ELEVATE WP4.4 in modul 21 a) import tax extension to carbon-content of imported PEs #1495

RahelMA · 2023-12-05T15:24:28Z

…priced with national or average carbon price b) revenue recycling; c) no technology learning spill-over (modul 80 nash optimization)

Purpose of this PR

ELEVATE WP4.4 "Energy autarchy and the green technology race - is climate the winner?"

Protectionist measures:

modules/21_tax:

Import tax: extension of import tax q21_taxrevImport that enables import tax of traded PE with world market prices

Introduces possibility to tax imported PEs based on their carbon-content. (i.e emissions associated with imports of energy carriers) with carbon prices.

with the regional carbon price; Switch: set cm_import_tax to CO2taxmarkup
maximum value between regional carbon price or average global carbon price; Switch: set cm_import_tax to avCO2taxmarkup

Note: This option leads to double taxation of imported PEs (import tax at border + REMIND's normal CO2 tax).

Revenue recycling of import tax for additional investments in renewables
Narrative: Extra revenues from the import tax are used for extra investment in green and low-carbon technologies.

Implementation: Investments in wind, solar and storage equal investments from reference scenario with tax and no revenue recycling plus the revenues received from the tax.

Switch: Set cm_taxrc_RE to REdirect

no technology learning spill-over (modules/80_optimization/nash)

Narrative: Technology autarchy (total shut-down of global technology spillover effects)

Implementation: Fixing the level of pm_capCumForeign to the value from year 2020. After 2020, technology learning based only on regional capacity.

Switch: Set cm_LearningSpillover to 0

Type of change

(Make sure to delete from the Type-of-change list the items not relevant to your PR)

Checklist:

My code follows the coding etiquette
I performed a self-review of my own code
I explained my changes within the PR, particularly in hard-to-understand areas
I checked that the in-code documentation is up-to-date
I adjusted the reporting in remind2 where it was needed
I adjusted forbiddenColumnNames in readCheckScenarioConfig.R in case the PR leads to deprecated switches
All automated model tests pass (FAIL 0 in the output of make test)
The changelog CHANGELOG.md has been updated correctly

Further information (optional):

Test runs are here:
\clusterfs\tmp\rahelma\ElevateWP4\remind3.2\CarbonPricing\remind\output

Import tax

Comparison of results (what changes by this PR?):

Note. Emissions reduction by import tax on carbon content of imported fossil fuels. The effect is further enhanced if revenues are used for additional investments in renewables & storage (revenue recycling).

no technology learning spill-over

If tax on carbon-content of PE imports is combined with no further technology cooperation as of 2020 (NDC_avtax_nTecC: only regional learning) emissions are lower than in the NDC only case, but higher than in the NDC_avtax case with global learning.

Investment costs solar PV

…priced with national or average carbon price b) revenue recycling; modul 80 nash optimization no technology learning (fix foreign cap to 2020 level)

…orldPricemarkup

… NDC as exog. ref. case

orichters

Fine from my side, but I did not check the latest latest version.

I did:

the regexp adjustments, correcting errors
delete engage config
adjustments in prepare.R and checkFixCfg

orichters · 2023-12-08T15:49:43Z

main.gms

@@ -1370,11 +1378,18 @@ $setglobal cm_steel_secondary_max_share_scenario  off !! def off , switch on for
 *** cm_import_tax
 *** set tax on imports for specific regions on traded energy carriers
 *** as a fraction of import price
-*** example: "EUR.pebiolc 0.5" means bioenergy imports to EUR see 50% tax on top of world market price.
+*** example: "EUR.worldPricemarkup.pebiolc 0.5" means bioenergy imports to EUR see 50% tax on top of world market price.


please change to EUR.pebiolc.worldPricemarkup.

orichters · 2023-12-08T16:03:09Z

scripts/start/checkFixCfg.R

@@ -67,7 +67,8 @@ checkFixCfg <- function(cfg, remindPath = ".", testmode = FALSE) {
    # count errors
    if (! is.null(errormsg)) {
      errorsfound <- errorsfound + 1
-      if (testmode) warning(errormsg) else message(errormsg)
+      message(errormsg)


errors were just summarized in "there were 30 warnings" in start.R --> useless

orichters · 2023-12-08T16:03:11Z

scripts/start/checkFixCfg.R

@@ -48,7 +48,7 @@ checkFixCfg <- function(cfg, remindPath = ".", testmode = FALSE) {
    # how parameter n is defined in main.gms
    paramdef <- paste0("^([ ]*", n, "[ ]*=|\\$setglobal[ ]+", n, " )")
    # filter fitting parameter definition from code snippets containing regexp
-    filtered <- grep(paste0(paramdef, ".*regexp[ ]*=[ ]*"), code, value = TRUE)
+    filtered <- grep(paste0(paramdef, ".*regexp[ ]*=[ ]*"), code, value = TRUE, ignore.case = TRUE)
    if (length(filtered) == 1) {


identify setGlobal and setglobal

orichters · 2023-12-08T16:03:32Z

main.gms

@@ -1242,7 +1250,7 @@ $setGlobal cm_oil_scen  medOil         !! def = medOil  !! regexp = lowOil|medOi
 ***  (lowGas): low
 ***  (medGas): medium
 ***  (highGas): high
-$setGlobal cm_gas_scen  medGas         !! def = medGas  !! regexp = low|medium|high
+$setGlobal cm_gas_scen  medGas         !! def = medGas  !! regexp = lowGas|medGas|highGas


some fixes to regexp because they were wrong

robertpietzcker · 2023-12-13T16:22:15Z

main.gms

+;
+  cm_LearningSpillover = 1; !! def 1 = Learningspillover activated (set to 0 to deactivate)
+*'
+*' * if Learningspillover is deactivated, foreign capacity is set to the level of 2020 in technology learning.


I would add something like: "This means that in the model, each region's learning depends on its OWN additional capacity investment after 2020 in comparison to the GLOBAL cumulative capacity until 2020, so for small regions learning is very slow. This is a very pessimistic interpretation of 'no learning spillovers', as every region has to follow the global learning curve"

Thank you, that is very helpful. Just for my understanding, what do you mean by "every region has to follow the global learning curve"? This would not hold anymore if cm_LearningSpillover = 0, or?

with "follow the global learning curve" I mean that in cm_learningSpillover = 0 a country only manages to "double capacity" (which is the moment that the costs are reduced by the learning rate value) when its own capacity addition is equal to the GLOBAL capacity in 2020.

so I think my initial formulation can be misunderstood - maybe "as every region has to climb up the global learning curve all by itself" is better?

Great, thank you for the further explanation. We have added your suggestion in main.gms, see last commit.

robertpietzcker · 2023-12-13T16:33:57Z

modules/21_tax/on/equations.gms

+*'                   3. "avCO2taxmarkup" = import tax level * max( national carbon price, average carbonprice) * imported carbon by carrier
+* NOTE: In case of "CO2taxmarkup" and "avCO2taxmarkup" there is double-taxation of the CO2-content of the imported energy carrier: Once when being imported (at the border) and once when being converted to Secondary Energy (normal CO2price applied by REMIND)
+***---------------------------------------------------------------------------
+sum(tax_import_type_21, p21_tau_Import(t, regi, tradePe, tax_import_type_21)$sameas(tax_import_type_21, "worldPricemarkup")


I am confused by the splitting of this code.

If I understand it correctly, the equation has three different right sides, depending on whether tax_import_type_21 is a, b or c.
I would find it clearer to write each of the options individually and put one "$$sameas(tax_import_type_21,a)" behind it, but not have the $ command twice in each version of the right side:
so instead of
p21_tau_Import(t, regi, tradePe, tax_import_type_21)$sameas(tax_import_type_21, "CO2taxmarkup") * pm_taxCO2eqSum(t,regi) * pm_cintraw(tradePe) * vm_Mport(t,regi,tradePe) - p21_taxrevImport0(t,regi,tradePe,tax_import_type_21)$sameas(tax_import_type_21, "CO2taxmarkup")
I would write

+ ( p21_tau_Import(t, regi, tradePe, tax_import_type_21) * pm_taxCO2eqSum(t,regi) * pm_cintraw(tradePe) * vm_Mport(t,regi,tradePe) - p21_taxrevImport0(t,regi,tradePe,tax_import_type_21) )$sameas(tax_import_type_21, "CO2taxmarkup")

(and the same for the other two cases.
For me this makes it easier to see that this is really just a way of saying "only one of these 3 versions will be active, and you don't need to look into the contents of the ones that are not active"

(and I would add a line break after the initial opening of the sum to show clearly these are three separate cases:

sum(tax_import_type_21, ( p21_tau_Import(t, regi, tradePe, tax_import_type_21) * pm_pvp(t,tradePe) / pm_pvp(t,"good") * vm_Mport(t,regi,tradePe) - p21_taxrevImport0(t,regi,tradePe,tax_import_type_21) )$sameas(tax_import_type_21, "worldPricemarkup")

Nice code cleaning, thank you! We have changed the equation according to your suggestion, see last commit!

robertpietzcker · 2023-12-13T17:01:58Z

I added a number of detailed comments - please check/reply.

For future PRs: I think it would be better to have this as 3 different PRs - each one changes an aspect of the code, and together there is so much change that it becomes a bit difficult to review. (Sometimes things are so interconnected that it is impossible to split, but here eg the learning would have been easy to do in a separate branch)

also, to be able to understand if the learning part does what it is supposed to do, it would be great to have a plot with eg PV capital costs in CHA and JPN plotted in two NPi runs that are identical except for once having learning spillovers turned on and turned off.
(and best of all would be a plot of capital costs over cumulative capacity in that region in the two scenarios)

robertpietzcker

I added a number of concrete comments and questions

robertpietzcker · 2023-12-13T16:37:09Z

modules/21_tax/on/equations.gms

+*'                   3. "avCO2taxmarkup" = import tax level * max( national carbon price, average carbonprice) * imported carbon by carrier
+* NOTE: In case of "CO2taxmarkup" and "avCO2taxmarkup" there is double-taxation of the CO2-content of the imported energy carrier: Once when being imported (at the border) and once when being converted to Secondary Energy (normal CO2price applied by REMIND)
+***---------------------------------------------------------------------------
+sum(tax_import_type_21, p21_tau_Import(t, regi, tradePe, tax_import_type_21)$sameas(tax_import_type_21, "worldPricemarkup")


(and I would add a line break after the initial opening of the sum to show clearly these are three separate cases:

sum(tax_import_type_21, ( p21_tau_Import(t, regi, tradePe, tax_import_type_21) * pm_pvp(t,tradePe) / pm_pvp(t,"good") * vm_Mport(t,regi,tradePe) - p21_taxrevImport0(t,regi,tradePe,tax_import_type_21) )$sameas(tax_import_type_21, "worldPricemarkup")

robertpietzcker · 2023-12-13T16:49:34Z

modules/21_tax/on/declarations.gms

@@ -39,7 +39,7 @@ p21_taxrevBio0(ttot,all_regi)                    "reference level value of bioen
 p21_implicitDiscRate0(ttot,all_regi)             "reference level value of implicit tax on energy efficient capital"
 p21_taxemiMkt0(ttot,all_regi,all_emiMkt)         "reference level value of co2 emission taxes per emission market"
 p21_taxrevFlex0(ttot,all_regi)                   "reference level value of flexibility tax"
-p21_taxrevImport0(ttot,all_regi,all_enty)        "reference level value of import tax"
+p21_taxrevImport0(ttot,all_regi,all_enty,tax_import_type_21)        "reference level value of import tax"


sorry that everyone else before you got the naming wrong and I just noticed it when you copied it - but let's do it better from here on :-)

p21_taxrevImport0(ttot,all_regi,all_enty,tax_import_type_21) "reference level value of import tax"
-> this should be named something like "tax revenues from import tax in the previous iteration"

also,
v21_taxrevImport(ttot,all_regi,all_enty) "tax on energy imports"
should in fact be
"net change vs. last iteration of tax revenues from energy import tax"

That's right, we have changed the naming accordingly! See last commit.

robertpietzcker · 2023-12-13T16:54:16Z

modules/21_tax/on/equations.gms

-  p21_tau_Import(t,regi,tradePe) * pm_pvp(t,tradePe) / pm_pvp(t,"good") * vm_Mport(t,regi,tradePe)
-    - p21_taxrevImport0(t,regi,tradePe)
+***---------------------------------------------------------------------------
+*'  import taxation: 1. "worldPricemarkup" = import tax level * world market price * tradePE import


something seems wrong witht his formulation, just based on the units. if you multiply a world market price (in TUSD/TWa) by a tax level in TUSD/TWa times an import amount in TWa, you don't get TUSD but rather TUSD^2/TWa.

@fschreyer we tried to extend your Import tax. Could you perhaps help us with the units in your original formula, which is based on the world market price?

Sry, description of tax rate parameter was wrong. The parameter gives the shares of the world market price. Please subsitute

p21_tau_Import(ttot,all_regi,all_enty) "tax on energy imports, currently only works on primary energy levels as those are traded on nash markets [trUSD/TWa]"

by

p21_tau_Import(ttot,all_regi,all_enty) "tax on energy imports, only works on energy carriers traded on nash markets, tax defined as share of world market price pm_pvp [Unit: share]"

Thank you, Felix! We have applied your change in our last commit.

modules/21_tax/on/equations.gms

RahelMA · 2023-12-20T09:15:46Z

I added a number of detailed comments - please check/reply.

For future PRs: I think it would be better to have this as 3 different PRs - each one changes an aspect of the code, and together there is so much change that it becomes a bit difficult to review. (Sometimes things are so interconnected that it is impossible to split, but here eg the learning would have been easy to do in a separate branch)

also, to be able to understand if the learning part does what it is supposed to do, it would be great to have a plot with eg PV capital costs in CHA and JPN plotted in two NPi runs that are identical except for once having learning spillovers turned on and turned off. (and best of all would be a plot of capital costs over cumulative capacity in that region in the two scenarios)

RahelMA · 2023-12-20T09:16:11Z

I added a number of detailed comments - please check/reply.
For future PRs: I think it would be better to have this as 3 different PRs - each one changes an aspect of the code, and together there is so much change that it becomes a bit difficult to review. (Sometimes things are so interconnected that it is impossible to split, but here eg the learning would have been easy to do in a separate branch)
also, to be able to understand if the learning part does what it is supposed to do, it would be great to have a plot with eg PV capital costs in CHA and JPN plotted in two NPi runs that are identical except for once having learning spillovers turned on and turned off. (and best of all would be a plot of capital costs over cumulative capacity in that region in the two scenarios)

RahelMA · 2023-12-20T09:23:20Z

A great thank you to @robertpietzcker!

We highly appreciate your detailed review and effort! With our last commit "Addressed reviewer comments by Robert and Felix" we have tried to address all the mindful comments. After the last changes, we also rerun make test that resulted in 0 FAIL and 0 WARN.

robertpietzcker · 2023-12-20T15:06:26Z

main.gms

+  cm_LearningSpillover = 1; !! def 1 = Learningspillover activated (set to 0 to deactivate)
+*'
+*' * if Learningspillover is deactivated, foreign capacity is set to the level of 2020 in technology learning.
+*' * In combination with endogenous carbon pricing (e.g., in NDC), the deactivated Learningspillover will lead to higher overall carbon prices. Can be solved by setting carbonprice to exogenous (config).


sorry that I have a tiny other point - could you change the order of the explanations?

if you have a sentence starting "This means that ..." after "In combination with endogenous ...", one could misunderstand the "this" to refer to the previous sentence, and not the "if Learningspillover is deactivated ..."
so I would put the "In combination with endogenous" at the end of the explanation :-)

Yes, I see your point and have changed the order (commit 9)!

robertpietzcker

Great, thanks for the changes, and for doing the extra plot with PV costs!
The results look reasonable - until 2050 there is the global learning curve convergence, which means that small regions which apparently are below the global average in 2020 (NEU) actually see a cost increase because the local capacity additions are so small against the global capacity that the additional learning is more than overcompensated by the "convergence of underlying learning parameters". In JPN, the starting point is higher, so we see the opposite effect. In very large regions (OAS, SSA, CHA, IND) the long-term difference to the spillover case is not so large because they deploy a lot of PV capacity.

rahelMA and others added 3 commits December 5, 2023 16:17

ELEVATE WP4.4 in modul 21 a) import tax extention to imported carbon …

eabf80b

…priced with national or average carbon price b) revenue recycling; modul 80 nash optimization no technology learning (fix foreign cap to 2020 level)

adjusted etiquette from make build

17e8afc

add manipulations for variable renaming

d0e77d0

orichters mentioned this pull request Dec 6, 2023

fix CDR=off error in NGFS_v4 config, improve tests to avoid such error #1496

Merged

7 tasks

orichters force-pushed the ELEVATE_WP44 branch from a055da2 to c1a88fe Compare December 6, 2023 13:34

add automated checks for cm_import_tax

ee7542f

orichters force-pushed the ELEVATE_WP44 branch from c1a88fe to ee7542f Compare December 6, 2023 13:48

rahelMA and others added 3 commits December 6, 2023 15:10

changed configs that use eg. EU27_regi.pebiolc to EU27_regi.pebiolc.w…

7b6e8fb

…orldPricemarkup

shortened setting of cm_import_tax

98598d2

further description in main.gms and adjusted config, non peronalized,…

e6b3bdd

… NDC as exog. ref. case

sophiefuchs changed the title ~~ELEVATE WP4.4 in modul 21 a) import tax extention to imported carbon …~~ ELEVATE WP4.4 in modul 21 a) import tax extension to carbon-content of imported PEs Dec 8, 2023

RahelMA self-assigned this Dec 8, 2023

RahelMA requested review from robertpietzcker and pweigmann December 8, 2023 14:54

orichters reviewed Dec 8, 2023

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RahelMA marked this pull request as ready for review December 8, 2023 16:49

robertpietzcker reviewed Dec 13, 2023

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robertpietzcker requested changes Dec 13, 2023

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Adressed reviewer comments by Robert and Felix

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RahelMA closed this Dec 20, 2023

RahelMA reopened this Dec 20, 2023

robertpietzcker reviewed Dec 20, 2023

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robertpietzcker approved these changes Dec 20, 2023

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Reorganize definition to avoid misunderstandings

c6bb736

RahelMA merged commit c8c9951 into remindmodel:develop Dec 22, 2023
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orichters mentioned this pull request Apr 30, 2024

move compareScenarios core framework to piamPlotComparison pik-piam/remind2#578

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ELEVATE WP4.4 in modul 21 a) import tax extension to carbon-content of imported PEs #1495

ELEVATE WP4.4 in modul 21 a) import tax extension to carbon-content of imported PEs #1495

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ELEVATE WP4.4 in modul 21 a) import tax extension to carbon-content of imported PEs #1495

ELEVATE WP4.4 in modul 21 a) import tax extension to carbon-content of imported PEs #1495

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RahelMA commented Dec 5, 2023 • edited Loading

Purpose of this PR

modules/21_tax:

no technology learning spill-over (modules/80_optimization/nash)

Type of change

Checklist:

Further information (optional):

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