Industrial sector - GCAM

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Model Documentation - GCAM

Corresponding documentation
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Model information
Model link
Institution Pacific Northwest National Laboratory, Joint Global Change Research Institute (PNNL, JGCRI), USA, http://www.globalchange.umd.edu.
Solution concept General equilibrium (closed economy)GCAM solves all energy, water, and land markets simultaneously
Solution method Recursive dynamic solution method
Anticipation GCAM is a dynamic recursive model, meaning that decision-makers do not know the future when making a decision today. After it solves each period, the model then uses the resulting state of the world, including the consequences of decisions made in that period - such as resource depletion, capital stock retirements and installations, and changes to the landscape - and then moves to the next time step and performs the same exercise. For long-lived investments, decision-makers may account for future profit streams, but those estimates would be based on current prices. For some parts of the model, economic agents use prior experience to form expectations based on multi-period experiences.

Industry

Nine detailed industrial sectors are modeled in GCAM. These include six manufacturing sectors (Iron & Steel, Chemicals, Aluminum, Cement, Fertilizer, and Other Industry) and three non-manufacturing sectors (Construction, Mining energy use, and Agricultural energy use). IEA energy balances are used to calibrate the sectoral energy consumption (except in Cement and Fertilizer where historical energy use is estimated bottom-up). Sectoral outputs such as physical commodity flows are calibrated based on historical data from different industrial associations. For each sector, the future industrial output growth is driven by GDP, income elasticities, and price elasticities. The current industry representation does not consider global trade. Output of the detailed industry sectors is represented in physical outputs (Mt) and/or generic terms (EJ of energy services). See the official documentation's industry section.

Iron and Steel

The Iron and Steel sector in GCAM consists of three distinct subsectors: Basic Oxygen Furnace (BOF), Electric Arc Furnace with scrap (EAF), and EAF with Direct Reduced Iron (DRI). Each subsector includes several competing technologies, such as fossil fuels w/ & w/o CCS, electricity, hydrogen, and biomass. See iron and steel for more information.

Chemical

The chemicals sector represents the chemicals and petrochemicals industry, which is the largest industrial consumer of oil and gas. The chemicals sector is disaggregated into chemicals energy use and feedstocks. See chemicals for more information.

Aluminum

The aluminum production in GCAM involves two main steps: (1) alumina refining, to refine bauxite ore into alumina, and (2) aluminum smelting, to convert alumina to aluminum. Alumina refining has multiple competing technologies, such as coal, refined liquids, gas, and biomass with and without CCS. Aluminum smelting uses alumina as an input and consumes electricity. See aluminum for more information.

Construction

The construction sector includes energy use and feedstocks for construction of buildings, roads, railways, utility projects, and other civil engineering projects, as classified in the IEA energy balances (CONSTRUC and NECONSTRUC flow codes). Historical and base year construction energy use and feedstocks are calibrated using IEA energy balances. See construction for more information.

Mining Energy Use

In GCAM, mining energy use includes mining of metal ores and other materials such as stone, sand, clay, peat, and chemical/fertilizer minerals, as classified in the IEA energy balances (MINING flow). To better represent technology competition and fuel substitution, mining energy use is also disaggregated into mobile and stationary uses, in similar fashion to construction energy use described in the construction section above. See mining for more information.

Agricultural Energy Use

Agricultural Energy use includes energy use to operate machinery and equipment, and for heating, cooling, and power in buildings. Refined liquids currently make up about half of agricultural energy consumption, and electricity about a quarter. To better represent technology competition and fuel substitution, agricultural energy use is also disaggregated into mobile and stationary uses, with hydrogen and battery-electric mobile technologies introduced in future periods. See agricultural energy use for more information.

Cement

GCAM includes a physical representation of the manufacture of cement, that tracks both the fuel- and limestone-derived emissions of CO2. Production volumes are indicated in Mt of cement; input-output coefficients of heat and electricity are indicated in GJ per kg of cement, and the input-output coefficient of limestone is unitless. See cement for more information.

Nitrogen Fertilizer

The representation of nitrogenous fertilizers (“N fertilizer”), indicated in Mt of fixed N in synthetic fertilizers, includes both the specific production technologies for transforming various feedstocks into N fertilizer, as well as the demands for the commodity in the agricultural sectors. Nitrogenous fertilizers manufactured for non-agricultural purposes are excluded from the commodity modeled in GCAM. See N fertilizer for more information.

Other Industry

The remaining industrial sectors are collectively modeled as “Other industry”, and represented as a consumer of generic energy services and feedstocks. Within “Other industry” there is cost-based competition between fuels, but with a low elasticity of substitution, as the specific uses of the energy are not specified. Cogeneration of electricity is tracked, and represented as a separate technology option for each fuel consumed by “Other industry” (other than electricity). Output of aggregate industrial sectors is represented in generic terms.