Dear Pedro,
Effective
climate policy is important for a good summer break – ensuring
predictable weather patterns for relaxing days, and avoiding risks of
future climate chaos to make space for happy dreams. Integration is a
key word characterizing successful climate policy – and is the theme
linking the recent analyses of the Climate Policy Department at DIW
Berlin. Here are a few suggestions for your summer reading list:
Industry emissions: Integrating climate and resource efficiency policy
The year 2018 started with studies of the German Energy Agency (DENA), and German Federation of Industry (BDI, English summary)
showing that scenarios for respectively 80% and 95% emission reduction
by 2050 are economically feasible for Germany. As for the 95% scenarios,
both studies find that the major challenge for decarbonizing the
production of basic materials like steel and cement, is either meeting
the scale of renewable electricity demand for clean production processes
or creating acceptance for CCS. This is no surprise – globally, more
than 25% of CO2-emissions are linked to primary production of basic
materials. Integrating climate and resource efficiency policies provides
a solution that these studies do not consider – reducing the demand for
primary materials by unlocking the potentials of material-efficient
design, manufacturing, use and recycling of products (Material Economics).
This
theme, together with other key elements for the policy design of the
decarbonisation of basic industry, was focus of discussion in the
meetings of our Climate Friendly Materials Platform bringing together
policy makers, industry and experts (CFM Platform). Results are summarized and backed by detailed Annexes on individual policy instruments in the new report “Filling gaps in the policy package to decarbonise production and use of materials” (Climate Strategies Report, see also Review Article).
Carbon pricing: Integrating consumers in incentive schemes
In the
industry sector, policy has traditionally focused on producers – most
recently with the introduction of the Chinese national emissions trading
system (Nature Climate Change).
Concerns that stringent policy could trigger relocation of production
and carbon leakage have, however, resulted in extensive exemptions like
free allowance allocation, largely undermining the intended incentives.
Why
does climate policy for the industry sector not integrate consumers, as
has always been the case for the buildings and transport sector? In a
review of global experiences with carbon pricing mechanisms directly
addressing consumers, we identified many success stories (Climate Policy).
We have in the past explored economic, administrative, legal and trade
aspects of including the consumption of basic materials into the EU ETS (Inclusion of Consumption in ETS).
The revised EU ETS Directive now creates the opportunity for the
implementation – it mandates the Commission to review the effectiveness
of the Directive, report in the context of global stock-taking, and
propose amendments to replace, adapt or complement existing measures to
prevent carbon leakage. National pilots may be one option for early
progress (Annex 5).
Among the biggest consumers of basic materials are cities and regions,
who purchase infrastructure for instance. Cities and regions can
formulate explicit environmental requirements or apply shadow carbon
prices in their public procurement choices, according to EU guidelines.
Our initial review points to barriers – including the issue of
incremental costs and how they could be covered (Green public procurement).
Renewable energies: Integrating finance expertise in policy design
Declining
costs of solar panels and wind turbines reduce the need for financial
support. Do we still need dedicated renewable energy policies? An
assessment of policy and market risks using cross-country comparisons
and financial models shows that in the absence of long-term contracts
with final consumers, costs per MWh of renewable electricity increase by
30% (DIW report).
Retail competition and counter-party risks, however, severely constrain
private long-term contracts with electricity consumers. Hence, publicly
secured long-term contracts for wind and solar power are essential to
hedge policy and market risk for renewable projects, facilitating access
to low-cost finance, and allowing to pass on the full benefits from
declining technology costs to end consumers.
In
assessing different renewable remuneration mechanisms to reach Germany’s
65% national renewable electricity target by 2030, we find that a shift
to contracts for difference results in annual savings in the order of
magnitude of 0.8 billion Euro (DIW report).
Sector coupling: Integrating all sectors in power system
Shifting
away from fossil fuels while accepting constraints on available biomass
requires that buildings, industry and transport source most of their
energy needs from electricity. Given the variability of wind and solar
production, this will only succeed if, at the same time, flexibility and
storage potentials in the sectors are realized. As part of the EU H2020
project Real Value, we explored how firms can build new business models
around smart heating devices and thermal storage (Real Value) and how power-market design and technology developments shape the market (Real Value). As part of the Synergie Consortium (German Kopernikus Projekt), we investigated demand response potentials in the industry (Synergie).
As the
electricity system moves into the center of the energy infrastructure,
the capacity of wind and solar power and flexible demand connected to
the system multiplies. Power-market design will have to evolve for an
efficient system operation. In discussions of our Future Power Markets
Platform (FPM Platform),
we find that intraday auctions can enhance market depth, and facilitate
broad participation of all actors – in particular if bidding formats
allow for capability-based (multi-part) bids. To allow the demand side
to respond to regional supply of power regional pricing is increasingly
discussed as part of such an emerging system (Energy Journal).
Sustainable finance: Integrating long-term requirements in today’s investment choices
Following the report of the EU high-level expert group on sustainable finance (HLEG), the European Commission came up with an action plan on March 8 (Action Plan).
It addresses three key themes: 1) Influencing the financing decision
and managing financial risks; 2) Reorienting financial flows; and 3)
Taxonomy and definition. To shape our research agenda and gear it
towards key policy challenges, we organized a high-level sustainable
finance conference in Berlin in co-operation with the European
Commission and the Hub for Sustainable Finance (Proceedings).
Wishing you all a good read and a good summer break,
Karsten
Neuhoff, Olga Chiappinelli, Ingmar Jürgens, Nils May, Carlotta
Piantieri, Jörn Richstein, Puja Singhal, Jan Stede, Heiner von Lüpke,
Vera Zipperer, Kerstin Ferguson, Olga Zhylenko
1 comentario:
Deben enfocarse en hacer este tipo de estudio para Jamaica, Pakistán, México, y Rusia.
En cuanto a CCS, si no cambian los criterios de almacenamiento para permitir que parte del CO2 pueda escaparse (teniendo en cuenta que esto no es almacenamiento de residuos radioactivos), e incluyen geoingenieria, no creo que vayan a tener resultados viables.
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