides detailed projections of energy demand, supply, power generation mix, energy-related carbon emissions, energy prices and investment to the future covering the global energy system. MENA-EDS is a fully fledged energy demand and supply simulation model aiming at addressing energy system analysis, energy price projections, power generation planning and climate change mitigation policies. The model contains relations and/or exogenous variables for all the main quantities, which are of interest in the context of general energy systems analysis. These include demographic and economic activity indicators, primary and final energy consumption by main fuel, fuel resources and prices, CO2 emissions, greenhouse gases concentrations and technology dynamics (for power generation, road transport, hydrogen production and industrial and residential end-use technologies).

MENA-EDS quantifies CO2 emissions and incorporates environmentally oriented emission abatement technologies (including renewable energy, electric vehicles, Carbon Capture and Storage, energy efficiency, electrification, green hydrogen, advanced biofuels) and energy and climate policy instruments. The latter include both market based instruments such as cap and trade systems with differential application per region and sector specific policies and measures focusing on specific carbon emitting activities. Key characteristics of the model, that are particularly pertinent for performing the analysis of the implications of alternative climate abatement scenarios, include world supply/demand resolution for determining the prices of internationally traded fuels and technology dynamics mechanisms for simulating spill-over effects for technological improvements (increased uptake of a new technology in one part of the world leads to improvements through learning by experience which eventually benefits the energy systems in other parts of the World). MENA-EDS is designed to provide medium and long term energy system projections and system restructuring up to 2050 (and 2100), both in the energy demand and the supply sides. The model produces analytical quantitative results in the form of detailed energy balances in the period 2015 to 2050 annually (to be expanded to 2100). The model can support impact assessment of specific energy and environment policies and measures, applied at regional and global level, including price signals, such as taxation, subsidies, technology and energy efficiency promoting policies, RES supporting policies, environmental policies and technology standards.

Climate module & emissions granularity

The MENA-EDS model estimates in detail carbon dioxide emissions, as emerging from fossil fuel combustion and industrial processes.

The model directly covers all emissions from the energy sector and the industry sector and can split CO2 emissions by sector (transport, industry, buildings, power generation, refineries, international bunkers, other) and by fuel (coal, oil, natural gas). The model is currently expanded to represent non-CO2 GHG emissions (including CH4, N2O and F-gases) through specific marginal abatement cost curves per region and sector.

Energy and climate policies affect these emissions: energy CO2 is derived from the changes in the energy sector induced by the policy, other emissions are affected by marginal abatement cost curves.

The model has been used extensively to study climate change mitigation scenarios, see References section for the most recent examples.

Socioeconomic dimensions

The two main socio-economic drivers, population and GDP, are exogenous in MENA-EDS.

The key marco-economic assumptions are derived from population and GDP projections.

Starting from historical data, sectoral economic activity variables are calculated (capturing regional differentiation):

• sectoral value added by sector (industries, services, agriculture): depends on the level of development of the region, given by GDP per capita (industrialization phase followed by service-based economy);
• industrial physical production: depends on the evolution of sectoral value added, which depends on the level of development
• mobility (for passengers and for goods): depends on the evolution of GDP per capita and transport activity (measured in terms of passenger-km/cars per capita or tonne-km) as well as the average cost of transport compared to income
• buildings surfaces: depend on households size and surface per dwelling, both depending on personal income.

Mitigation/adaptation measures and technologies

MENA-EDS is a technology-rich energy system model that represents most major fossil fuel and low-carbon technologies that are envisaged to be available for at least the first half of the 21st century, and also including disruptive technological options, including zero and negative-emission technologies (incuding Biomass with CCS and Direct Air Capture) . By simulating the substitution of low or zero-carbon for high-carbon technologies in response to their relative costs, as well as emissions constraints and/or carbon prices, the MENA-EDS energy system model simulates mitigation through a large set of different measures and technological configurations.

Economic rationale and model solution

MENA-EDS is a recursive dynamic energy system simulation model. Variables are either calculated directly or are calculated based on the previous years' values, to which are applied the evolution of explanatory variables and other exogenous parameters.

The economic decisions regarding the investment and operation of the energy system are based on the current state of knowledge of parameters (costs and performance of technologies, prices, ...) or with a myopic anticipation of future costs and constraints. The model does not use foresight but myopic anticipation. Some foresight can be forced in the electricity production sector. The core operating principle of the model is that of market equilibrium. The representative agents in the modules use information on prices and make decisions about the allocation of resources. They represent, for example, regional electricity sectors, regional refining sectors, regional energy demand sectors. Markets are the means by which these representative agents interact with one another. The model solves for a set of market prices so that supplies and demands are balanced in all these markets across the model ; in other words, market equilibrium is assumed to take place in each one of these markets (partial equilibrium), and not in the entire economy across all markets (general equilibrium). The solution process is the process of iterating on market prices until this equilibrium is reached. The regional fuel markets are also integrated to form an international (global or regional) market equilibirum for crude oil, natural gas and coal.

A major update of the model is currently implemented, expanding its time horizon, technology coverage, regional coverage and policy representation (as part of H2020 NDC ASPECTS project)

Key parameters

Key scenario assumptions for MENA-EDS include socioeconomics (population, labour participation, and GDP); energy technology characteristics (e.g. costs, performance); energy and other resources & potentials, such as fossil fuels, wind, solar, uranium; and policies, including emissions constraints, renewable portfolio standards, etc.

Key scenario results (outputs) from MENA-EDS include an analysis of the energy system (energy demands, flows, technology deployments, and prices throughout); prices of energy products; and emissions for the major greenhouse gases

Outcomes of MENA-EDS depend strongly on the assumptions made for socioeconomic, techno-economic, and policy parameters.

Parameters can be revised and updated in the framework of the project, following the feedback of local and national experts (stakeholder engagement), the comparative assessment with other modelling experiences, and the discussion with the partners (modellers).

Policy questions and SDGs

Key policies that can be addressed

The MENA-EDS model is used to simulate the implications of various energy and climate policy instruments, including:

GHG policies

Regional emission reduction objective: Implementation of carbon pricing schemes

Cumulated CO2 buget: Regional differentiation of emission constraints and carbon pricing to reduce emissions within budget (iterative calculation)

Energy pricing policies

Carbon pricing (either carbon taxation in ETS sectors or carbon values non-ETS sectors)

Other environmental taxes (e.g. introduction of taxes on fossil fuel production and/or consumption or environmental tax on non-conventional fuels production)

Subsidies to renewable energy, electric cars and energy efficiency

Fossil fuel subsidies (including the possibility to phase out)

Support policies for specific technologies

Electricity generation feed-in tariffs (especially for renewable energy technologies)

Acceleration of deployment of low-emission vehicles (e.g. through direct subsidies or low interest loans)

Low interest loans or subsidies to capital cost to purchase energy appliances and equipment or to perform energy retrofitting

Efficiency standards

Fuel efficiency standards in vehicles and in buildings

Penetration of low-energy consuming buildings

Openness to investment, especially in low-carbon technologies

Discount rates in low-carbon technology investment

Lower discount rates (subsidies to capital) for low-carbon and energy efficient technologies

The model calculates several indicators that can be used to inform energy and climate policy impact assessment at regional or global level. These include:

Energy Demand, Energy intensity of GDP (primary and final energy), Energy intensity per unit of value added in industry, Energy intensity of households’ income, Energy intensity per inhabitant, Energy intensity per passenger car, Electricity consumption per capita in residential sector, Electricity generated per capita, Transport fuels per capita, Performance against overall energy efficiency targets (primary energy and final energy), Number of passenger cars per capita, Overall share of RES in primary energy demand, Share of RES in total power generation, Share of bio-fuels in fuels used in the transport sector, Share of renewable energy in power generation, Share of electricity produced by CCS, Share of intermittent RES in power generation, Share of nuclear in power generation, Power generation per capita, Average load factor of power generation, Average rate of use of power plant capacities (by type), Security of Energy Supply, Overall energy dependence indicator in each region, Evolution of import fossil fuel prices for the EU, Developments of global fossil fuel markets for oil, natural gas and coal, Share of unconventional oil (extra heavy oil and tar sands) in global oil supply, Share of Middle East production in global oil production and reserves, Development of unconventional gas resources (shale, tight and CBM), Carbon intensity of GDP, Carbon intensity of households,Carbon intensity of the transport sector,Carbon emissions per capita,Carbon intensity of power generation, Share of emissions captured in power generation, Carbon intensity per unit of final energy in industry/transport/buildings, Carbon intensity per unit of primary energy, Prices for internationally traded fossil fuels (coal, oil and natural gas), Electricity prices for industries and households, Unit costs of electricity production, Investments in the power generation sector and in energy efficiency, Consumer expenditures on final energy, Carbon prices

Implications for other SDGs

MENA-EDS does not automatically calculate the implications on non-climate SDGs of its least-cost energy system to meet prescribed climate or emissions constraints. However, it is possible to use its outputs to calculate relevant indicators in the SDG agenda (details in the SDGs tab).

Model presentation

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Slides

Recent use cases