11-03-2021, 03:42 AM (This post was last modified: 11-03-2021, 03:47 AM by qzaus.)
Hello! I am implementing a FLO_SUB (as a tax credit) to CCS technologies. Since the unit for the tax credit is $/ton CO2 sequestered, and the process has a negative ENV_ACT~ELCCO2 value, I was wondering in the FLO_SUB whether the way I molded it is correct. (The unit for the process is in PJ, and the unit for CO2 is in Mt). The value for the FLO_SUB is converted to $/PJ (based on the process).
In the set up I used Pset_PN to identify the process name and used Cset_CN to identify ELCCO2 (CO2 from the electricity sector).
Please let me know whether this is the correct way to model such tax credit.
If the flow of ELCCO2 of these processes is negative, and you define a positive unit subsidy for them (by FLO_SUB), then the amount of subsidy will be negative. And negative subsidy is like an additional cost. So, probably not as intended?
(11-03-2021, 03:57 AM)Antti-L Wrote: If the flow of ELCCO2 of these processes is negative, and you define a positive unit subsidy for them (by FLO_SUB), then the amount of subsidy will be negative. And negative subsidy is like an additional cost. So, probably not as intended?
Thanks! That makes sense. I tried to use FLO_TAX, and for both FLO_TAX and FLO_SUB (for using ELCCO2 in Cset_CN)I got the same results as the reference case.
My current issue is that if I use the output commodity of the process in Cset_CN instead of using ELCCO2, the results are more CO2 if using FLO_SUB, and no change CO2 if using FLO_TAX. I was wondering what should I use in determining for all the values to put in Pset___ and Cset_ values.
Are you saying that even if the CCS processes are active (you have e.g. ENGACCCS operating), you see no difference in the objective function, between either FLO_TAX or FLO_SUB defined for ELCCO2?
(11-03-2021, 02:18 PM)Antti-L Wrote: Are you saying that even if the CCS processes are active (you have e.g. ENGACCCS operating), you see no difference in the objective function, between either FLO_TAX or FLO_SUB defined for ELCCO2?
If I define Cset_CN with ELCCO2, there is no difference in the objective between using FLO_TAX and using FLO_SUB (I understand what being active means but was not sure how to check that in the results, for these two scenarios, there ENGACCCS has different values of VAR_ActM and VAR_NcapM). I don't think this process is active since there is no difference compared to a BAU case without such tax policy.
If I define Cset_CN with the output commodity in process ENGACCCS, using FLO_TAX does not change anything compared to the BAU case, but using FLO_SUB actually leads to more CO2 emission and lower objective values compared to the BAU case. This is the case where for ENGACCCs process, more attributes exist in the results (and I understand it as it's active).
On a second set of CCS technology, the ENV_ACT is positive, I ran similar scenarios as above. The only scenario that leads to a different obj value compared to the BAU case is that I define Cset_CN with ELCCO2 (not the output commodity) and use FLO_SUB. In this scenario, the obj value is lower than the BAU obj and CO2 is lower than the emission in the BAU case.
Sorry for the rambling. In summary, I think my confusion lies in two parts: 1. how should I choose Cset_CN, should it be the emission (as a commodity) or should it be the output commodity of the process? 2. If I define Cset_CN using ELCCO2, and applying FLO_SUB and FLO_TAX both lead to no changes compared to the BAU, is it because the tax credit value is too low or should I change the ENV_ACT to be positive?
Thank you very much for your time. Please let me know if I can provide more information.
(12-03-2021, 11:08 AM)qzaus Wrote: If I define Cset_CN with ELCCO2, there is no difference in the objective between using FLO_TAX and using FLO_SUB (I understand what being active means but was not sure how to check that in the results, for these two scenarios, there ENGACCCS has different values of VAR_ActM and VAR_NcapM). I don't think this process is active since there is no difference compared to a BAU case without such tax policy.
Ok, if there is no activity for ENGACCCS, then of course there cannot be any difference in the objective.
(12-03-2021, 11:08 AM)qzaus Wrote: If I define Cset_CN with the output commodity in process ENGACCCS, using FLO_TAX does not change anything compared to the BAU case, but using FLO_SUB actually leads to more CO2 emission and lower objective values compared to the BAU case. This is the case where for ENGACCCs process, more attributes exist in the results (and I understand it as it's active).
Well, that sounds basically fine. With FLO_TAX the process is taxed, and apparently does not become active in the solution. With FLO_SUB you are subsidising this process, and it then becomes active (I expect that you see investments into this process). But you also say that it actually leads to more CO2 emission, and that leaves the question open whether the net emission are correct or not? Do you see the negative emissions from ENGACCCS in this case (CO2 captured)?
(12-03-2021, 11:08 AM)qzaus Wrote: On a second set of CCS technology, the ENV_ACT is positive, I ran similar scenarios as above. The only scenario that leads to a different obj value compared to the BAU case is that I define Cset_CN with ELCCO2 (not the output commodity) and use FLO_SUB. In this scenario, the obj value is lower than the BAU obj and CO2 is lower than the emission in the BAU case.
The OBJ value decreasing indicates that FLO_SUB is working as expected, but it remains unexplained why CO2 would be lower than in BAU. Maybe it is some low-emission technology?
(12-03-2021, 11:08 AM)qzaus Wrote: Sorry for the rambling. In summary, I think my confusion lies in two parts: 1. how should I choose Cset_CN, should it be the emission (as a commodity) or should it be the output commodity of the process? 2. If I define Cset_CN using ELCCO2, and applying FLO_SUB and FLO_TAX both lead to no changes compared to the BAU, is it because the tax credit value is too low or should I change the ENV_ACT to be positive?
FLO_TAX(r,y,p,c,ts,cur) / FLO_SUB(r,y,p,c,ts,cur) both expect region, year, process, commodity, timeslice and currency. The commodity should be the one you wish to be taxed or subsidized. Only you can tell which flow you want to choose to be taxed or subsidized, but as noted earlier, if the flow is negative, a tax would work like a subsidy and vice versa. Sorry, if I could not really be of much help with the confusion.
(12-03-2021, 11:08 AM)qzaus Wrote: Sorry for the rambling. In summary, I think my confusion lies in two parts: 1. how should I choose Cset_CN, should it be the emission (as a commodity) or should it be the output commodity of the process? 2. If I define Cset_CN using ELCCO2, and applying FLO_SUB and FLO_TAX both lead to no changes compared to the BAU, is it because the tax credit value is too low or should I change the ENV_ACT to be positive?
FLO_TAX(r,y,p,c,ts,cur) / FLO_SUB(r,y,p,c,ts,cur) both expect region, year, process, commodity, timeslice and currency. The commodity should be the one you wish to be taxed or subsidized. Only you can tell which flow you want to choose to be taxed or subsidized, but as noted earlier, if the flow is negative, a tax would work like a subsidy and vice versa. Sorry, if I could not really be of much help with the confusion.
Thanks Antti-L for your detailed response. One thing I am not quite sure is that the value I put on this FLO_TAX/FLO_SUB is to convert the unit to $/PJ, is that correct?
The reason for this is that the process has the activity unit of PJ and capacity unit in GW, the tax is $50/ton CO2 sequestered. So I used the ENV_ACT factor of the process to CO2, say it's -0.2 and convert everything to be as $/PJ. Is this correct? Thanks!
You must define FLO_TAX / FLO_SUB in proportion to the flow unit. If the activity unit is PJ, your process activity is in PJ, and all the energy flows of that process should normally also be in that same unit. However, emission flows are not expressed in PJ, but usually in kt or Mt. BTW: It is a bit strange if you have defined ELCCO2 emissions per activity, using ENV_ACT, because CO2 emissions are characteristic to the input fuel. For example, according to the (old) IPCC guidelines, natural gas has a default CO2 emission factor of 56.1 metric tonnes of CO2 per TJ. Therefore, I would define such an emission factor on the input flow. In other words, if your input flow of natural gas is in PJ, and the emissions are in kt, you would define FLO_EMIS(r,y,p,cg,ELCCO2,ANNUAL)=56.1 on the input flow of natural gas (where cg=the name of the natural gas commodity). And if it should be the captured amount of CO2, then multiply it by the capture efficiency (possibly with a negative sign, if you assume the captured amount to be immediately sequestered).
But anyway, emission flows are typically in mass units, and I would expect so in your model as well. Thus, if you need to specify e.g. an emission tax of 50 USD/tonne, and if the currency unit is cur=MUSD and emission flow unit is kt, the value should be 0.050.
(13-03-2021, 02:58 AM)Antti-L Wrote: You must define FLO_TAX / FLO_SUB in proportion to the flow unit. If the activity unit is PJ, your process activity is in PJ, and all the energy flows of that process should normally also be in that same unit. However, emission flows are not expressed in PJ, but usually in kt or Mt. BTW: It is a bit strange if you have defined ELCCO2 emissions per activity, using ENV_ACT, because CO2 emissions are characteristic to the input fuel. For example, according to the (old) IPCC guidelines, natural gas has a default CO2 emission factor of 56.1 metric tonnes of CO2 per TJ. Therefore, I would define such an emission factor on the input flow. In other words, if your input flow of natural gas is in PJ, and the emissions are in kt, you would define FLO_EMIS(r,y,p,cg,ELCCO2,ANNUAL)=56.1 on the input flow of natural gas (where cg=the name of the natural gas commodity). And if it should be the captured amount of CO2, then multiply it by the capture efficiency (possibly with a negative sign, if you assume the captured amount to be immediately sequestered).
But anyway, emission flows are typically in mass units, and I would expect so in your model as well. Thus, if you need to specify e.g. an emission tax of 50 USD/tonne, and if the currency unit is cur=MUSD and emission flow unit is kt, the value should be 0.050.
Thank you Antti for the detailed response. I think I have a better idea now in terms of how to assign the value to these tax credits.
Since the process associated with CO2 sequestered is negative, the processes in power generation in the dataset I am working on is very detailed, with a lot of the input and output commodities in the CCS process are used in other processes in power generation. I am planning to use NCAP_FSUB to impose a tax credit for the installed capacity. So changing the detailed technology information may be difficult at this moment. Thanks very much for your help. I appreciate it!
