Exploring low-carbon development pathways for Bolivia - A model-based analysis focused on the energy sector

Abstract: Global emissions have continued to rise steadily at levels exceeding the 1.5°C climate stabilization target. Therefore, the increase in the average global temperature and climate change will be determined by how we handle greenhouse gas (GHG) emissions over the next years. Decarbonizing economic growth and development add pressure to all countries in the world, but even more pressure to low and middle-income countries planning to use their fossil fuel resources as a ‘leading sector’ to achieve growth. Low and middle-income countries have limited financial resources and often have to prioritize short-term development goals with immediate local co-benefits over mitigation and adaptation strategies with long-term gains. Reaching the climate stabilization/decarbonization goal will require large investments to decarbonize the energy sector, together with investments and policy measures to ensure resilience and adaptation to climate change.Bolivia has signaled its intent to eradicate poverty and achieve economic growth while preserving environmental sustainability by adopting the seventeen Sustainable Development Goals (SDGs). In line with SDG7, Bolivia aims to achieve universal access to electricity by 2025. Although electricity access has improved significantly with large investments in grid-extension and decentralized systems, currently 61% of the grid generation capacity and 93% of the decentralized generation capacity is fossil-fueled. Other sectors, such as the transport sector, depend mostly on fossil fuels and largely contribute to Bolivia’s GHG emissions. Policies intended to increase energy security in Bolivia focus on the increased use of domestic natural gas, on investments in large-scale hydropower plants, and on first-generation (1G) biofuel production for the transport sector.In line with SDG 7 and SDG 13, this doctoral thesis examines low-carbon development pathways for the main policies addressing energy access and energy security in Bolivia. With methods deriving from systems analysis, the particulars of the Bolivian energy system were scrutinized and the effects of alternative energy planning decisions ‒ such as policies and investments ‒ displayed using scenario analysis. Five research articles answering four research questions form the main part of the thesis.The first research question examines the role of decentralized technologies (primarily micro-grids) and renewable energy for addressing universal electricity access targets. The cost-competitiveness of multi-source micro-grids is assessed using an innovative methodology developed to increase the technical accuracy of load simulation and microgrid system design optimization in an existing geospatial modelling tool. The results highlight the potential of decentralized electrification solutions and identify the location, size and investments required to meet electrification targets in 2025.The second research question focuses on evaluating alternative policies for decarbonizing the power generation sector using an energy system optimization model. The combined effects of inserting carbon taxes and modifying the weighted average cost of capital on the power generation emissions are measured in marginal abatement cost curves. Results from this conceptual and numerical analysis show that a deep decarbonization of the power generation system requires very high carbon prices if the costs of capital are high. Instead, moderate carbon prices combined with low costs of capital can lead to significant emissions reductions and comparably smaller increases in carbon abatement costs.The third research question examines Bolivia’s hydroelectricity export plans in the medium-term using a cost-optimization model of South America. The study also evaluates the fair distribution of benefits using a cooperative game-theory approach and the decarbonization achieved in a scenario of power systems integration in South America. Results of this study indicate that electricity from large-scale hydropower projects could be traded with Brazil and reduce Bolivia’s dependence on natural gas for power generation. The results also show that Bolivia has less bargaining power than its competitors have in the long-term and benefits less from emissions reductions in a scenario of trade with Brazil.Lastly, the fourth research question explores energy security in the transport sector by assessing Bolivia’s sugarcane-based ethanol production targets. Increased sustainability in the ethanol production chain is evaluated quantitatively by identifying opportunities for agricultural intensification and investments in advanced biorefineries in a least-cost optimization model. Results from this analysis demonstrate that Bolivia can cost-effectively reach its medium-term targeted volumes of ethanol production with a moderate expansion of sugarcane cropland and investments in agriculture intensification. The results further suggest that it is cost-optimal to invest in current technological advances (i.e. efficient co-generation plants) to maximize the renewable energy output and the economic benefits of sugarcane-derived ethanol. Finally, the study identifies a range of biofuel-support incentives to promote investments in second-generation biofuel production.

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