1 / 14

Climate Change Policy: Cost Effective Strategies

Climate Change Policy: Cost Effective Strategies. Brussels Office: Park Leopold, Rue Wiertz 50/28 B-1050 Brussels, Belgium Tel: +32.2.401.68.44 Fax: +32.2.401.68.68 Email: mthorning@iccfglobal.org Web: www.iccfglobal.org Washington D.C. Office: 1750 K Street, Suite 400

amaya-diaz
Download Presentation

Climate Change Policy: Cost Effective Strategies

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Climate Change Policy: Cost Effective Strategies Brussels Office: Park Leopold, Rue Wiertz 50/28 B-1050 Brussels, Belgium Tel: +32.2.401.68.44 Fax: +32.2.401.68.68 Email: mthorning@iccfglobal.org Web: www.iccfglobal.org Washington D.C. Office: 1750 K Street, Suite 400 Washington, D.C. 20006 Tel: 202-293-5811 Fax: 202-785-8165 Dr. Margo Thorning Managing Director, International Council for Capital Formation

  2. WhereDoes Europe Stand on Actually Complying with Kyoto? • European Union is projected to be 7% above the 1990 emission levels by 2010. • EU leaders realize they cannot reconcile goals of increased EU industrial competitiveness as well as tighter future targets for GHG emission reductions. • EU policy-makers are beginning to worry about the additional steps required to meet the targets including impact of emission trading schemes on industry. • Slow EU economic growth hinders reducing energy intensity (energy used per Euro of output)

  3. Greenhouse Gas Emissions in the European Union Projected to Exceed Kyoto Targets in 2010 Source: European Environmental Agency, November 30, 2004

  4. The cost of the Kyoto Protocol varies according to which type of economic model is used: • Sectoral models such as PRIMES(used by DG Environment) are designed to show the effect of policy changes on the energy sector rather than economy wide effects. Primes estimates cost of Kyoto is 0.12 % of GDP in 2010. • General equilibrium models such as that used by UNICE and the Danish consulting firm COWI are designed to show the “big picture” impacts of policy changes in the long run after the economy has had time to adjust to energy price changes. Costs range from 0.7 to 1.5% of GDP in 2010. • Macroeconomic models such as those used by Oxford Economic Forecasting or Global Insight are designed to capture the short-run, frictional costs of adjusting to policy changes. Costs range from 1.0 to 4.8% of GDP in 2010.

  5. Impact of Climate Change Policy on EU Competitiveness in 2010: General Equilibrium Model Results % Change Assumptions: Cost of a permit to emit a ton of Carbon ranges from €55 to €238 depending on rate of economic growth and speed of new technology penetration. Source: COWI Report for UNICE, October 2004

  6. Impact of Kyoto Protocol and Additional Targets on GDP In the EU in 2010 and 2020:Macroeconomic Model Results *Italian Target is a 70% Reduction below 1990 by 2050 Source: DRI-WEFA, 2002. www.iccfglobal.org

  7. Rapid Growth in China’s and India’s CO2 Emissions Projected (Million Metric Tons CO2) 8,000 6,000 4,000 If increase China limited to 50% 2,000 of baseline forecast India 0 1990 2001 2025 Base Case Projection: Energy Information Administration, International Energy Outlook, 2004

  8. Limiting Emissions Growth to 50% Would Require Much Faster Reductions in CO2 Intensity

  9. Even Limiting Emissions Growth to 50% Could Have Big Impact on Per Capita GDP

  10. Economic Freedom and the Adoption of New Energy Technologies • Economic Freedom Promotes Improved Living Standards: protection of investment, openness of internal markets, overall share of output absorbed by government, political freedom • Faster Economic Growth: associated with adoption of new energy technologies which reduces energy intensity of emissions as living standards rise • Barriers to new technology: • Pricing distortions • Lack of markets • Subsidies through State run enterprises • Lack of protection for property rights including intellectual property • Restrictions on foreign direct investment • Lack of infrastructure, education, skills to handle new technology • Import restrictions

  11. 80000 Russia 70000 60000 50000 China 40000 30000 India S. Korea Singapore 20000 USA 10000 Namibia 0 3.00 4.00 5.00 6.00 7.00 8.00 9.00 Economic Freedom Compared to Energy Intensity in 2001 2001 Carbon / GDP

  12. Greenhouse Gas Emissions Per Dollar of Output Million Metric Tonnes Carbon/Billion $1997

  13. Comparison of EU and US Energy Intensity Reduction 1992-2002 1992-1997 1997-2002 1992-2002 US EU US EU US EU

  14. Practical Strategies to Address Economic Growth and Climate Change Policy • Remove barriers to developing world’s access to more energy and cleaner technology by promoting economic freedom and market reforms • Increase R&D for new technologies to reduce energy intensity • Develop sequestration through both natural and man-made technologies • Promote nuclear power for electricity • Expand bilateral cooperation with developing countries • Promote a truly global solution

More Related