Agent-based scenarios comparison for assessing fuel-switching investment in long-term energy transitions of the India’s industry sector

Graphical abstract

Highlights

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  Large on-site survey to provide real-world investment data of 108 iron-steel plants.

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  Agent-based integrated assessment framework to assess industry fuel-switching.

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  Fuel-switching assessment including 4 investment metrics and 5 comparable scenarios.

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  Partial-equilibrium agent-based scenarios of an evolving socio-technical system.

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  Partial-equilibrium agent interactions produce non-smooth gas uptake patterns.

Abstract

This paper presents the formulation and application of a novel agent-based integrated assessment approach to model the attributes, objectives and decision-making process of investors in a long-term energy transition in India’s iron and steel sector. It takes empirical data from an on-site survey of 108 operating plants in Maharashtra to formulate objectives and decision-making metrics for the agent-based model and simulates possible future portfolio mixes. The studied decision drivers were capital costs, operating costs (including fuel consumption), a combination of capital and operating costs, and net present value. Where investors used a weighted combination of capital cost and operating costs, a natural gas uptake of ~12PJ was obtained and the highest cumulative emissions reduction was obtained, 2 Mt CO ₂ in the period from 2020 to 2050. Conversely if net present value alone is used, cumulative emissions reduction in the same period was lower, 1.6 Mt CO ₂, and the cumulative uptake of natural gas was equal to 15PJ. Results show how the differing upfront investment cost of the technology options could cause prevalence of high-carbon fuels, particularly heavy fuel oil, in the final mix. Results also represent the unique heterogeneity of fuel-switching industrial investors with distinct investment goals and limited foresight on costs. The perception of high capital expenditures for decarbonisation represents a significant barrier to the energy transition in industry and should be addressed via effective policy making (e.g. carbon policy/price).