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Technology and Trading Systems A Comment

Technology and Trading Systems A Comment. Dolf Gielen Senior Analyst IEA. Topics. The importance of technology Issues for options/sectors Specific comments. ETP Scenarios & Strategies 2050. “The WEO scenarios are not sustainable” (Claude Mandil)

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Technology and Trading Systems A Comment

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  1. Technology and Trading Systems A Comment Dolf Gielen Senior Analyst IEA

  2. Topics • The importance of technology • Issues for options/sectors • Specific comments

  3. ETP Scenarios & Strategies 2050 • “The WEO scenarios are not sustainable” (Claude Mandil) • ETP supplements WEO as it shows new pathways to a sustainable future • Emissions can be stabilised by 2050, if proper energy policies are implemented • Assumes incentive $25/t CO2 worldwide • Technology plays a key role • Key technology options and policies have been identified

  4. Global CO2 Emissions 2003-2050Baseline, ACT and TECH plus Scenarios Mt CO2 32 Gt CO2 TECH Plus: More optimistic on progress for certain key technologies

  5. OECD Developing Countries +250% +70% +65% -32% CO2 EmissionsBaseline and Map Scenarios Map: OECD Emissions 32% below 2003 level, while emissions in Developing Countries are 65% higher

  6. Issues for Sectors

  7. Emission Reduction by Technology AreaACT Map Scenario Improved energy efficiency most important contributor to reduced emissions

  8. Energy Efficiency - A top Priority • Improved energy efficiency saves about 15 Gt CO2 by 2050 - equivalent to 60% of current emissions • Improved efficiency halves expected growth in electricity demand and reduces the need for generation capacity by a third • Not a pricing issue, an issue of barriers and market inefficiencies • Trading systems usually do not help AGENCE INTERNATIONALE DE L’ENERGIE INTERNATIONAL ENERGY AGENCY

  9. CO2 Emissions in Power Generation

  10. Electricity Generation • Power plant efficiencies – autonomous trend • CCS – not yet ready, further cost reduction needed • Nuclear – not really a cost issue • Renewables – cost matter, trading systems are not sufficient (learning needed) AGENCE INTERNATIONALE DE L’ENERGIE INTERNATIONAL ENERGY AGENCY

  11. Manufacturing Industry • Carbon leakage: more global coverage may help • ETS does not capture industry complexity fully: • Commodity trade • Life cycle effects/competition (e.g. plastic waste incineration) • Progress is not rewarded (revised permit allocation): no incentive for technological change • Half of world industry emissions part of AP6 (benchmarking) • Sectoral approaches as alternative ? AGENCE INTERNATIONALE DE L’ENERGIE INTERNATIONAL ENERGY AGENCY

  12. Specific Comments

  13. Linking ETS • Linking is almost always technically possible, and some difficulties might be overstated: • Price cap issue: only countries in compliance can be sellers • Market segmentation with caps may or may not occur • Indexed vs. non-indexed targets: little difference (e.g. Spain, Greece) • Linkage creates winners and losers and therefore acceptance problems • Linkage difficult for key countries outside Europe (Japan) AGENCE INTERNATIONALE DE L’ENERGIE INTERNATIONAL ENERGY AGENCY

  14. CDM/JI and Technology Transfer • Technology transfer is more than installing foreign equipment • Interests of technology suppliers and governments differ • May work for non-CO2 (important reductions per project, low cost, limited economic relevance) • Less relevant for energy related CO2 (higher cost, high economic relevance)

  15. Thank You dolf.gielen@iea.org

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