Case Studies
Utilising DECO2 for energy planning in emerging economies
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DECO2 can assist both governmental and industrial policymakers in ASEAN countries by identifying achievable emissions targets and optimal paths to achieve them through a range of technologies, interventions, as well as budgetary and time constraints.
The applicability of DECO2 has been demonstrated through multiple case studies, including studies on the power sectors in Malaysia and Pakistan, and the Philippines. DECO2 can be used in a variety of settings, including industrial settings, policymaking, as well as academic settings for educational purposes.
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Malaysia is a CO2-intensive nation due to its rapid development and industrialisation, with about half the electricity consumed in the industrial sector alone. Electricity generation is projected to rise further, yet Malaysia aims to become a carbon-neutral nation by 2050. This brings the need for establishing a sustainable energy system that could support the demand without relying heavily on fossil fuel-based sources.
The initial version of DECO2 was tested to evaluate five emission-intensive industries in Peninsular Malaysia (i.e., refinery, petrochemical, oleochemical, cement, and power generation) for their mitigation of carbon footprint. The software enabled the specification of different energy demands of each industry, and the level of respective CO2 intensities. Based on this data, multiperiod energy planning for three distinct five-year periods was performed for all types of plants within each industry.
Through this case study, the efficiency of DECO2 framework was verified for planning emissions reduction. Additionally, the study provided grounds for accelerating decarbonisation efforts through a carbon trading scheme, by employing mitigation strategies for certain industries that are relatively easier to decarbonise to offset emissions from other sectors.
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The revised version of DECO2 (v2023) was tested in Pakistan's power sector. The new model incorporated carbon trading as an additional carbon management strategy, representing a significant advancement in the field of energy planning. Pakistan has pledged to reduce up to 20% of its projected greenhouse gas emissions by 2030 and has been taking steps to promote renewable energy and reduce CO2 emissions. However, a formal carbon trading system is yet to be introduced. Thus, the study utilised the modified version of DECO2 to test whether having a carbon trading scheme would promote sustainability in Pakistan.
A total of 208 power plants in Pakistan were analysed for the period of 2020-2040, with the reflection of simultaneous emissions trading across periods and among entities (power plants and government). The results showed that incorporating carbon trading into an energy market may lead to both financial (increased profits) and environmental (lower emissions) sustainability, and that hydropower, solar, and wind generation would be the energy sources with growth potential between 2021 and 2040.
The results provided insights into the effectiveness of carbon trading policies, the potential for renewable energy sources, and the efficacy of emission mitigation technologies to contribute to decarbonisation in the power sector. The results also indicated the challenge of harmonising deep decarbonisation with economic development in less developed countries and the potential that optimisation models can play in maximising gains under tight resource constraints.
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DECO2 was further improved in terms of the optimisation and technical aspects by including dynamic electricity pricing in addition to the carbon trading mechanism which has been integrated into the previous version. The revised software was case-tested on the power sector of Malaysia. A total of 107 existing and planned power plants in Peninsular Malaysia were examined for the period of 2024-2054, to align with Malaysia’s commitment to achieving net zero by 2050.
Carbon trading and gradual fossil phase-out are essential for Malaysia to meet its target of 29% renewable energy by 2030, 0% coal capacity by 2050, and 70% renewable capacity by 2050. However, Malaysia lacks a clear post-2035 plan to achieve these targets, and stringent regulations on palm plantations will be required to maintain 50% forest cover.
Results from the case study indicate that carbon pricing and trading policies (especially higher carbon prices) incentivise cleaner technologies and operational efficiencies, favouring renewable energy over CCS (Carbon Capture and Storage), NETs (Negative Emission Technologies), and fossil fuels, while generating additional carbon trading revenue. Despite renewable energy expansion and coal phase-out plans, CCS and CCUS (Carbon Capture, Utilisation, and Storage) remain necessary due to the significant role of natural gas in future energy systems.
The Philippines aims for 35% renewable power by 2030 and 50% by 2035, but detailed expansion plans are lacking, necessitating clear and achievable goals from policymakers. Achieving net zero by 2060 is possible with aggressive goals, strict regulations, promotion of emerging technologies, and a robust carbon trading mechanism, which could reduce dependence on foreign investments. Using the latest version of DECO2, energy planning optimisation (with and without carbon trading) was performed with a total 133 power plants connected to Luzon grid for the period of 2024-2054.
Results indicated that a mix of low-emitting power sources and emission reduction technologies is essential for meeting emission targets. Although CCS (Carbon Capture and Storage) deployment is limited to a capture capacity, carbon trading, renewable energy expansion, fossil plant decommissioning, and afforestation could help Philippine achieve its net-zero emissions.
Through the recent two case studies in Malaysia and the Philippines, the scalability of the modified DECO2 framework has been confirmed: It has been shown that the framework is flexible in accommodating various energy sources, emission reduction technologies, market mechanisms, and economic instruments, and thus can be adapted to diverse energy landscapes in ASEAN countries.
The latest DECO2 version was published as a part of the project “Supporting ASEAN energy decarbonisation through bespoke decision-support software (led by Dr Michael Short, University of Surrey)”, and it was funded by Research and Innovation for Development in ASEAN (RIDA) call and sponsored by the UK Foreign, Commonwealth & Development Office.
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