CASES – Cost Assessment for Sustainable Energy Systems

CASES – Cost Assessment for Sustainable Energy Systems

2

Cost Assessment for Sustainable Energy Systems

Outline of the presentation

What is CASES

Context

Objectives

Expected results

Interaction with other projects

The actors

Organisation of work

Description of Work Packages

Description of dissemination activities

3



What is CASES

Context

Objectives

Expected results


The actors




4


What is CASES

CASES is the acronyms of ‘Cost assessment of sustainable energy costs’, which is an European Commission funded Coordination Action.

A Coordination Action:

aims at promoting and supporting the coordination, cooperation or networking of a range of research and innovation projects or operators for a specific objective, normally to achieve improved integration and coordination of European research for a fixed period of time.

5


What is CASES

Types of co-ordinated collaborative activities studies, analyses, benchmarking exercises; exchanges and dissemination of information and good practice organisation of conferences, seminars, meetings; setting up of common information systems, setting up of expert

groups; definition, organisation and management of joint or common

initiatives; joint memoranda of understanding; pre-standardisation and standardisation activities in specific

fields; establishment of roadmaps for research in specific topics.

6



What is CASES

Context

Objectives

Expected results


The actors




7


Context

While effort has been devoted in recent years to the estimation of the external costs of energy, more attention is now being paid to the examination of both the private and external costs in one framework.

Energy policy making is concerned with both the supply side and the demand side of energy provision.

The geographical dimension is also important since environmental damage from energy production crosses national borders.

Costs are dynamic: the private costs and the external costs are changing with time, as technologies develop, knowledge about impacts of energy use on the environment increases and individual preferences for certain environmental and other values change.

The least well and least systematically covered area of external cost is the one related to energy security.

8



What is CASES Context Objectives

– General objective– Detailed objectives

Expected results Interaction with other projects The actors Organisation of work Description of Work Packages Description of dissemination activities

9


Objectives

General Objective

CASES aims to evaluate policy options for improving the efficiency of energy use, underpinning this evaluation with a consistent and comprehensive picture of the full cost of energy, and to make this crucial knowledge available to all stakeholders.

10


Objectives

Detailed Objectives

1. To compile estimates of full costs of the use of different energy sources in EU and selected other countries under agreed energy scenarios to 2030.

2. To use resulting datasets to undertake comparative cost assessments of introducing alternative policy options over the time period.

3. To disseminate research findings to energy producers and users and to the policy makers.

11



What is CASES Context Objectives Expected results

– Objective one– Objective two– Objective three

Interaction with other projects The actors Organisation of work Description of Work Packages Description of dissemination activities

12


Expected results

Objective One will produce: Best predictions about the evolution of the private costs of major

technologies for generating energy from different sources over the next 25 years.

Best estimates of the major environmental external costs of different types of energy in different countries and how will these change in the next 25 years.

Best estimates of the major energy security-related external costs of different types of energy in different countries and of their changes in the next 25 years.

Best estimates of the likely prices of major sources of energy over the next 25 years.

Determination of the greatest uncertainties and of the most relevant research directions for the future.

13


Expected results

Objective Two will produce comparative assessments of : the investment and operational costs of different energy options

taking account of only private costs and taking account of private plus external costs. This assessment is dynamic and will provide the implications of different levels of internalisation on the investment decisions and on key social indicators.

the impacts of the use of different methods of decision-making on the selection of projects - e.g. cost-benefit analysis with ‘externality adders’ versus multi-criteria decision analysis tools.

the implications of different taxes/charges on energy and/or on emissions on (a) the degree of internalisation and (b) the comparative cost comparisons, now and over time.

14


Expected results

Objective Three will produce:

An interactive web site for the dissemination of project related information (partnership, activities and results, reports and deliverables, useful policy documentation, etc).

An electronic mailing list to ensure prompt, updated and easy communication on project news.

Two stakeholders workshops and a final conference organised to present main results of the project.

15



What is CASES Context Objectives Expected results Interaction with other projects The actors Organisation of work Description of Work Packages Description of dissemination activities

16



This Coordinated Action builds on the formidable amount of research produced by several projects, focused to measure the full costs of the use of different energy sources such as fossil fuels, nuclear energy and renewable energy sources.

CASES will interact with other projects to assess: energy scenarios, external costs and private costs.

17



Former and current projects related to CASES: Projects focused on External Costs of Energy:

– ExternE, NewExt and ExternE-Pol,– DIEM,– ECOSIT,– INDES,– MAXIMA

Project focused on both the private and external costs:– NEEDS

Projects focused on energy scenarios:– Primes,– Poles,– NEEDS.

Projects producing national energy models for non EC countries:– Markal (India),– AIM (India),– IPAC (China).

18



What is CASES Context Objectives Expected results Interaction with other projects The actors

– Partners from pre-existing North European member States– Partners from pre-existing Mediterranean member States– Partners from new member States– Partners from associated candidate Countries– Partners from associated non candidate Countries– Partners from INCO DEV Countries

Organisation of work Description of Work Packages Description of dissemination activities

19


Partners

The Consortium of the CASES’ Co-ordination Action is composed by twenty-six partners established in twenty States.

Most of the institutions are established for research activities (11) and for higher education (9). The other participants are not qualified in one particular activity but they provide a scientific expertise and carry out complementary activities necessary to achieve the objectives of this Co-ordination Action.

20


Partner

University of Bath (UBATH)

University of Stuttgart (USTUTT/IER)University of Flensburg (UFLENS)

Flemish Institute for Technological Research (VITO)Centre for European Policy Studies (CEPS)

Risoe National Laboratory (RISOE)

Stockholm Environment Institute (SEI)

Energy Research Centre of the Netherlands (ECN) Vrije Universiteit Amsterdam-Institute for Environmental Studies (VU/IVM) Wageningen Universiteit (WU)

Partners from pre-existing North European member States

21


Partner

Observatoire Méditerranéen de l'Energie (OME)

Partners from pre-existing Mediterranean member States

Fondazione Eni Enrico Mattei (FEEM)

Istituto di Studi per l’Integrazione dei Sistemi (ISIS)

Centro de Investigaciones Energéticas, Medioambientales y Tecnológicas (CIEMAT)

National Technical University of Athens (NTUA)

22


Partners

Partners from new member StatesLithuanian Energy Institute (LEI)University of Warsaw - Warsaw Ecological Economic Center (UWARS)Univerzita Karlova v Praze - Charles University Enviroment Center (CUEC) Partners from associated candidate CountriesEnergy Agency of Plovdiv (EAP) Turkiye Bilimsel ve Teknik Arastirma Kurumu Marmara Research Center, Institute of Energy (TUBITAK)

23


Partners

Partners from associated non candidate Countries

ECON Analysis AS (ECON), Norway

SWECO Grøner as (SWECO), Norway

Paul Scherrer Institut (PSI), Switzerland

Energy Research Institute (ERI), China

Fundação COPPETEC (COPPETEC), Brasil

Indian Institute of Management Ahmedabad (IIMA), India

Partners from Developing Countries

24



What is CASES

Context

Objectives

Expected results


The actors




25


CO

ST

S P

OL

ICY

Scenarios WP1

Cor

dia

nti

on a

nd

man

agem

ent

WP

13

Internal costs

WP4 Private costs WP12 Uncertainty

External costs WP2 Human related external costs

WP3 Non human related external costs WP5 Energy security

WP12 Uncertainty

EU national level cost estimates WP6

Non-EU national level cost estimates WP7

Assessment of policy instruments to internalize environment related external

costs

WP8 EU Member States, non-renewables WP9 EU Member States, renewables

WP10 non-EU Member States

DIS

SE

MIN

AT

ION

Dissemination

Assessment methods

WP11

Stakeholders


26


Organisation of workMain steps of the project structure: Agree upon the storylines of three electricity scenarios [WP1] (status

quo and two options developments): this will produce as output three reference scenarios;

Calculate average external costs per unit of emission, using Ecosense [WP2, WP3, WP5], and private costs [WP4] on the basis of the reference scenarios when a dynamic element is needed;

Refine scenario definition on the basis of computed external costs by considering full costs per each country/technology given by external costs plus private costs, where external costs are given by average cost calculated by Ecosense times the emission determined under energy scenarios [WP2-7]. This second run will include policy variables in order to facilitate policy assessment [WP8-11].

Analyse how the policy proposed in WP8-10 are affected by uncertainty in external costs estimates [WP12].

Draw final conclusions on the final output of the project.

27



What is CASES

Context

Objectives

Expected results


The actors




28



WP1

Electricity Scenarios

29


WP1 – Electricity scenarios

WP1 objective Provide electricity scenarios up to 2030 for EU-25

countries, Bulgaria, Turkey, Brazil, India and China

WP1 partners OME, France (coordinator) ECON, Norway FEEM, Italy EAP, Bulgaria TUBITAK, Turkey COPPETEC, Brazil IIMA, India ERI, China

30


WP 1 – Electricity scenarios

TASK 1Parameters having

direct influence on the evolution of electricity

demand

TASK 3Electricity scenarios by

country and primary fuel for 2010, 2020 and

2030

TASK 2Energy policy and other drivers for

power supplyoptions

31



Parameters having direct influence on the evolution of electricity demand

Economic factors (growth rate, income, etc)

Prices and subsidies (for electricity and competitive final energies)

Structure of electricity demand

– Peak load & seasonal variation

– Energy intensity

Industry structure

Potential for energy savings and DSM

32



Pro-GasCompetitive gas for environment &

security of supply. EU-level dialogue with producers. Infrastructure support

ScarcityGeo-Political tensions; High fuel prices

Governments intervene policiesBalkanization of markets

Today’s UncertaintiesVolatile fuel prices; divergent

environmental commitments; vacillating Governments; industry consolidation

Political uncertainty;high oil prices persist

CompetitionInfrastructure investments then global hard

landing; Visionary leadership; EU leads liberalization; strong growth w/ volatility

Near-term overbuild creates circumstances for re-

energizing market liberalization

ECON’s European Gas & Power Scenarios

Beyond KyotoTough Post-Kyoto commitments; Governments intervene; Gas as

intermediate fuel; Nuclear revival

Tough Post-Kyoto settlement

33



Electricity scenarios by country and primary fuel for 2010, 2020 and 2030

Review and assessment of existing scenarios

Use of in-house models when available

34



WP2

Human Health Related External Costs of Different Energy

Sources

35


WP2 – Human Health Related External Costs

WP2 objectives Collection of life cycle emissions for state-of-the-art

conversion technologies Description of methodology for external costs

estimation (human health, materials, crops) Including methodologies for other areas

(eutrophication, acidification, land use change, climate change) into framework and tools

Calculation of marginal costs for state-of-the-art technologies in Germany

Organisation of a joint WP2-7 stakeholder workshop

36



WP2 partners USTUTT/IER, University of Stuttgart – Institute of Energy

Economics and the Rational Use of Energy (Co-ordination and main work on emissions, methodology, tools)

PSI, Paul Scherrer Institut (nuclear life cycle and methodologies for assessment of exposure of population with radioactive substances)

ISIS, Istituto di Studi per l’Integrazione dei Sistemi (cooperation concerning stakeholder workshop)Involvement in estimating data on emissions of state of the art technologies outside EU25:

Fundação COPPETEC, Brasil IIMA, Indian Institute of Management Ahmedabad ERI, Energy Research Institute, China EAP, Energy Agency of Plovdiv, Bulgaria TUBITAK, Turkiye Bilinsel ve Teknik Arastirma Kurumu – Marmara

Research Center, Institute of Energy

37



WP2 description of work Task 2.1: to identify and describe the pressures to

the environment stemming from the latest state-of-the-art energy conversion technologies.

Task 2.2: to describe the current state-of-the-art methodology to estimate external costs.

Task 2.3: to incorporate the methodology to cover land use change, acidification and eutrophication, visual intrusion and climate change into the methodology to generate external cost estimates and into the ECOSENSE tool to calculate marginal external costs.

Continue…

38



… Task 2.4: to demonstrate the application of the

methodology, by estimating external costs for the different technologies at specific sites in Germany.

Task 2.5: to organise a joint WPs 2-7 workshop for stakeholders, to discuss the methodology to calculate external and private costs and the results for selected sites.

39


EcoSense Flowchart

Emissioninventory

Air QualityModelling Valuation

Em

issi

on

s (N

Ox,

SO

2, N

H3,

NM

VO

C,

pri

mar

y p

arti

cles

...)

acc

ord

ing

to

• S

ou

rce

• L

oca

tio

nLocal Model

WTM

SROM

Concentration / Depositionfields

Receptor distribution- population- crop yield- building materials

Physical impacts

Monetary unit values

En

viro

nm

en

tal d

am

ag

e c

ost

s

Impact Assessment

Do

se-

effe

ct

mo

de

ls

(e.g. increased mortality, crop losses)

Ozone formation,Regional scale

primary pollutantsand acid species,

regional scale

primary pollutants,local scale

40



WP3

Non Human Health Related Environmental Costs of

Different Energy Sources

41


WP3 – Non human health related environmental costs

WP3 objectives To update the estimates of non-human health

related environmental costs of different energy sources based on life cycle impacts for EU and non-EU countries with specific attention to ‘new impacts’ (acidification, eutrophication and visual intrusion);

To discuss and confirm ranges of estimates of environmental costs with representatives of industry.

42



WP3 partners VU-IVM, Institute for Environmental Studies of the

Free University, Amsterdam (WP coordinator) Sweco Grøner, E-Co Tech Ås, Norway UW, Wageningen University

43



WP3 Description of work This WP provides a critical review and updates

external cost estimates of energy-related impacts on land use change, acidification, eutrophication, visual intrusion and climate change across Europe and for selected non-EU countries.

Jointly with WP2 and WPs4-7, research findings are presented and discussed in a stakeholder workshop. Results on land use change, acidification, eutrophication, visual intrusion and climate change are shared with the coordinator of WP2 to be included in the ECOSENSE model.

44



VU-IVM

– reviews and updates monetary estimates of energy-related land use change and climate change impacts;

– contributes to the review and update of monetary estimates of impacts on aquatic ecosystems;

– prepares a database on studies concerning external cost estimates of land use changes, acidification, eutrophication and climate change.

Continue…

45



… Sweco Grøner

– reviews and updates monetary estimates of acidification impacts on freshwater fish, and impacts of eutrophication on use values and non-use values, and estimates of landscape aesthetic impacts of renewable energy;

– provides a state-of-the art review of valuation studies on these topics and a discussion on benefit transfer methods for these values.

UW

– studies the impacts of various emissions related to energy systems;

– focuses on the impacts of acidifying compounds on terrestrial ecosystems, including agriculture.

46



WP4

Private Costs of Electricity and Heat Generation

47


WP 4 – Private Costs

WP4 objectives

Determine the private costs for electricity and heat generation of different technologies for selected countries

Overview of existing heating technologies and electricity generation plants in previous studies.

Updating to the state-of-the-art technologies and extending with technologies under development.

Determination of the levelised lifetime cost of the heat and electricity generation technologies.

Accomplishment of some sensitivity analysis for different– load factors– workers’ salaries and– annual energy production.

48



WP4 partners USTUTT/IER, University of Stuttgart – Institute of

Energy Economics and the Rational Use of Energy (WP coordinator)

VITO, Flemish Institute for Technological Research COPPETEC, Fundação COPPETEC IIMA, Indian Institute of Management Ahmedabad ERI, Energy Research Institute, China EAP, Energy Agency of Plovdiv, Bulgaria TUBITAK, Turkiye Bilimsel ve Teknik Arastirma

Kurumu - Marmara Research Center, Institute of Energy

49



Electricity generation plants

nuclear power plants (EPR, PBMR)fossil-fired (oil, hard coal, lignite) power plantsintegrated coal gasification combined cycle (IGCC) plantscombined cycle gas-steam power plantshydropower (run of river, dam) plantswind mills (onshore and offshore)solar photovoltaic systems (roof, open space)combustible renewable power plants

CHP plants

coal-, gas-fired CHP plants with a back-pressure turbinescoal-, gas-fired CHP plants with an extraction condensing turbinesinternal combustion enginesbiomass CHP plants (gasification)fuel cells (high temperature fuel cells)

Heat generation technologies

gas, oil and wood chips combustion boilersheat exchangersheat pumps

WP4 description of work - overview of technologies (proposed by WP leader)

50


WP 4 – Private CostsComponents of static social cost for electricity generation (From EUSUSTEL project) global external costs due to

– specific emissions– other external life cycle cost

costs of system integration due to– stochastic wind, solar and hydro power supply– spatial distribution, share of total generation

private generation cost– from an overall system oriented point of view

Average Lifetime Levelised Electricity Generation Cost Solve for the price that makes costs equal to revenue over the lifetime of

the project– from an investor‘s point of view additional premium due to risks in liberalised

markets (e.g. electricity prices, economics, regulatory and political factors) should be considered

51



WP5

Externalities of Energy Security

52


WP5 – Externalities of Energy Security

WP5 objectives

To derive estimates of externalities related to energy supply insecurities for EU and other selected countries;

To use estimates of externality costs in policy assessment of measures addressing energy security in the EU and other selected countries.

53



WP5 partners

UBATH, University of Bath (WP coordinator)

ECN, Energy Research Centre of the Netherlands

CEPS, Centre for European Policy Studies

54



WP5 description of work University of Bath (WP leader) reviews and updates existing estimates

of external costs of energy insecurity for primary fuels; – use published outputs of existing macro-economic and inter-

sectoral models to make estimates of the costs of the use of these fuels;

– make predictive estimates of aggregated costs up to 2030 for the EU and selected other countries.

Energy Research Centre of the Netherlands (ECN) critically reviews current estimates of values of loss of load (VOLLs) of electricity for EU and other selected countries;– Include costs of recent blackouts in EU and other countries (e.g.

Italy, UK, Denmark etc);– Provide basis for deriving country estimates to a time horizon of

2030. Continue…

55



Energy Research Centre of the Netherlands (ECN) and Centre for European Policy Studies, Belgium (CEPS) assess the policy options to reduce - and insure against - the costs of energy insecurity– by comparing costs of a number of policy options with the

benefits in terms of reduced energy insecurity. – policy options to include:

increased maintenance of strategic stockpiles, feed-in tariffs and tradable certificates as methods to

increase renewable energy sources’ share in the EU energy mix,

taxes on fossil fuels, requirements of increased capacity in the electricity

sector and; other market-based instruments.

Policy recommendations

56



WP6

National Level Estimates of Energy Costs in EU Countries

57


WP 6 – National Level Estimates of Energy Costs in EU Countries

WP6 objectives

To develop a consistent set of national level full costs estimates for the 25 EU countries for different energy sources.

To develop a comparative full cost assessment and a consistency analysis of the set of national level full costs estimates.

58



WP6 partners FEEM, Fondazione Eni Enrico Mattei (WP coordinator) VITO, Flemish Institute for Technological Research USTUTT/IER, University of Stuttgart - Institute of Energy

Economics and the Rational Use of Energy UWARS, University of Warsaw LEI, Lithuanian Energy Institute CIEMAT, Centro de Investigaciones Energéticas,

Medioambientales y Tecnológicas SEI, Stockholm Environment Institute CUEC, Univerzita Karlova v Praze NTUA, National Technical University of Athens

59



WP6 Task 6.1: full cost estimation Analysis and Integration of costs: A data template for private

and external estimates is developed and filled for each country and for each energy source.– The marginal costs of different technologies and the total

external costs are calculated for the energy sector by technology for each EU-25 country.

– Estimates on costs are dynamic as result of the scenarios of energy use for the years 2010, 2020 and 2030.

Full cost calculation: The private and external cost data are harmonised and assembled in a coherent and systematic way to derive the total costs estimations.– The total cost calculation is extended to the EU 25 countries. – Full cost estimates for each EU country and for different

energy sources are integrated into a dynamic framework, carefully choosing among different scenarios.

60



WP6 Task 6.2: comparative full cost assessment A comparative full cost assessment is developed to

identify inconsistencies and structural variations in the total costs composition.

The full cost estimates are compared across countries, to pay particular attention to local geographical variations.

Private and external costs are integrated within one dynamic framework.

The most critical parameters that have an influence on the total cost estimates are identified.

61


WP2WP2Private costs

of energyproduction

WP3WP3Human health related external

costs

WP6WP6

WP5WP5Costs ofenergysecurity

Existing literature

WP4WP4Non-human

health relatedexternal costs

New investigationsW

P1

WP

1 T

ime

dim

ensi

on

WP

12

WP

12 U

ncer

tain

ty d

imen

sion

Compare full cost across countries.Compare full cost composition.

Completecost datasets.

Fill in data gaps.

Calculate full (private +external) cost

for different energy sources.

62



WP7

National Level Estimates of Energy Costs in Non EU

Countries

63


WP7 – National Level Estimates of Energy Costs in Non EU CountriesWP7 – National Level Estimates of Energy Costs in Non EU Countries

WP7 objectives Develop a methodological framework for the

extraction of private and social costs of energy fuel cycles in a set of non EU countries;

Derive new insights into the costs of fuel cycles in EU as compared to the group of non EU countries;

The group on non EU collaboration countries: Brazil, Bulgaria, China, India and Turkey.

64



WP7 partners

RISOE, Risoe National Laboratory (WP coordinator)

COPPETEC, Fundação COPPETEC, Brasil

IIMA, Indian Institute of Management Ahmedabad

ERI, Energy Research Institute, China

EAP, Energy Agency of Plovdiv

TUBITAK, Turkiye Bilimsel ve Teknik Arastirma Kurumu - Marmara Research Center, Institute of Energy

65



WP7 description of workEstimates of private and social costs Twenty–five years’ time frame Based on available fuel cycle cost assessments for the

collaboration countries. Two fuel cycles in each country Special focus on social costs of human health impacts from

pollutionFuel cycles considered as of yet: Brazil: Renewable energy options and ethanol for transportation

(COPPETEC) Bulgaria: Fossil fuel based power production and renewable

energy (EAP). China: Coal and bio–mass or other renewable (ERI); India: Coal and ethanol for transportation (IIMA) Turkey: Coal and bio–diesel (TUBITAK);

66



Challenges in harmonizing computations to ExternE standards

Differences across developed and developing countries arise in: Issues related to incomplete markets, inefficiencies and informal

sectors The kinds of externalities that arise The relative magnitude of impact from similar kinds of externalities Data availability Modelling issues Valuation issues

67



Challenges in monetarisation of damages in developing countries

Final estimate of costs associated with e.g. the use of coal are context specific.

Challenges are inherent to:

Data constraints

Modelling issues

Valuation issues

68



WP8

Assessment of Policy Instruments to Internalise

Environment-Related External Costs in EU Member States,

Excluding Renewables

69


WP8 – Assessment of policy instruments to internalise environment-related external costs in EU Member States, excluding renewables

WP8 objectives Comparative assessment of investment and operational

costs of different energy options taking account of only private costs and taking account of private plus external costs.

Impact of the use of different methods of decision-making on the selection of projects - e.g. cost-benefit analysis with ‘externality adders’ versus multi-criteria decision analysis tools.

Implications of different taxes/charges on energy and/or on emissions on (a) the degree of internalisation and (b) the comparative cost comparisons, now and in the future.

Continue…

70



… Implications of different policies to reduce energy insecurity

on (a) the degree to which energy security concerns are internalised and (b) the comparative costs of different energy sources, now and over time.

Comparison of the effectiveness of emissions trading instruments for internalising externalities versus the use of externality based taxes.

Comparison of different instruments to promote renewable energy sources, in terms of the degree to which they internalise the positive externalities associated with renewable energy use.

71



WP8 partners

VITO, Flemish Institute for Technological Research (WP coordinator)

FEEM, Fondazione ENI Enrico Mattei

NTUA, National Technical University of Athens

ISIS, Istituto di Studi per l’Integrazione dei Sistemi

PSI, Paul Scherrer Institut

72



WP8 methodology

WPs 8-10 share a common investigation methodology:

– First, they look at a taxonomy of policy instruments (taxes, permits, emissions trading system, feed in tariffs, tradable emissions certificates, etc.) currently available and discussed in the energy arena.

– Second, they consider how successful the different instruments are in internalising the external costs of energy production and in promoting the use of renewables.

WPs 8-10 will have a dynamic outlook by comparing policies at the current time and in the future, considering the energy use scenarios identified in WP 1 and the uncertainties assessed in WP 12.

73



WP8 description of work Task 8.1: Synopsis of all relevant policy instruments

(taxes, permits, command and control, voluntary agreements, etc.) for non-renewable energy sources and systems used by EU Member States. Synergies with WP 9 and WP 10 are exploited.

Task 8.2: Analysis of the extent to which different policy instruments succeed to internalise external costs of fossil fuels and nuclear energy with reference to 2010, 2020, 2030 scenarios of energy use provided by WP1. A comparative full cost assessment is undertaken emphasising the comparison of nuclear and fossil fuels.

Continue…

74



… Task 8.3: Analysis of policy linkages for fossil fuels use

reduction and GHG emissions trading regimes. Task 8.4: Development of suggestions to improve the

instruments for reducing negative social and fiscal impacts while increasing their power to achieve an extensive internalisation of the external costs of the use of fossil fuels and nuclear energy; and of a suggestion for an integrated EU policy for the external costs of fossil fuels and nuclear energy. Finally, an analysis of the hidden costs of the implementation of different policy instruments for internalisation of external costs of fossil fuels and nuclear energy is carried out. D.8.1: WP8 Report on the assessment of policy instruments.

75



Criteria for analysis

1. Efficiency of allocation:

how far ? (MC=MB or equal total cost)

2. Cost efficiency:

who does the efforts ? (MCa=MCb)

3. Dynamic efficiency:

stimulate clean technologies

4. Verifiability: measurement

5. Political practicability

76



WP9

Policy Assessment of Instruments to Internalise

Environment Related External Costs in EU Member States,

via Promotion of Renewables

77


WP9 – Policy Assessment of Instruments to Internalise Environment Related Policy Assessment of Instruments to Internalise Environment Related External Costs in EU Member States, via Promotion of RenewablesExternal Costs in EU Member States, via Promotion of Renewables

WP9 objectives

Provide overview of instruments used to stimulate the use of renewables

Compare different instruments with respect to degree of internalisation achieved

Analyse social and fiscal implication of different instruments especially on poor and vulnerable groups

Suggest modifications to minimize negative and maximise positive impacts

Analyse hidden costs of implementation

Investigate stakeholder preferences

78


WP9 – Policy Assessment of Instruments to Internalize Environment Related Policy Assessment of Instruments to Internalize Environment Related External Costs in EU Member States, via Promotion of RenewablesExternal Costs in EU Member States, via Promotion of Renewables

WP9 partners

UFLENS, University of Flensburg (WP coordinator)



RISOE, Risoe National Laboratory

79


WP9 – Policy Assessment of Instruments to Internalise Environment Related Policy Assessment of Instruments to Internalise Environment Related External Costs in EU Member States, via Promotion of RenewablesExternal Costs in EU Member States, via Promotion of Renewables

WP9 tasks

Synopsis of all relevant policy instruments

Analysis of extent of success of internalisation

Analysis of extent of future success 2010, 2020, 2030

Analysis of linkages between Renewable Energy policies and GHG emissions trading

Analysis of social and fiscal implications

Development of suggestions to improve policy measures

Development of a suggestion of an integrated EU policy

Analysis of the hidden costs of implementation

80



WP10

Assessment of Policy Instruments to Internalise

Environment-Related External Costs in non-EU Member

States

81


WP10 – Assessment of policy instruments to internalise environment-related external costs in non-EU Member States

WP 10 objectives

To assess policy instruments to internalise externalities in non EU Member States, via promotion of renewables, focusing on Turkey, Bulgaria, India, China and Brazil;

To investigate stakeholders preferences for policy instruments to promote renewable energy sources through Stakeholders Workshop 2 (together with WPs 8-11).

82



WP 10 partners

UBATH, university of Bath (WP leader)


COPPETEC, Fundação COPPETEC

IIMA, Indian Institute of Management Ahmedabad

ERI, Energy Research Institute

EAP, Energy Agency of Plovdiv

TUBITAK, Turkiye Bilimsel ve Teknik Arastirma Kurumu - Marmara Research Center, Institute of Energy

83



WP 10 structure of work

Task 10.1: Synopsis of policy instruments for the promotion of renewables in non-EU Countries (UBATH)

Task 10.2: Comparison of instruments used in non-EU Countries with those used in EU-Countries for the internalisation of externalities in the production of energy (UBATH)

Task 10.3: Analysis of the extent to which different policy instruments succeed in internalising the net external benefits of renewables in year 2010, 2020, 2030 (UBATH).

Continue…

84



… Task 10.4: Analysis of the social and fiscal implications of

different internalisation instruments, focusing on the impacts on the most vulnerable groups in society and on the fiscal burdens created by some instruments working through positive incentive schemes on the basis of government payments (UBATH - TUBITAK).

Task 10.5: Suggestions to reduce negative social and fiscal impacts of instruments while increasing their power to achieve an extensive internalisation; suggestions for an integrated EU policy for the internalisation of the positive net external benefits of renewables; analysis of the hidden costs of the implementation of different policy instruments for the internalisation of net external benefits of renewables (UBATH).

85



WP11

Methods of Assessment

86


WP11 – Methods of assessment

WP11 objectives To perform a comparative analysis of policy

assessment methods and identify common grounds and linkages;

To provide guidelines for the dynamic implementation of policy assessment methods;

To provide tools and support for implementing methods in WPs 8-10 with the involvement of energy suppliers and other stakeholders;

To estimate implied monetary equivalents for non-monetised impacts.

87



WP11 partners

NTUA, National Technical University of Athens (WP coordinator)

UBATH, University of Bath

VITO, Flemish Institute for Technological

UFLENS, University of Flensburg

88



CBA Stems from neoclassical economics The market as guided by individual

preferences secures optimal allocation

Money is the appropriate vehicle to express these preferences

If stated preferences are missing, use of hypothetical or surrogate markets.

Decision: Aggregation of costs/benefits expressed in monetary terms.

MCDA Stems from social sciences (decision-

behavioral analysis) Humans do not always value

environmental goods as consumers within a market

Preferences do not a priori exist in human mind, especially for non familiar or non traded goods.

A discursive, interactive approach might help individuals construct their preferences

Decision: aggregation of weighted performances or outranking of global preferences.

Overview of methods

89



Formulation of policy problems Clear specification of alternative policy instruments to

be assessed– Which– Where– When– How

Identification of evaluation perspectives – Cost/benefit component (CBA)– Criteria (MCDA)

Identification of people concerned.

90



WP11 description of work

Analysis, description and operationalisation of assessment methods

Task 11.1: to review Cost-Benefit Analysis (CBA), Cost Effectiveness Analysis (CEA), Multi-Criteria Decision Analysis (MCDA) techniques/tools and successful applications in energy and environmental policy making.

Task 11.2: to set up guidelines for using CBA, CEA and MCDA in policy assessment, with emphasis on integrating dynamic aspects in multi-criteria assessment.

Continue…

91



… Task 11.3: to set up tools for implementing assessment methods in an

interactive and dynamic way. These tools are developed in a generic form assuming a number of alternative policy instruments evaluated along a number of aspects. The CBA-CEA tool provides rankings of instruments according to external cost estimates and discount rates. The MCDA tool provides rankings of instruments according to the preferential input of stakeholders. In both cases a sensitivity analysis indicates the robustness of the obtained results.

Task 11.4: to extend and improve the methodology for deriving monetary equivalents for non-monetised impacts through individual preferences elicited in MCDA.

Continue…

92



… Task 11.5: to organise a seminar for WPs 8-10

partners to validate methods and user guidelines. Task 11.6: to adapt the tools to the specific context

and data of WPs 8-10, testing the tools through electronic communication and in partners meetings.

Task 11.7: to participate in stakeholders workshop 2 and to elaborate results providing policy input.

93



WP12

Treatment of Uncertainty in Estimates of External Costs

at the National Level

94


WP12 – Uncertainties

Objectives To evaluate the uncertainties of the costs (both

private and external) estimated in this project; To evaluate the effect of these uncertainties on policy

decisions, e.g. choice of energy technologies, choice of emission limits, and the resulting emission levels;

To evaluate the social costs if the wrong policy choices are made because of errors or uncertainties in the estimation of the costs estimated in this project;

To evaluate the benefit of reducing the uncertainties by further research (to help identify the priorities for such research).

95



WP12 partners

ECN, Energy Research Centre of the Netherlands (WP coordinator)


96



Description of work Task 12.1: to review, update and complete the estimation of uncertainties (ECN,

FEEM). This task begins by reviewing the existing uncertainty estimates and updating them as necessary. The extension of the external cost calculations to countries outside the EU entails additional uncertainties that will be evaluated, in particular with regard to monetary valuation. Uncertainties are also estimated for private costs; here both energy prices and abatement costs need to be considered.

Task 12.2: to assess the effect of the uncertainties on different levels of internalisation (ECN, FEEM). Tradable permits that are given away free make the polluters reduce their emissions to the social optimum, but without paying anything for the damage caused by the residual emissions. By contrast, pollution taxes and tradable permits that are auctioned by the government make the polluter pay not only the abatement cost to reach the optimum but also the residual damage; the difference in cost to the polluter is large. The monetary transfers and the effects on the economy are therefore much larger in the latter case than in the former, and so are the consequences of errors in the estimation of the external costs.

Continue …

97



… Task 12.3: to evaluate effect of uncertainties on energy choices (ECN,

FEEM). Errors in the estimation of the external costs could lead to inappropriate energy choices, for example too low a level of renewable energy sources. Since the evaluation of energy choices is a difficult and complex undertaking, we will attempt to provide at least some initial estimates.

Task 12.4: to evaluate benefit of reducing the uncertainties by further research (ECN, FEEM). Previous research has evaluated how much the social cost of air pollution abatement is increased beyond the optimum if an error is made in the estimation of the damage cost or the abatement cost curve. This social cost penalty can be reduced by further research aimed at reducing the uncertainties of the respective cost estimates. By examining the relation between a measure of the uncertainty (e.g. geometric standard deviation) and the social cost penalty, the value of such research will be quantified. To help identify the priorities the various sources of uncertainties are ranked in terms of their contribution to the total.

98



WP13

Management and Coordination

99


WP13 – Management and Coordination

Objectives To ensure the efficient co-ordination and

management of the project, both in terms of scientific co-ordination and administrative management;

To review and assess project results and progress towards the objectives;

To carry out full communication and dissemination on the project activities and findings.

100



WP13 partners

FEEM, Fondazione ENI Enrico Mattei (project coordinator)

UBATH, University of Bath (deputy coordinator)

101



Description of work

Task 13.1: Project management and coordination activities overall legal, contractual and administrative management;

maintenance of the Consortium Agreement; management of the financial flows between the Commission and the consortium; co-ordination of knowledge management issues; overall co-ordination of the technical activities of the project (FEEM and UBATH);

project reporting:

– 12months and 30months Activity and Management Reports

– 24months Summary Activity Report (ALL PARTNERS).

Continue…

102



…

Task 13.2: Project review and assessment monitoring of project implementation, review and

assessment of project results and progress towards the objectives (ALL PARTNERS).

organisation of project meetings:– Kick-off Meeting (month 2, FEEM);– Mid-term Project Meeting (month 14, FEEM);– 3 Project Steering Committee Meetings (month 18,

IER, month 25, VITO and month 29, ISIS)

Continue…

103



…Task 13.2: Project communication and dissemination activities development and update of a Plan for using and disseminating

knowledge (month 6, ALL); development and update of a Project’s communication action plan

(month 6, ALL); establishment and maintenance of a dedicated web site, production

of scientific contents, publication of project findings and reports, linking with partner web sites, etc (FEEM and ALL).

establishment of links with other EU and international initiatives (in particular, with the NEEDS consortium through active participation to the NEEDS Fora) (ISIS and ALL).

publication of working papers, a book (FEEM), articles in peer-reviewed scientific journals, and project presentations at international conferences (ALL).

104



What is CASES Context Objectives Expected results Interaction with other projects The actors Organisation of work Description of Work Packages Description of dissemination activities

105



Dissemination of research outputs is a key objective to maximize the impact of the project activities.

The dissemination strategy will be implemented through a range of means to reach the highest number of end-users.

Target: EU/international research community, policy sphere, business, public at large.

106



Dissemination means

Interactive web site

Electronic Mailing List

Electronic Newsletter

Project events: 2 Stakeholders Workshops and the Final Conference

Other conferences and workshops, seminars

Publications

107



Interactive website

Intranet service

To ensure intra-partnership communication on project related issues

External dissemination

Project-related information (partners details, project activities and results, deliverables, workshops,…)

Useful links, policy docs, list of stakeholders

Forum

Subscribe Electronic Newsletter and Mailing list

108



Electronic mailing list Prompt, up-to-date and simple communication on

project news Target: project partners, organization outside the

consortium expressing interest in the initiative (business, policy, public…)

Electronic news letter 6-month update on the progress of the project, with

direct links to project outputs posted on the web Target: academy, policy-makers, business, public at

large

109



Project events

Stakeholders Workshops

At least 2 Workshops are organised in order to confront preliminary results of the network with academic excellence and key stakeholders and end-users outside the network.

Final Conference

At the end of the project a Final Conference (month 29, ISIS) is organised to present the results of the network to the academic, policy and business communities and civil society organisations.

110



Other events

Conferences and workshopsThe partners will participate to other scientific and policy meetings (national and international workshops and conferences) in order to present the project and its preliminary and final results, both during and after the end of the project.

111



Publications

FEEM Working Paper series (Economic Research Institutes Paper Series of SSRN, RePEc, Econlit)

Peer-reviewed scientific journals

Book

112


corso Magenta 6320123 Milano - Italy

tel +39 | 02 | 5203.6934fax +39 | 02 | 5203.6946web http://www.feem.it

Documents

CASES – Cost Assessment for Sustainable Energy Systems