italy’s route to kyoto: a wishful thinking? · cipe 2002 vs. nap 2004 (mton ghgs) residences...
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Italy’s route to Kyoto: a wishful thinking?
USAEE/IAEEUSAEE/IAEE –– Washington DC,Washington DC, JulyJuly 20042004
byEnzo Di Giulio - Scuola Mattei – Eni Corporate UniversityStefania Migliavacca - Scuola Mattei - Eni Corporate UniversityAlessandro Vaglio – University of Bergamo
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Which sectors are mainly responsible?
GHGs Emissions in 2001 (EU Countries)
Household and Services
17%
Industry20%
Transportation21%
Electricity Generation and
refineries28%
Others4%
Agriculture10%
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Italy and Kyoto: ambitions and reality
Ambitions- 6.5% with respect to 1990
521 Mton CO2 eq in 1990- 6.5%
= 487.1 Mton CO2 eq in the first commitment period 2008-2012
KYOTO TARGET
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Distinctive features of Italian Energy System
Dependent abroadNo nuclearThe “cool” questionPrivatization-liberalization-regulation
Reality
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Energy saving life-style originated by a
strong energy dependence
Non energyintensiveeconomic structure
climate, high population
density
High energyprices
A low energy intensity
due to
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2002 Law 39/2002 to enforce the EU Directive for the promotion of renewables June: Italy ratified the Kyoto ProtocolDecember: the new CIPE resolution
200420 April a draft National Allocation Plan
Is it enough?
Political Actions
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CipeCipe ResolutionResolution 2002 2002 (MtCO2 (MtCO2 eqeq))
2000 Emissions(546,8)
2010BASE Scenario
(579,7)
2010 ReferenceScenario
(528,1)
Already located measures(39,6)
+ CDM – JI (12)
Further measures(32,5 - 47,8)
Riforestation(10,2)
FurtherCDM - JI (20,5 - 48)
Surplus(92,6)
Surplus(41)TARGETTARGET
(487,1)
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Now we have “the number”The gap is around 92.6 Mton CO2 eq
ET40.8FCJ
FDP12ASCJ
39.8ASDP
7.5Transportation
6.3Household & services
26Power Generation
Import
CombinatedCycles
Renewable
= 92.6
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How much CDM and JI?
Italian firms have a low propensity to invest abroad
FDI towards Developed countries and service sector
Which policies and measures could support CDM and JI decisions?
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2004…Time to wake up !
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Model specifications:discount rate 5%;the net cost of most P&M is assumed to be zero; simulations from 2002 but policies effective from 2004; the abatement grows linearly; price for ET = 15 Euro/tonCO2
How much will it cost?
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TIME plays a crucial role:Opportunity costTechnical limit
We want to estimate the cost of reaching Kyoto assuming different degree of implementation of CIPE Guidelines
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0.04415
0.00000 0.30000
R SUR
0.02
0.00 0.30
U
R CC
0.02
0.00 0.30
U
R RENEW
0.02
0.00 0.40
U
R IMP
0.02
0.00 0.40
U
R RES
0.02
0.00 0.40
R TRANS
0.00
0.00 0.50
U
R CDM
0.00
0.00 0.50
U
R FOREST
0.00
0.00 0.50
U
R OT P&M
0.00
0.00 0.50
U
R OT CDM
0
CO CC
0
CO RENEW
0
CO ELE IMP
0
CO RES
9
CO TRANS
10U
CO CDM & JI
1
CO FOREST
5
CO OTHER P&M
3
CO OT CDM&JI
15.000
CO ET
SWITCH ELE SWITCH R&T SWITCH CDM&JI SWITCH ET SWITCH THE OTHERS
CO ET Graph
NEW CC Graph NEW RENEW Graph NEW IMP Graph
RES Graph TRANS Graph CDM&JI Graph
FOREST Graph OTHER P&M Graph OTHER CDM&JI G…
CO2 PRICE THE OTHERS
P&M + CDM&JI
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Degree of implementation of the Italian policies in 4 scenarios
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Total cost in different Scenarios (MilEuro)
-200
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2200
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
scenario 1 (15Euro/ton)
scenario 1 (5Euro/ton)
scenario 1 (40Euro/ton)
scenario 2 (15Euro/ton)
scenario 2 (5Euro/ton)
scenario 2 (40Euro/ton)
scenario 3 (15Euro/ton)
scenario 3 (5EUro/ton)
scenario 3 (40Euro/ton)
scenario 4 (15Euro/ton)
scenario 4 (5Euro/ton)
scenario 4 (40Euro/ton)
Scenario 1, 2, 3 and 4: annual total cost assuming different CO2 prices (5-15-40 Euro/ton CO2)
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Scenario 1, 2, 3 and 4: weight of ET and other actions cost in millions of Euro (CO2 price:15 Euro/tonCO2)
Emissions Trading and other actions cumulative costs (2002-2012 in MilEuro)
-500
0
500
1000
1500
2000
2500
3000
3500
4000
4500
SCENARIO 1 SCENARIO 2 SCENARIO 3 SCENARIO 4
ET other actions
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The Italian NAPItaly published on 20 April 2004 a draft National Allocation Plan (NAP) under the EU emissions trading scheme.
The non-cogeneration power sector gets the larger share
The new entrants’ reserve is based on sectorial level
279.2279.7278.5Total
98.9103.2105.6Non-cogeneration power sector
200720062005Mton CO2
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Allocation criteria
Historical emissions paper, refining, glassHistorical production Iron and steel, lime, clay, cogenerationEmissions projections Power sector
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CIPE 2002 vs. NAP 2004 (Mton GHGs)
068.068.0Residences Reference Scenario2136.7134.7Transportation Reference Scenario282.280.2Industry Reference Scenario
28.3172.7144.4Power Industry Reference Scenario23.2541.1517.9Scenario with P&M to 2010 (with CDM)
39131.692.6Distance from Kyoto target28607.7579.7BAU Scenario to 2010-2544.0546.0Emissions in 2000-11476.1487.1Kyoto Target-13508.0521.0Emissions in 1990
DeltaNap 2004Cipe 2002
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24,4GHGs Abatement by NAP
131,6 (+27,6%)Surplus in 2010
607,7BAU Scenario to 2010
476,1 Kyoto Target
A New SurplusA New Surplus
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CO2 Abatement Cost in UE (4% discount rate, all sectors, EU15 – Euro/ton. CO2 eq.)
Source: EU 2001, “Bottom-up Analysis of Emission Reduction Potentials and Costs for Greenhouse Gases in the EU”
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ConclusionsSurplus in 2010: about + 27%
Domestic P&M cannot solve the problem because of…
time and costs,
current political orientation
CDM-JI ? …. maybe, but let’s avoid exaggerations
Thus, Emissions Trading: how much does it cost?
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Thank you for your attention!