De mi buzón de correo:
European policy makers are facing the triple challenge of climate change, the war-related energy price hikes, and the relocation incentives from the US focused incentives from the inflation reduction act. Will the crisis create the political pressure necessary for joint-up and clear response? Our research points to four key elements that should be considered: an EU-wide response to the gas price crisis, a refinement of the CBAM design for an effective investment framework; contracts for difference to deploy renewables at scale; and climate alliances to ensure effective global cooperation.
An effective EU scale response to the gas price crisis.
The German Expert Commission on Gas and Heat has suggested to protect consumers for 70-80% of their gas consumption in the previous years against wholesale price increases above 70 Euro/MWh. In light of the current crisis, two recommendations warrant particular attention:
First: Additional programs and measures are necessary to inform, engage, enable and support households, public and private organizations and business to realize the necessary savings.
Allow me to invite you to a Berlin Seminar next Tuesday at 12.30 to discuss the implementation of these measures with members of the expert commission and the German government at DIW Berlin. If you want to join us for the event, please register at: https://www.diw.de/de/diw_01.c.860593.de/formulare/berlin_seminar_on_energy_and_climate_policy__bsec__dezember_2022__-_registrierung.html
Second: The implementation of a gas price limit at the national level that preserves incentives to save gas can serve as a blueprint for an EU-wide solution to a gas price limit opposed by countries like Germany and The Netherlands. 18 European economists outline a policy package that combines a price limit – preserving incentives – using regulation rather subsidies – with firm gas saving targets at member states. See https://cepr.org/voxeu/columns/european-economists-eu-level-gas-price-cap-and-gas-saving-targets
This would save hundreds of billions of Euros in subsidies for investments into our future, avoids negative impacts on consumers in all EU countries and in developing countries importing LNG, and avoids delays and uncertainties from state aid clearance processes. See https://justclimate.fes.de/e/price-cap-energy-crisis
Carbon border adjustment mechanism (CBAM)
The EU proposal for a carbon border adjustment mechanism (CBAM) helped to create global attention for climate action. Yet, as the proposed design fails to address exports and the value chain, carbon leakage risks are only partially addressed. Hence the eternal debate continues – at what scale is it necessary to continue to grant free allowances. The result – persistent uncertainty, lack of effective carbon price incentives, and insufficient revenues from carbon pricing to compete with the scale of the US Inflation Reduction Act (IRA).
As the analysis of the climate friendly materials platform and the support study commissioned by DG TAXUD show an alternative design of the CBAM using a climate contribution to complement EU ETS can create the desired carbon pricing incentives and revenues. By using standardized values both administrative feasibility and WTO compatibility are ensured. This CBAM design had initially been disregarded, because the standardized values fails to incentivize third countries to implement carbon pricing and emission reductions. However, if sectoral and climate alliances are used to advance such international cooperation, it may be a good idea to consider a refined CBAM design using a climate contribution in the current negotiations between EU member states and Parliament. See: https://climatestrategies.org/publication/addressing-export-concerns-in-the-cbam-file/
An ETS and CBAM design based on a climate contribution would also yield some additional 40 billion carbon revenue per year – available for domestic and international climate action. This would ensure that not only countries with fiscal leeway like Germany, Netherlands, France and Sweden can use carbon contracts for difference programs to support green investments, notably in basic materials, and modernize their industry, but all EU member states and possibly even international partners. See: https://doi.org/10.1016/j.isci.2022.104700
Contracts for difference to deploy renewables at scale
A functioning market environment and investment framework is essential to unlock the wind- and solar energy potential across the EU. The EU Commission indicates that contracts for differences and locational pricing should be explored. Both elements will be essential to protect investors against regulatory risk and energy users against financial risks of power purchase agreements, as well as future-proof the electricity market for a world of decentral flexibility resources such as electric vehicles, demand response and batteries. Already by 2030, CfDs will lower financing costs for renewable energy deployment, thus reducing energy costs for industry and households to the tune of 8 billion per year while enhancing protection against price hikes. In addition, an appropriate CfD-design can both set the right incentives for system friendliness, as well as reduce windfall profits of firms at good locations and will reduce financing costs.
The bigger picture: https://www.diw.de/de/diw_01.c.851297.de/publikationen/wochenberichte/2022_35_1/differenzvertraege_foerdern_den_ausbau_erneuerbarer_energien_und_mindern_strompreisrisiken.html
Auction design for Cfds: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4178053
Financing costs analysis: https://www.sciencedirect.com/science/article/pii/S0928765522000471
International perspective
Finally, Europe will need to continue to build on cooperation beyond its borders. It is a combination of fair and predictable rules, funding motivated by solidarity and mutual benefits of cooperation and an attractive shared vision that have determined the success of the European Union as well as its latest grand project, the EU Green Deal. Globally, it is likely to do so also when it comes to cooperating with emerging economies and developing countries on the green transition.
These nations will sign off on a joint climate and industrial policy if built on a robust institutional framework. A Climate Alliance can then reward ambitious action at home by sharing in financial flows; break through alliances can transform select sectors such as steel or cement; and energy transition partnerships can set out joint areas of technology cooperation. To this end, EU policy frameworks need to be aligned with the needs of such global cooperation. The EU ETS reform building on a climate contribution can also ensure sufficient scale and predictable funding to back up global climate alliances and partnerships, including for industrial transition.
Bridges over troubled waters: Climate clubs, alliances, and partnerships as safeguards for effective international cooperation? http://dx.doi.org/10.2139/ssrn.4246329
Carbon contracts for difference as an instrument for strengthening climate cooperation between industrialized and emerging economies https://doi.org/10.18723/diw_dwr:2022-38-1
Global Climate Alliance for Accelerated Climate Action https://www.kas.de/documents/272317/12679622/GCA+HandBook_Web.pdf/ff05462d-2d85-c91c-4ec3-d5acb4855eba?t=1669195207841
Outlook
Past crisis have shown that they can create the political momentum to trigger change with lasting benefits. Europe has the opportunity of this crisis to make decisive steps on key policy areas outlined above – to get on the right path for the domestic energy transition and global rules-based climate cooperation. Thus, rather than pushing for a global green race that is exclusive and targeted at industrial re-shoring, it will provide a robust and credible investment framework to mobilizing public and private funds to cope with the crisis.
No hay comentarios:
Publicar un comentario