Transcript Document

Energy Day
Unlocking the synergies
between EE, RE and Emission
target
Karsten Neuhoff,
Dresden, 19.4.2013
Unlocking the synergies between EE, RE and Emission target
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2
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The role of targets for policy implementation
Multiple targets to achieve one objective
Multiple objectives motivating one target
Translating targets into action
The role of EU ETS – a target turned instrument
Possible implications for formulation of energy and
climate targets
1
Ability of indicators to facilitate
policy/project management
NOTE: 80% of respondents agreed
that the data collection process for
the indicators was labour intensive
Disagree
Strongly
Disagree
Strongly
Agree
Agree
1
What type of indicators are commonly used?
Lester, S. and K. Neuhoff, 2009, Understanding the roles of policy targets
in national and international governance. Climate Policy, 9 (5), p. 464-480.
1
What trade-offs are involved in selecting indicators?
• Allow
comparison of
policy
effectiveness
Outcome
Policy target applied to
MDG
Response
time
PRSP
• Often more
difficult to define
PSA
• Response time
GPRA
• Easier to
measure
Input
• Identify barriers
• Can ignore
important
interactions /
focus to narrowly
GPRA
PSA
PRSP
MDG
1
Government performance
result act
Public Service Agreements
Poverty Reduction Strategy
Papers
Millennium Development Goals
3
10
Time frame (years)
15
Lester, S. and K. Neuhoff, 2009, Understanding the roles of policy targets
in national and international governance. Climate Policy, 9 (5), p. 464-480.
2
European CO2 emissions year
EE and RE targets make LT emission targets viable
Illustrative
Energy Efficiency
Gas
Renewables
Oil
Conventional coal
today
2020
2050
2
Multiple targets to achieve one objective
Illustration
Political objective
Climate
protection
Targets
Emission
Technology
Energy
efficiency
Policies / Programms
2
Example RE deployment
100
90
Principle A: 2030 targets needed
% of EU Power from RE
80
Policy
scenarios
70
60
50
Reference
scenario
40
30
20
10
0
2005
2010
2015
2020
National Renewable
Energy Action Plans
2025
2030
2035
2040
2045
EU Roadmap 2050
See also : Ensuring renewable electricity investment: 14 policy principles for a post-2020
perspective www.remunerating-res.eu
2050
3
Multiple objectives motivating one target
Illustration
Political objectives
Climate
protection
Targets
Emission
Industry
development
Energy
security
Technology
Employment
Energy
efficiency
Reducing
inequality
Reduction of
fuel poverty
Policies / Programms
3
Short-term job multiplier effects of green investments
Spencer T. , K. Bernoth, L. Chancel, E. Guerin, K. Neuhoff (2012) Green investments in a European
Growth Package, IDDRI Working Paper 11
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Translating targets into action
Illustration
Political objectives
Climate
protection
Targets
Emission
Policies / Programms
EU ETS
Industry
development
Technology
RE support
Employment
Energy
efficiency
Buiding standard
Information program
Reducing
inequality
Reduction of
fuel poverty
Support for retrofit
Energy
security
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4
What is necessary to deliver targets – example RE
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Barriers along the RE pipeline
Global Input:
TechnicallyFeasible RE
Generation
Capacity
Planning
Access to Grid and
Energy Market
Supply Chain
Project Finance
Global Output:
Installed / Target
RE Capacity
Barriers
Barriers
Barriers
Barriers
Lack of effective legal /
regulatory framework
Highly controlled energy
sector
Lack of competition and lack of
standards and codes of
certification
Financial Support
(costs, risks, ...)
Lack of entrepreneurs, skilled
labour, and training and O&M
facilities
Energy Market
(access, structure, long-term
costs, ....)
Lack of R&D capacity
Capital Market
(perception of technical risk,
perception of regulatory risk,
...)
Lack of private participation
and professional institutions
Uncertainty with government
policies
Lack of coordination
between authorities
Lack of consumer/social
acceptance of RE
technologies
Lack of grid access for RE
technologies
Lack of clear practises and
procedures (related to
planning barriers)
Lack of available grid capacity
High grid connection costs for
RE developers (poor cost
allocation)
Lack of access to energy
market
Restricted access to
technologies
Lack of reliability of products
Lack of institutions /
mechanisms to disseminate
information
Visibility
(uncertainty, ....)
4
Barriers along the RE pipeline:
Indicators provided in NREAPs:
Global Input:
TechnicallyFeasible RE
Generation
Capacity
Planning
Access to Grid and
Energy Market
Supply Chain
Project Finance
Global Output:
Installed / Target
RE Capacity
Barriers
Barriers
Barriers
Barriers
Lack of effective legal /
regulatory framework
Highly controlled energy
sector
Lack of competition and lack of
standards and codes of
certification
Financial Support
(costs, risks, ...)
Lack of entrepreneurs, skilled
labour, and training and O&M
facilities
Energy Market
(access, structure, long-term
costs, ....)
Lack of R&D capacity
Capital Market
(perception of technical risk,
perception of regulatory risk,
...)
Lack of private participation
and professional institutions
Uncertainty with
government policies
Lack of coordination
between authorities
Lack of consumer/social
acceptance of RE
technologies
Lack of grid access for RE
technologies
Lack of clear practises and
procedures (related to
planning barriers)
Lack of available grid capacity
High grid connection costs for
RE developers (poor cost
allocation)
Lack of access to energy
market
Restricted access to
technologies
Lack of reliability of products
Lack of institutions /
mechanisms to disseminate
information
Visibility
(uncertainty, ....)
Qualitative indicators
Quantitative and
qualitative indicators
Not covered
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2nd Purpose of targets:
Creating confidence for investors in supply chain
Installed wind power per year (MW)
France
Italy
U.K.
Germany
India
Spain
China
Denmark
U.S.
Source: IEA, GWEC, Worldwatch Institute
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The role of EU ETS – a target turned policy
Illustration
Political objectives
Climate
protection
Targets
Emission
Policies / Programms
EU ETS
Industry
development
Technology
RE support
Employment
Energy
efficiency
Buiding standard
Information program
Reducing
inequality
Reduction of
fuel poverty
Support for retrofit
Energy
security
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How does EU ETS impact on investment process?
I. Capturing Companies’ Attention
II. Providing Clarity for Decision Making
III. Creating enabling environment for Low-Carbon
Investment
See Climate Strategies Project Summary: Carbon pricing for low carbon investment
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Volume of unused allowances (billion)
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3,0
The surplus of unused allowances is „piling“ up
High Renewables
Current Policy Initiative
2,5
Reference
Uncertainty
about future
emissions will
remain
2,0
CDM/ JI credits linked to EU
(1.7 bn)
International
offsets add to
surplus
1,5
Early auctioning (120 m)
Early phase III NER (300 m)
Retained phase II NER (350 m)
Timing of auctions
increases surplus
in 2012/13
1,0
0,5
0,0
Cap exceeds emissions
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Source: Banking of Surplus Emissions Allowances: Does the Volume Matter? DIW
Discussion paper 1196
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Volume of unused allowances (billion)
5
Where do unused allowances go?
Banks buy allowances to sell forward/ future/
option contracts  No impact on demand
3,0
2,5
Speculative investment
2,0
I Industry sector banks free allowances
1,5
Power sector uses allowances to
hedge future power sale
(flexibility on volume)
1,0
I
0,5
0,0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Source: Banking of Surplus Emissions Allowances: Does the Volume Matter? DIW
Discussion paper 1196
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Unlocking the synergies between EE, RE and Emission target
1
2
3
4
5
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The role of targets for policy implementation
Multiple targets to achieve one objective
Multiple objectives motivating one target
Translating targets into action
The role of EU ETS – a target turned instrument
Possible implications for formulation of energy and
climate targets
6
Implicatinos of multiple drivers for targets
• Consistency of targets:
• Could limit scope for political compromise
• Might be difficult to test with real data/projections
• Could limit link from specific political objective to target
-> Coherence is guiding principle
How to model this?
Jose Ramon San Cristobal (2012) A goal programming model for
environmental policy analysis, Energy Policy
Discrepancy can trigger discussion to increase consistency
Illustration
CO2 emissions
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2020 emission target ~ no further action
Current
initiatives
(EE, RE)
Discrepancy crystalizes
in 2030 discussion
Political objective:
2°C / - 80-95%
CO2
2010
2020
2030
2040
2050
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Retain options for flexiblity
• Capacity of political process is limited
-> allow for renegotiation of a sub-set of targets at a time
• For some targets long-term matters
-> but if all targets set long-term = inflexible
-> allow for different time frames for different targets
• Avoid artificial simplification of target frameworks
-> build on historic development of objectives and targets
Continue & further develop current set of targets.
See: H. Meyar-Naimi, S. Vaez-Zadeh (2012) Sustainable development
based energy policy making frameworks, a critical review, Energy Policy
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Considerations for future target development
• Enhance predictabilty of future adjustement of targets
-> formulate minimum levels of attributes nec. for society
-> link targets more closely to policy objectives
• Enhance credibility of targets
-> balance „ambition“ with credibility/effectiveness
-> develop track record of delivery against targets
-> show committment with complementing short-term pol.
Integrate multiple actors more closely in 2030 process.
Track and support delivery against targets.
Create transparency around process of target adjustment.
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Summary
Illustration
Political objectives
Climate
protection
Targets
Emission
Policies / Programms
EU ETS
Industry
development
Technology
RE support
Employment
Energy
efficiency
Buiding standard
Information program
Reducing
inequality
Reduction of
fuel poverty
Support for retrofit
Energy
security
25
Vielen Dank für Ihre Aufmerksamkeit.
DIW Berlin — Deutsches Institut
für Wirtschaftsforschung e.V.
Mohrenstraße 58, 10117 Berlin
www.diw.de
Redaktion
Karsten Neuhoff
[email protected]