The Economic Feasibility of Mitigation Strategies to Limit CO2 Emissions From the Power Sector in Lebanon

Abstract

Based on the latest communication report submitted, in November of 2016, to the United Nations Framework Convention on Climate Change (UNFCCC), Lebanon has emitted Greenhouse Gases (GHG) equivalent to 26,333 Gg (Gigagrams) of CO2 in 2012 – excluding removals by sinks – where 13,980 Gg were emitted only from the power sector. Compared to the base year of 1994 – the year during which the first GHG inventory was recorded – where total emissions were estimated at 13,947 Gg CO2eq, the number has increased by 89% which is considered to be a very alarming rate. Out of the emitted rate in 2012, 53% of the emissions came from the power sector, making it the highest emitting sector in Lebanon. This high emission rate allows the power sector to have priority in terms of mitigation strategies, especially after Lebanon’s unconditional pledge to reduce CO2 emissions by 15% by 2030. Moreover, Lebanon suffers from a deficiency in capacity, where power demand is never met by adequate power supply, leading to frequent load shedding, estimated at an average of 14 hours per day in 2019.

This thesis aims at evaluating the power generation sector in Lebanon from a generation expansion, environmental and economic perspective, via a medium-term approach. In the 10-year time span from 2020 until 2030, four scenarios are modelled using LEAP – a tool that allows the study of a power system from both an environmental and economic standpoint – and these scenarios are then compared to a business as usual scenario that is adopted according to past and current trends. The first scenario assumes that existing units start using natural gas (NG) instead of heavy fuel oil (HFO) and diesel oil (DO), given that existing technologies permit the usage of NG as fuel. It also assumes that capacity expansion occurs through the addition of new combined cycle gas turbines (CCGT) that operate on NG. The second scenario is based on the penetration of renewable energy (RE) sources, where newly added capacity pertains to solar photovoltaics and wind farms. The third scenario is a hybrid of the first two, where it is assumed that both CCGT and RE sources are added to meet the needed power requirements. The fourth and final scenario adopts the ministry of energy and water (MoEW) updated policy paper expansion plan.

The environmental and economic feasibility of the four scenarios is then investigated as compared to the business as usual scenario. Moreover, a sensitivity analysis is conducted in order to account for variations in key cost factors such as market interest rates and fuel prices.