erc harald winkler economics of climate change context and concepts related to mitigation energy...
TRANSCRIPT
ERC
HARALD WINKLER
Economics of climate change Economics of climate change Context and concepts related to mitigationContext and concepts related to mitigation
Energy Research Centre University of Cape Town
Workshop at the 2009 Climate Change Summit
Wednesday 4 March 2009
ERC
Climate change – an integrated frameworkClimate change – an integrated framework
Source: IPCC 2001
ERC
Climate change economicsClimate change economics
Environmental issue, Environmental issue, rising emissionsrising emissions
Deeply economic issue Deeply economic issue – at heart of energy – at heart of energy economyeconomy
““Climate change presents a Climate change presents a unique challenge for unique challenge for economics: it is the greatest economics: it is the greatest and widest-ranging market and widest-ranging market failure ever seen” (Stern failure ever seen” (Stern Review 2006)Review 2006)
ERC
History: minerals-energy complex History: minerals-energy complex
Complex comprising mining, minerals processing, the Complex comprising mining, minerals processing, the energy sector, and associated industries energy sector, and associated industries
(Fine & Rustomjee (Fine & Rustomjee 1996) 1996)
Coal Coal ¾ of TPES¾ of TPES > 90% of electricity> 90% of electricity ‘‘cheap’ and inefficientcheap’ and inefficient
Particular challenge for mitgation …Particular challenge for mitgation …
… … while increasing access to affordable eneryg while increasing access to affordable eneryg services services
Short-term: energy efficiencyShort-term: energy efficiency
Medium-term: change fuel mixMedium-term: change fuel mix
ERC
Future: low-carbon future Future: low-carbon future
Redefine competitive advantageRedefine competitive advantage fromfrom attracting energy-intensive sectors attracting energy-intensive sectors toto building a new advantage around climate- building a new advantage around climate-
friendly technologies and systemsfriendly technologies and systems
ERC
Towards climate policyTowards climate policy
LTMS strategic option of ‘Use the Market’LTMS strategic option of ‘Use the Market’
Polokwane resolution on climate changePolokwane resolution on climate change
Treasury work on environmental fiscal reform Treasury work on environmental fiscal reform Theme of ‘putting a price on carbon’Theme of ‘putting a price on carbon’ Question is ‘how?’ Question is ‘how?’
ERC
Carbon and carbon markets Carbon and carbon markets
Markets are a means, not an endMarkets are a means, not an end May be efficient, but not good at equityMay be efficient, but not good at equity
Carbon cycle is global – problem of common property Carbon cycle is global – problem of common property managementmanagement
How to manage How to manage Multi-laterally – UNFCCC, but also other scalesMulti-laterally – UNFCCC, but also other scales Price vs quantityPrice vs quantity
Pure regulation – standardsPure regulation – standards
Pure price – taxPure price – tax
Combination – cap-and-trade Combination – cap-and-trade
ERC
Conceptual distinctionsConceptual distinctions
Carbon taxGHG emission standardsCap and
trade
Economic instruments Regulatory instruments
Green or white certificates
Building standards
Direct
IndirectFuel input tax
ERC
Some broad questions Some broad questions
1. What would the distributional implications of different economic instruments be?
2. What are the implications, including costs and benefits, of choosing to use an economic instrument for mitigation?
3. How could different instruments be combined
4. How responsive is the system (and its parts) to various economic instruments for mitigation? (elasticity)
5. What would a consistent and effective approach to energy-intensive sectors, in order to increase efficiency, encourage fuel switching and eventually diversify products
6. What are the key design elements that need to be considered to design the best instrument for mitigation in SA?
7. What supportive measures might be needed to implement a set of instruments? Implications of existing policy? What legal and institutional arrangements could we build on?
ERC
Thank youThank you
Energy Research Centre University of Cape Town
www.erc.uct.ac.za
Environmental Policy Research Unit, University of Cape Town
Genesis Analytics