Price of all commodities increased when the carbon tax is applied.

1
A Framework for Assessing the Biocomplexity of
Material Use Jun-Ki Choi1, Bhavik R. Bakshi1 and
Tim Haab2 1Center for Resilience, Department of
Chemical and Biomolecular Engineering, The Ohio
State University, Columbus OH-43210 2Department
of Agricultural, Environmental and Development
Economics. The Ohio State University, Columbus
OH-43210 The Intermediate Input-Output Meeting,
July 9-11, 2008, Seville, Spain
Motivation and Needs
Framework
Price Changes

• Successful development and execution of
  industrial products and processes requires
  consideration of economic, environmental and
  social factors that span multiple spatial and
  temporal scales.
• Biocomplexity refers to the dynamic web of
  often surprising interrelationships that arise
  when components of various disciplines in
  multiple temporal and spatial scales interact
  U.S. National Science Foundation
• Analyzing these interrelations among these
  systems is essential for ensuring feasibility of
  engineering and economic activities.
• Ultimate goal is to develop a multi-scale
  framework for integrated assessment of technology
  and policy alternatives for material use by
  input-output analysis.

• Price of all commodities increased when the
  carbon tax is applied.
• Percentage price change of the disaggregated
  coal fired electricity and natural gas/petroleum
  fired electricity are increased with highest rate
  compare to other commodities.
• It implies that these sectors consumes lots of
  fossil fuels.

Coal fired electricity generation
NG Pet. fired electricity generation
Disaggregated NAICS 2211 Electric power
generation
Environmental Analysis

• Hypothetical Carbon tax (50/ton Coal,
  25/barrel Oil) is levied to the whole year 2002
  economy proportion to the physical amount of
  burning the fossil fuels. Following graphs show
  the CO2 reduction.

Existing Methodologies

• Engineering- Detailed, scientifically sound
  models of equipment and processes are available.
• Environmental- Many methods consider resource
  consumption, emissions and their impact
  throughout life cycle (LCA, MFA, Energy, and
  Exergy Analysis).
• Economy - Macroeconomic models consider
  interaction between aggregated sectors (EIO, CGE,
  Partial Equilibrium Models) and microeconomic
  models focus on consumer behavior.
• However, most of the method usually focus on the
  single scale modeling and ignores the multi scale
  aspect of different disciplines.

Integrated Engineering Analysis
Economy wide
Electricity sector

• Profits of an engineering plant are compared for
  different scenarios.
• Profit increased for Multi-scale case even after
  carbon tax levied.
• This is because the percentage price increase of
  electricity is much higher than that of raw
  materials and the percentage decrease of the
  production.

Disaggregation

• Different rules for disaggregation are used for
  allocating the physical input and output
  transactions.

Aggregated Economy level
Disaggregated Economy level
Integrated Multiscale Modeling

• Maximize Profit of industrial process
• Subject to
• Mass and energy conservation equations
• Dual price equations of disaggregated economy
• Carbon Tax
• Price elasticity of demand for each commodities

Engineering Process level
Interaction between Economy and Industry
Allocation of Physical Flows
On-going works
Cost-Push System Leontief Price Model

• Life cycle analysis of the alternative
  transportation fuels
• Utilization of the developed framework for
  accounting the possible shock in economy to
  engineering system
• Develop rigorous methods to account for the role
  of natural capital in engineering production
  decision making

ECONOMY
Demand-Pull System
Ghosh Model
Price elasticity of demand
Electricity share In 2002 economy (Data Source
EIA)
Acknowledgement
Different Industrial Operation

• This work is supported by U.S. National Science
  Foundation under MUSES grant (ECS-0524924)

INDUSTRY

• Engineering Optimization

Electronic copy of this poster can be requested
to dominick.choi_at_gmail.com or bakshi.2_at_osu.edu