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Quotas for energy resource use - An integrating set of tools to manage

environmental, social and economic crises

Veronika Kiss, CEEweb for Biodiversity

European High-Level Conference on Rio+20:

“Achieving Global Justice in the Green Economy”

March 15th, Brussels

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A growing world population meets the challenge of limited natural resources. How about the future?

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Problems to be solved: resource use• Overshoot – utilising resources above carrying

capacity

• Return to carrying capacity

• Regulation of resource input to the economy

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Challenges of resource use regulation

Challenge Tackle the challenge

Human made structures (production and consumption, infrastructure) requires energy to operate and maintain.

Change structures to a less resource intensive one

Natural resources are undervalued and

though unlimited.

Limit resources and give them real price

Getting the maximum profit, investors

privatise all benefits and shift

externalities to the society.

Minimise negative

external costs

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Challenge Tackle the challenge

Economic growth means benefit for a few people based on due the compound interest.

Establish „free money” - stimulates economy and long term investments.

550 ppm in 2050 requires 920 MW in RES and the replacement requires additional enormous amount of energy

Reduce the energy resource use of economy activities

Challenges of resource use regulation

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System level innovation requires systemic approach

• Outputs comes from inputs.• Less input means less resource use, less use of land, and less emission.• We have to change production and consumption patterns through

economic incentives

legal regulation

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Energy quota scheme

•1st pillar: non-renewable energy quota•2nd pillar: green market •3rd pillar: revolving fund•4th pillar: advisory service

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1st pillar: non-renewable energy quota

•To reduce non-renewable resource use year by year until it reaches the carrying capactiy •A cap and share (trade) system of non-renewable energy resources instead of GHG emissions•All users are grouped and each group receive allowances (called energy quota)

Different interest groups come up with proposal of quota amount and share it among themselvesPeople get personal quotas from managing organisation

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•Quotas cover all kind of energy demand (gas, electricity,fuel)

Users trade with saved quotas, The saved quotas can be sold for a new type of money, called quota money.

•If the absolute use of energy quotas exceeds the annual cap extra quotas can be bought at a high rate from the managing organisation.

1st pillar: non-renewable energy quota

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How is quota money born?

Quota received

Sell

Buy

Quota money

AdditionalQuota

Balance of quota and real

consumption

Rest

Need

Exchange

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• its guarantee the national currency• has zero interest• its exchange to national currency has a high commission (e.g. 30%) •stimulates the economy through the green market

Quota money

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2nd pillar: Green Market• An internal green market is established for environmentally sound goods and services.• The market is open, run by market rules.• It sets sustainability requirements and thus excludes certain goods and services.

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3rd pillar: Revolving Fund

• a financial instrument to ensure sufficient amount of credit

in quota money financial security: paid back through the future energy savings or the generated profit of the investment low speed return: speed of return depends on speed of saving

• Credit covers all costs of investment and its 100% is returned to the Fund.

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4th pillar: Advisory service

• informs all stakeholders (citizens, industries, etc.) affected by the system• provides assistance and guidance on how to change lifestyles and how to make right (investment) decisions

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Strengths •Feasible apart from the globalised world•Step by step•Not just GHG but all dimension of environmental problems are concerned.•Stimulates economy, •Increases long term competitiveness,•Gives new direction to research and development,•Supports social justice.

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Thank you for your attention!

Any questions?