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Energy Day. Karsten Neuhoff,. Dresden, 19.4.2013. Unlocking the synergies between EE, RE and Emission target. The role of targets for policy implementation Multiple targets to achieve one objective Multiple objectives motivating one target Translating targets into action - PowerPoint PPT Presentation
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Unlocking the synergies between EE, RE and Emission target
Energy Day
Karsten Neuhoff,Dresden, 19.4.2013
1 The role of targets for policy implementation
2 Multiple targets to achieve one objective
3 Multiple objectives motivating one target
4 Translating targets into action
5 The role of EU ETS – a target turned instrument
6 Possible implications for formulation of energy and climate targets
Unlocking the synergies between EE, RE and Emission target
Strongly Disagree
Disagree Strongly Agree
Agree
NOTE: 80% of respondents agreed that the data collection process for the indicators was labour intensive
Ability of indicators to facilitate policy/project management 1
What type of indicators are commonly used?1
Lester, S. and K. Neuhoff, 2009, Understanding the roles of policy targets in national and international governance. Climate Policy, 9 (5), p. 464-480.
Policy target applied to
Out
com
eIn
put
Time frame (years)1 3 1510
PSA
PRSP
EU Acces
sion
MDGResponsetime
GPRA
GPRA Government performance result act
PSA Public Service Agreements PRSP Poverty Reduction Strategy
Papers MDG Millennium Development Goals
What trade-offs are involved in selecting indicators?1
• Allow comparison of policy effectiveness
• Often more difficult to define
• Easier to measure
• Can ignore important interactions / focus to narrowly
• Response time• Identify barriers
Lester, S. and K. Neuhoff, 2009, Understanding the roles of policy targets in national and international governance. Climate Policy, 9 (5), p. 464-480.
Eur
opea
n C
O2 e
mis
sion
s ye
ar
2020today 2050
Conventional coal
Oil
Gas
Illustrative
EE and RE targets make LT emission targets viable2
BAU
Energy Efficiency
RenewablesCCS/ additional nuclear
Political objective Targets Policies / Programms
Climateprotection Emission
Technology
Energy efficiency
Illustration
Multiple targets to achieve one objective2
Example RE deployment
See also : Ensuring renewable electricity investment: 14 policy principles for a post-2020 perspective www.remunerating-res.eu
2Principle A: 2030 targets needed
0
10
20
30
40
50
60
70
80
90
100
2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Reference scenario
Policy scenarios
% o
f EU
Pow
er fr
om R
E
National Renewable Energy Action Plans
EU Roadmap 2050
Political objectives Targets Policies / Programms
Climateprotection
Reducing inequality
Emission
Technology
Employment Energy efficiency
Reduction of fuel poverty
Illustration
Industry development
Energy security
Multiple objectives motivating one target3
Short-term job multiplier effects of green investments3
Spencer T. , K. Bernoth, L. Chancel, E. Guerin, K. Neuhoff (2012) Green investments in a European Growth Package, IDDRI Working Paper 11
Translating targets into action
11
4
Political objectives Targets Policies / Programms
EU ETS
RE support
Buiding standardInformation program
Support for retrofit
Illustration
Climateprotection
Reducing inequality
Emission
Technology
Employment Energy efficiency
Reduction of fuel poverty
Industry development
Energy security
What is necessary to deliver targets – example RE 4
Global Input:Technically-Feasible RE Generation Capacity
Global Output:Installed /
Target RE Capacity
PlanningAccess to Grid and
Energy Market Supply Chain Project Finance
BarriersLack of effective legal / regulatory framework
Lack of private participation and professional institutions
Uncertainty with government policies
Lack of coordination between authorities
Lack of consumer/social acceptance of RE technologies
Barriers
Highly controlled energy sector
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
Barriers
Lack of competition and lack of standards and codes of certification
Lack of entrepreneurs, skilled labour, and training and O&M facilities
Lack of R&D capacity
Restricted access to technologies
Lack of reliability of products
Lack of institutions / mechanisms to disseminate information
Barriers
Financial Support(costs, risks, ...)
Energy Market(access, structure, long-term costs, ....)
Capital Market(perception of technical risk, perception of regulatory risk, ...)
Visibility(uncertainty, ....)
Barriers along the RE pipeline4
Global Input:Technically-Feasible RE Generation Capacity
PlanningAccess to Grid and
Energy Market Supply Chain Project Finance
BarriersLack of effective legal / regulatory framework
Lack of private participation and professional institutions
Uncertainty with government policies
Lack of coordination between authorities
Lack of consumer/social acceptance of RE technologies
BarriersHighly controlled energy sector
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
BarriersLack of competition and lack of standards and codes of certification
Lack of entrepreneurs, skilled labour, and training and O&M facilities
Lack of R&D capacity
Restricted access to technologies
Lack of reliability of products
Lack of institutions / mechanisms to disseminate information
BarriersFinancial Support(costs, risks, ...)
Energy Market(access, structure, long-term costs, ....)
Capital Market(perception of technical risk, perception of regulatory risk, ...)
Visibility(uncertainty, ....)
Quantitative and qualitative indicators
Qualitative indicators
Global Output:Installed /
Target RE Capacity
Not covered
Barriers along the RE pipeline:Indicators provided in NREAPs:4
Source: IEA, GWEC, Worldwatch Institute
Installed wind power per year (MW)
China
U.S.
SpainIndiaGermanyU.K.ItalyFrance
Denmark
2nd Purpose of targets: Creating confidence for investors in supply chain4
The role of EU ETS – a target turned policy
16
5
Political objectives Targets Policies / Programms
EU ETS
RE support
Buiding standardInformation program
Support for retrofit
Illustration
Climateprotection
Reducing inequality
Emission
Technology
Employment Energy efficiency
Reduction of fuel poverty
Industry development
Energy security
How does EU ETS impact on investment process?
17
I. Capturing Companies’ AttentionII. Providing Clarity for Decision MakingIII. Creating enabling environment for Low-Carbon Investment
5
See Climate Strategies Project Summary: Carbon pricing for low carbon investment
The surplus of unused allowances is „piling“ up
18
5
Source: Banking of Surplus Emissions Allowances: Does the Volume Matter? DIW Discussion paper 1196
Early auctioning (120 m)Early phase III NER (300 m)Retained phase II NER (350 m)
0,0
0,5
1,0
1,5
2,0
2,5
3,0
Volu
me
of u
nuse
d al
low
ance
s (b
illio
n)
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Cap exceeds emissions
Uncertainty about future emissions will remain International offsets add to surplus
Timing of auctions increases surplus in 2012/13
High Renewables
ReferenceCurrent Policy Initiative
CDM/ JI credits linked to EU (1.7 bn)
Where do unused allowances go?5
Source: Banking of Surplus Emissions Allowances: Does the Volume Matter? DIW Discussion paper 1196
19
0,0
0,5
1,0
1,5
2,0
2,5
3,0
Volu
me
of u
nuse
d al
low
ance
s (b
illio
n)
Speculative investment
Banks buy allowances to sell forward/ future/ option contracts No impact on demand
I Industry sector banks free allowances
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Power sector uses allowances to hedge future power sale(flexibility on volume)
I
1 The role of targets for policy implementation
2 Multiple targets to achieve one objective
3 Multiple objectives motivating one target
4 Translating targets into action
5 The role of EU ETS – a target turned instrument
6 Possible implications for formulation of energy and climate targets
Unlocking the synergies between EE, RE and Emission target
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
6
Political objective:2°C / - 80-95% CO2
20502010 2020 2030 2040
CO
2 em
issi
ons
2020 emission target ~ no further action
Current initiatives (EE, RE)
Illustration
Discrepancy crystalizes in 2030 discussion
Discrepancy can trigger discussion to increase consistency6
Retain options for flexiblity
23
•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
6
Considerations for future target development
24
•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.
6
Summary
25
6
Political objectives Targets Policies / Programms
EU ETS
RE support
Buiding standardInformation program
Support for retrofit
Illustration
Climateprotection Emission
Technology
Energy efficiency
Reduction of fuel poverty
Reducing inequality
Employment
Industry development
Energy security
Vielen Dank für Ihre Aufmerksamkeit.
DIW Berlin — Deutsches Institutfür Wirtschaftsforschung e.V.Mohrenstraße 58, 10117 Berlinwww.diw.de
RedaktionKarsten [email protected]