climate mitigation and energy challenge
Post on 05-Dec-2014
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Henry Sichel, Angela de Michele
Environment and development
Wirtschaftuniversitaet - Wien
Catch-up growth rate of 6-8% per year
Increase in global temperature max 2C°
but
We need «creative destruction», driven by massive investments and innovative technologies
Every delay can lock investment projects in old technologies, which will make the
emission level stuck at high levels.
Environmental objectives
Economic goals
Lack of effective mitigation action
vs
Climate change Development
challenge Energy (60% global emissions)
Without addressing such
an issue:
NO
mitigation targets’ fulfillment in developed countries
NO
catching up in developing world
310 ppm
430 ppm
Abatement fulfillment
through
Land-use mitigation options (15-40% of potential reduction)
Multi-gas emission reduction
Lower costs than addressing only CO2
The lower the stabilization target, the sooner the peak of CO2 and
CO2 equivalent emissions
The role of different scenarios
Predictions’ uncertainty
The higher the limit, the more uncertain the trend
To widespread technology improvements and the adoption of new techniques
Reduction of the rate of energy intensity and to improve carbon intensity
To foster changes in the energy system
To enhance energy efficiency (not sufficient alone)
Upfront investments and rapid diffusion of low-emission technologies
How to reach reduction objectives without jeopardize growth?
• Solar energy;
• CCS;
• Afforestation;
• Biomass;
• Efficiency
What?
• Ranking of technologies and industrial processes according to the net cost of avoiding a ton of CO2
emission
Win-win
• It suggests opportunities for negative costs emissions reductions where the uprfont capital costs are more than paid-back by future savings
Which measure?
• Energy efficiency, low-emissions energy supplies, terrestrial carbon, behavioural change
Coal cluster Oil cluster Renewables
cluster?
Energy intensity has declined
Decarbonization of economy
From a policy perspective, significant investments in «social overhead capital», such as the provision of
energy services, has long been advocated by development economists
Strong investments
Rising productivity
Falling costs
Expanding income and
markets
Suppliers of inputs
Power sector
New activities and markets using
produced outputs
Electricity
Motive power, refrigeration, lighting, etc.
Increased productivity
Increased earnings
Increased household
demand for electricity
Unequal distribution of energy
consumption
North 100 kWh per capita per day < x < 300
South < 35
Thresold of 100 kWh
Is equal to a 0.9
HDI value
Problems
Capacity
Affordability
What to do?
What to do?
100 kWh per capita per day thresold
(minimum target to overcome energy poverty)
Efficiency measures
Energy destitution
China e.g.: Coal use, highly polluting, not satisfactory
Suggestions
To build up the infrastructure…
…together with a decentralized small-scale technology
Massive investments in renewable energy sources…
…able to generate backward links
The longer we wait to introduce new technologies, the higher the emissions reductions will be
Subsidies … but this would require direct subsidies to poor countries in
order to offset the impact of high energy prices
Oil price The scenario could even be better if the oil’s price increased,
triggering profitability of other alternatives…
McKinsey Cost curve < 60€ per ton of CO2: good opportunities to act in those areas
• A2: the «bad» one;
• B1: the «good» one
• The initial difference in upfront investments is limited to 2 trillion
Two alternatives
• The capital costs of enforcing the B1 alternative are lower than the ones showed in the A1 scenario, because of technologica changes and learning effects (learning curve)
In the long-run…
Early investments should be done in developing
countries, which have low potential costs and high
mitigation potentiality, to exploit the learning effects.
Oil
Leading resource for
next ¼ century
Co
al
More polluting
Gas
Attractive because
less polluting
Nu
clea
r
No emissions, but waste-problem
Ren
ewab
les
Not enough resources
invested to make them able to replace non-
renewable sources
Upfront investments
…more efficient electrical storage
devices…
Overcoming of technological hurdles,
like…
…and transmissions systems
The developed world must face diverse challenges, to reduce the reliance on fossil fuels. The required actions are:
Conservation
Reduction of the consumption
patterns
Innovation
Development of more fuel-efficient
devices
Investment
Public and private investments
Capacity expansion in the South is expected to be double that in the North
Lock-in risk
• New capacities could be not build with
recent technologies
Leap-frogging opportunity
• Advanced technologies, and
gaps-cutting with the industrialized world
The opportunity coming from the crises to completely change energy production’s paradigms can be wasted if government chose to subsidize old systems
RD&D is fundamental to
Improve performances
Lower the costs
Transformational changes
Removal of barriers and provision o information
RD&D and Investments
Capacity-building
A policy that obligates companies to «feed into» the grid at a mandate price (tariff) energy generated by any individual or oraganization from renewable sources
Support mechanisms
Mandatory supply of a % of energy from renewable resources
Price-based mechanism (e.g. carbon tax)
Direct/indirect support for renewable sector
Advanced Renewable Tariff (ART) example
First success in California
Germany case-study Subsequent
modification
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