Rethinking the BAU energy paradigm

1. Rethinking the BAU energy paradigm Liam Salter Head, Climate Programme WWF Hong Kong ICCC May 2007 Six principles for change

2. Outline • The concept of business as usual energy paradigm • Technology mixes for climate protection • Six principles for reform • Hong Kong and the six principles • Conclusions

3. Thinking ‘Paradigms’ “At any time in history there is a ruling paradigm within the constraints of which most thinking takes place.” “When its effectiveness diminishes and it begins to break down, a paradigm shift takes place and a new paradigm comes into being.” (Reddy, 2002)

4. Thinking ‘Paradigms’ • GROSSCON – GRowth Oriented, Supply Sided, CONsumption directed • DEFENDUS – DEvelopment Focused, END Use oriented, Service directed The late Amulya Reddy

5. Thinking Paradigms • Hard energy path – the more energy we use the better off we are • Soft energy path – energy is a means to social ends. Energy services are tailored to needs. Amory Lovins

6. “… any plausible BAU scenario entails continuing increases in global temperatures, well beyond levels previously experienced by humankind …” (Stern Report) IEA WEO 2004 US DOE EIA 2007

7. WWF 400 ppm CO2e WWF Climate Solutions Report (2007) www.panda.org/climate

8. Ambitious climate scenario technology mixes vary …. Hohne and Hoogwijk, (2005)

9. Common features of low carbon scenarios • No technology silver bullet • In the short to medium term the bulk of emissions reductions come from massive improvements energy efficiency. • The structural shift towards a low carbon energy supply tends to dominate the reduction potential over the longer term. Preparing low carbon supply technologies for substantial increases in market share post - 2050 was a key priority in the short-medium term. • Key common supply technologies across many models were renewable energy and carbon capture and storage.

10. Back to paradigm thinking • BAU / GROSSCON / Hard Energy Path will not protect us from climate change • What will it take to bring these technologies to market? • Evidence suggests that there is no ‘policy bullet’ either • Require a comprehensive rethink of BAU / GROSSCON / Hard Energy Path that delivers on other energy policy objectives such as access to energy and energy security concerns

11. Rethinking energy system drivers • Valuation and pricing • Supply vs. demand • Consumer participation • Infrastructure • Planning • Technology development Using principles and techniques already in use today 2 caveats: Not intended as an exhaustive list Limitations of power sector oriented analysis

12. Valuation and pricing:Internalising True Costs

13. True costing in practice • Carbon emissions trading • USD 24 billion in 2006 and potentially the world’s largest commodity market • Can deliver the true cost of carbon only if linked to ambitious compliance targets • Suite of measures is required to reflect even partial true cost to all consumers • Taxes • Emissions charges • Technology standards • Uncertainty often cited as the reason for avoiding a holistic approach to true costing

14. Supply and demand:Efficiency first

15. Efficiency first Packages and tools vary by country and sector Policy targets critical to evaluate performance of packages e.g. China’s 11 Five Year Plan Minimum standards – appliances, buildings, automobiles Sector specific programmes e.g. China’s top - 1000 programme Consumer engagement and labeling Financing schemes Public procurement True costs

16. Rethinking the consumer:Promoting participation “Economics drive customers. Customers drive markets. But first, they must be informed, educated and challenged” Rose McKinney-James, former President and CEO of the Corporation for Solar Technology and Renewable Resources, Nevada. "We must understand clearly that public participation is the right and interest of the people endowed by law. The government has the obligation to respond to and to protect this right.“ Pan Yue, SEPA Vice-Minister

17. Participation in practice • ‘Community Choice’ Laws passed in Massachusetts, Ohio, and New Jersey and Rhode Island in recent years, One programme involving over half a million customers has already achieved a 33% greenhouse gas reduction in its electricity without a rate increase. 12 Californian cities, 3 million residents finalising Ordinance to achieve 40% green electricity from green power • Civil society watchdogs supporting power sector regulation in Maharashtra, India 1999-2000 - Civil society analysis of MSEB tariff proposals revealed accounting irregularities and allowed the regulator to insist on enhanced energy efficiency

18. Remaining 3 principles • Decentralisation • Master planning • Bringing critical technologies to market

20. Conclusions ‘Its not that we need new ideas, but we need to stop having old ideas’. Edwin Land A paradigm shift using DEFENDUS or Soft Energy Path style logic is required to protect the world from climate change. ‘Tinkering around the edges’ will not bring the major shifts in technology required to cut emissions. Paradigm shift must go beyond technology analysis and understand the system-level issues that drive technology choice Beyond technology paradigm shift can be defined concretely in terms of specific principles which can be used as the basis for energy policy analysis and development Can a focus on principles move us out of our ‘technology boxes’? And actually improve our ability to build consensus?

21. Thank You! lsalter@wwf.org.hk