Assessment of low carbon measures with a bottom-up energy model in the residential and tertiary sector Montenegro April 2014 NATIONAL OBSERVATORY OF ATHENS Modelling of low carbon measures in residential and tertiary buildings: Montenegro 1 The assessment of low carbon measures in residential and tertiary sector of Montenegro with a bottom-up energy model has been compiled by the National Observatory of Athens (NOA), Greece, and Joanneum Research (JR), Austria in the framework of the project Low Carbon South East Europe (LOCSEE) (SEE/D/0166/2.4/X). The LOCSEE project is co-funded by the South East Europe Transnational Cooperation Programme. The Report was developed by a team from the Institute for Environmental Research and Sustainable Development (IERSD), NOA and Joanneum Research: . Dr. Elena Georgopoulou, Senior Researcher and LOCSEE Project Coordinator at NOA . Dr. Sebastian Mirasgedis, Senior Researcher . Dr. Yannis Sarafidis, Senior Researcher . Dimitra Koutentaki, Staff Environmental Scientist . Nikos Gakis, External Assistant to NOA for the LOCSEE project . Dr. Vasso Hontou, External Assistant to NOA for the LOCSEE project . Dr. Daniel Steiner, JOANNEUM RESEARCH . Mag. Andreas Tuerk, JOANNEUM RESEARCH . Dr. Hannes Schwaiger, JOANNEUM RESEARCH . Mag. Claudia Fruhmann . DI Johanna Pucker Modelling of low carbon measures in residential and tertiary buildings: Montenegro 2 CONTENTS 1. INTRODUCTION ...................................................................................................................................... 4 1.1. GENERAL ........................................................................................................................ 4 1.2. METHODOLOGICAL APPROACH .............................................................................................. 4 2. STRUCTURE OF THE BOTTOM-UP ENERGY MODEL .................................................................... 5 2.1. ENERGY MODELS .............................................................................................................. 5 2.2. MODULE 1: RESIDENTIAL BUILDINGS ..................................................................................... 6 2.3. MODULE 2: TERTIARY BUILDINGS .......................................................................................... 9 3. FORMULATION OF THE REFERENCE SCENARIO ........................................................................ 11 3.1. INTRODUCTION .............................................................................................................. 11 3.2. BASIC INPUT DATA AND ASSUMPTIONS .................................................................................. 11 3.3. GHG EMISSION FACTORS .................................................................................................. 12 3.4. EMISSIONS PROJECTIONS .................................................................................................. 13 4. ASSESSING TECHNICAL POTENTIAL OF GHG EMISSIONS REDUCTION MEASURES ... 17 4.1. GHG EMISSIONS REDUCTION MEASURES ............................................................................... 17 4.2. TECHNICAL POTENTIAL ..................................................................................................... 19 5. ECONOMIC EVALUATION OF GHG EMISSIONS REDUCTION MEASURES ......................... 21 5.1. INTRODUCTION .............................................................................................................. 21 5.2. ECONOMIC EVALUATION OF MITIGATION MEASURES .................................................................. 22 6. SOCIO-ECONOMIC ASSESSMENT OF LOW CARBON MEASURES IN RESIDENTIAL AND TERTIARY SECTOR OF MONTENEGRO .................................................................................................... 28 6.1. INTRODUCTION .............................................................................................................. 28 6.2. METHODOLOGICAL APPROACH ............................................................................................ 28 6.3. ELECTRICITY GENERATION - COUNTRY SPECIFIC GHG EMISSIONS AND LOCAL AIR POLLUTANTS ............ 29 6.4. CALCULATION OF LOCAL AIR POLLUTANTS OF LOW CARBON MEASURES ........................................... 31 6.5. SOCIAL MARGINAL ABATEMENT COSTS OF LOW CARBON MEASURES ............................................... 31 6.6. MACROECONOMIC IMPACTS ............................................................................................... 35 Modelling of low carbon measures in residential and tertiary buildings: Montenegro 3 1. INTRODUCTION 1.1. General Developing, implementing and monitoring low carbon policies and measures is not an easy task as it requires a significant background scientific and technical work in order to collect necessary data, identify mitigation options, develop tools for estimating the GHG emissions abatement potential and selecting the appropriate mix of policies and measures. In order to assist this process, the LOCSEE project (’Low Carbon South East Europe’), funded by the South East Europe (SEE) Transnational Cooperation Programme, was launched in October 2012. A major task of LOCSEE is to develop a methodological framework for assessing the technical and economic GHG emissions abatement potential at sectoral level. The methodology is primarily addressed to SEE countries in the process of joining the EU, but can be applied also by other countries and regions as well. It is based on the long experience of EU Member States in the SEE region which have already developed and implement low carbon policies and measures, and takes into account the real needs, gaps and barriers in the region as communicated by SEE countries during its development. The analysis presented thereafter focuses on residential and tertiary building sector, which is responsible for a large part of GHG emissions of Montenegro. In this context, a bottom-up model for each sub-sector (residential and tertiary) was developed, including all major structural characteristics of the buildings (e.g. energy uses, key technologies, energy sources). The model was first calibrated on the basis of recent energy balances and then utilized for developing a reference scenario for 2030. Next, several mitigation measures were analyzed as regards their GHG emissions abatement potential and their cost-effectiveness. On the basis of the results obtained, a marginal abatement cost curve was constructed in each case, providing quantitative estimations on the technical and economic GHG emissions abatement potential of the sector. 1.2. Methodological approach The applied methodology for the assessment of GHG emissions mitigation measures in residential and tertiary building sector comprises the following steps: . Formulation of the Reference Scenario. The future energy consumption and the relevant GHG emissions of the residential/tertiary sector are estimated for the period 2010-2030 using an energy model. Assessing the expected GHG emissions reduction per measure. The potential low carbon measures are identified based on the current situation analysis (e.g. end-uses with a significant influence on sector’s total emissions of greenhouse gases, technical barriers etc.) and good practices examples implemented in other countries. The future energy consumption and GHG emissions after the implementation of each measure are estimated with proper modifications (e.g. technologies and fuels share, technologies efficiency etc.) in the energy model. The difference between the results of the model for these two scenarios shows the energy savings and the GHG emissions abatement potential that can be achieved with the implementation of this measure. Economic evaluation of measures. Based on the results of the energy model (e.g. technologies share, energy savings per fuel etc.) and market data (e.g. energy Modelling of low carbon measures in residential and tertiary buildings: Montenegro 4 prices) annual cost and benefits are calculated for each measure. The cost components comprise initial (investment) expenditures and operational / maintenance cost, while the benefit components include potential revenues arising from the operation of the project (such as energy savings in case of energy conservation measures, etc). The cost per unit of CO2eq emission reduction of each measure is then estimated by dividing the net cost (i.e. costs reduced by benefits) with the corresponding GHG emissions reductions, and then marginal abatement cost curves are constructed for residential and tertiary sector respectively. 2. STRUCTURE OF THE BOTTOM-UP ENERGY MODEL 2.1. Energy Models The detailed modeling of energy intensive economic sectors is the initial step for estimating the energy saving and GHG emissions reduction potential of low carbon technologies. In general energy models can be classified into the following 2 categories: . Top-down energy models which describe in detail the interaction between the energy system and the economy. Top-down energy models do not contain technological detail and in general the technology term is represented by aggregated indicators (e.g. elasticities, energy efficiency index). Bottom-up energy models which rely on a detailed technical description of the energy system. These models are used to explicitly calculate energy consumption of end- users for each economic sector based on detailed descriptions of fuel shares and technologies efficiency. Top-down energy models can provide consistent scenarios in terms of economic growth, labor productivity,