Report No. 70290-ge
ANNEX 1: EFFECT Analysis Methodology
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ANNEX 1: EFFECT Analysis MethodologyEFFECT: Energy Forecasting Framework and Emissions Consensus Tool
EFFECT is an Excel-based bottom-up modeling tool designed to estimate energy consumption and forecast emissions in a given country over a long-term period.CITATION Gla08 \n \t \l 1033 The tool comprises one general module summarizing the basic socio-economic assumptions and six sector-specific modules for industry, transport, agriculture, power, households, and non-residential segments (Error: Reference source not found). The modular structure of EFFECT allows aggregating energy use estimates to project total emissions on a country level or, alternatively, simulating developments in an individual sector under various policy scenarios. For purposes of this study, the analysis focuses on environmental and economic effects of policy choices suggested under the Green Transportation Framework as applied to the transport sector in Georgia. More specifically, the tools offered by EFFECT are employed to model and assess the reduction in fuel consumption and associated improvement of air quality under a number of vehicle use and technology considerations. In its simplified form, the basic equation underlying the EFFECT framework expresses transport sector energy use as a function of three elements: (i) total number of vehicles (vehicle ownership), (ii) vehicle use (annual distance traveled = number of trips average length of a trip), and (iii) vehicle technical parameters (e.g. fuel consumption per km for cars or energy consumption index for metro trains). For road transport, the equation takes the following form: Fuel consumption = number of motor vehicles annual distance travelled fuel consumption per km travelled Of critical importance to understanding the overall modeling framework is a brief description of the three concepts mentioned above and their underlying dependencies and relationships. Vehicle ownership. Total vehicle population of a given country consists of a private vehicle fleet (passenger cars and motorcycles) and vehicles owned by public and private entities, which are used for commercial purposes (freight and passenger transportation). While a number of exogenous macroeconomic parameters (GDP, population growth and urbanization) affect the total vehicle stock, different approaches should be used to project private and commercial vehicle ownership. Private vehicle ownership is a function of an extensive array of factors, including but not limited to household income, vehicle purchase price and operating (in-use) costs, demographic characteristics (driver’s age, lifestyle, etc) and other – all of these parameters can be best accounted for using bottom-up forecasting approach based on household survey data. Conversely, top-down modeling is considered to be more appropriate when projecting commercial vehicle fleet. The size of the latter can be estimated based on the forecasted demand for freight and passenger transportation services, for which GDP growth (used as a proxy for increase in economic activity, e.g. transportation of goods) and urbanization rate are key determinants. Both approaches are employed in EFFECT. Vehicle use. Depending on the average age of the fleet and fuel price fluctuations, the number of vehicle-kilometers driven will vary thus affecting vehicle use. The net effect of change in the fuel price is the sum of two effects: the decline in the share of trips made by private motor vehicles (the in-use price elasticity effect) and the effect of an increase in the price of gasoline on shifts to other modes, e.g., shift to rail or bus (elasticity of substation effect). As evidenced by ample empirical data, vehicle use is inversely correlated with vehicle use: the older the vehicle, the less it is driven. However, a rebound effect may be observed when the reduction of vehicle operating costs due to improved fuel-efficiency of new cars encourages an increase in annual distance travelled. Vehicle fleet composition (vehicle fleet mix by class and technology). Future vehicle sales mix—and, ultimately, the composition of future vehicle population—depends on a complex set of consumer preferences. Most published studies of vehicle type choice attempt measuring these preferences by focusing on such explanatory variables as vehicle attributes, household characteristics, brand loyalty, travel attitude, personality, and lifestyle factors. Originally conceived as an engineering type modeling tool, EFFECT was not designed to reflect the complicated nature of user choices and their effects on vehicle fleet composition. Noting this caveat, a number of essential assumptions on consumer behavior were introduced in the model exogenously. The behavioral assumptions applied are described in more detail in Section C: Assumptions Used in the Analysis. An important factor influencing aggregate transport sector emissions is the modal shift, i.e. relative change in the market share of three transport modes analyzed under EFFECT framework – road transport, railway and metro. Other things being equal, a shift from road to railway vehicles or from passenger cars to public transport will result in reduced emissions and improved air quality. By analogy to vehicle type choice, travel mode choice by individual users depends on several quality variables (e.g., price, travel time, comfort, convenience, safety, etc.), which cannot be accounted for in EFFECT. To compensate for dearth of such dependencies in EFFECT, benchmarking data was used to model various model shift scenarios, as referred to in various places of the report. Introducing these exogenous assumptions in EFFECT allows filling out the existing gaps and calibrating a simple but accurate policy simulation. Structure of EFFECT analysis is depicted in Figure 30.
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