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EU ENERGY POLICY

EU ENERGY POLICY. Bart Castermans European Commission DG ENER. Energy. OUTLINE. CONTEXT THE 2030 FRAMEWORK STUDY ON EMPLOYMENT EFFECTS OF SELECTED SCENARIOS FROM THE ENERGY ROADMAP 2050. The backdrop: Rising global energy demand. CONTEXT.

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EU ENERGY POLICY

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  1. EU ENERGY POLICY Bart Castermans European CommissionDG ENER Energy

  2. OUTLINE • CONTEXT • THE 2030 FRAMEWORK • STUDY ON EMPLOYMENT EFFECTS OF SELECTED SCENARIOS FROM THE ENERGY ROADMAP 2050

  3. The backdrop: Rising global energy demand CONTEXT Global energy demand to go up by a third by 2035

  4. CONTEXT Import dependence Japan Gas Imports 100% 2010 2035 80% European Union 60% 40% China 20% India United States 0% Gas Exports 20% 20% 40% 60% 80% 100% Oil imports While dependence on imported oil & gas rises in many countries, the United States swims against the tide Data Source: Gould, IEA 05/03/2013

  5. Dependence by supply country CONTEXT

  6. Managing external policy risks CONTEXT

  7. Challenge 2: Climate Change CONTEXT

  8. Challenge 2: Climate Change CONTEXT Source IEA 2013

  9. Towards 2030 Challenge 3: Competitiveness

  10. CONTEXT Challenge 3: Competitiveness 10

  11. Challenge 4: Investment CONTEXT

  12. The threeEU policy objectives

  13. A 2030 framework for climate and energy policies 22 January 2014EC proposal Energy

  14. Towards 2030 Agreement on 2030 framework essential for:

  15. On instruments Towards 2030

  16. On targets Towards 2030

  17. Proposal: GHG Towards 2030 • GHG targetfound to be least costpathway to a lowcarboneconomy • Binding Target GHG reduction 40% (vs 1990)to betranslatedintobinding national targets • ETS Sector: 43% • Non ETS: 30% (both vs 2005)

  18. Proposal: RES Towards 2030 • Focus on market based approach • Binding target at global EU level 27% (minimum) of the energy consumed • No national binding targets. • MS flexibility on individual commitments • "Governance" mechanism to monitor and foster progress • Review of Directive on renewable energy

  19. Proposal: Energy Efficiency Towards 2030 • Assessment of the EE Directive in 2014 (transposition deadline June 2014) • Shortfall vs the 20% 2020 is expected. • Review could lead to proposal for amendments • Current EC estimate: need of 25% EE to meet the GHG target of 40% in 2030

  20. Towards 2030 The context: ETS price Concerns about energy prices and energy security ETS price

  21. Proposal: Reform of ETS Towards 2030 • Dec 2013 decision to postpone auction of 900 Million tons ETS until 2019/2020 • Address structural surplus through a "market stability reserve" to start 2021 (Phase 4) – • Automatic adjustments, based on rules to be further elaborated (no discretionary measures)

  22. Proposal: IEM Towards 2030 • Target: operational by end 2014 • Avoiddistortiveeffects: • DG COMP cases (ia UK HPC, RES in DE,…) • costs/prices and state aids/subsidies (study)

  23. OUTLINE • CONTEXT • THE 2030 FRAMEWORK • STUDY ON EMPLOYMENT EFFECTS OF SELECTED SCENARIOS FROM THE ENERGY ROADMAP 2050

  24. 1. Context and timeline (1) - The Energy Roadmap to 2050 Employment • Nov. 20082nd SER: EC to prepare an energy policy roadmap towards a low carbon energy system; in line with the EU growth agenda set out in the Europe 2020 strategy • Feb. 2009, Oct. 2009The European Parliament and the EU Council support an EU objective to reduce GHG by 80-95% 1990 levels, as estimated by IPCC • Feb. 2011The EU Council reconfirms the reduction commitment, recognizes it will require a revolution in the EU energy systems; fixing intermediary targets discussed • Dec. 2011The EC adopts the Communication, IA and scenario analysis of the Energy Roadmap to 2050

  25. 1. Context and timeline (2)The study of empl. effects of RM2050 scenarios Employment • 2012 Following a recommendation from the IAB, DG ENER commissioned a study analysing potential impacts of decarbonisation scenarios on jobs and skills • Dec. 2012 - Oct. 2013Work on the study • Nov. 2013 – Dec. 2013Discussion of results with stakeholders • Dec. 2013 – Jan. 2014DG ENER to decide on the dissemination of the findings and conclusions of the report

  26. 2. Project details Employment • The tender under an existing framework contract was awarded to a Consortium led by • COWI • which included • Cambridge Econometrics, • Exergia E3M Lab, NTUA, • Enrst&Young • Warwick Institute for Employment Research • Final draft (159 p.) & appendices (57 p.)

  27. 3.1 Collection of disaggregated statistical and market employment data in the energy sector Employment • 2,5 millionpeople directly employed in the energy sectors across EU28(1% of the total employmentin all sectors) • 0.6 million directly employed in power generation • fossil fuels (32 800), • hydro (160 400), • nuclear (141 700), • solar (88 200), • wind (55 200), • geothermal (8 000), • biomass (106 500) and tidal (100) • 0.5 million directly employed in transmission(67 500) and distribution(425 900) of electricity and about140 000were employed intransmission and distribution of natural gas

  28. 3.3 The models Employment Cambridge Econometrics uses E3ME, a structural (Keynesian) macroeconometric model of Europe’s economic and energy systems and the environment. Exergia E3M Lab from the National Technical University of Athens uses GEM-E3, a multi-regional, multi-sectoral, recursive dynamic computable general equilibrium (CGE) model which provides details on the macro-economy and its interaction with the environment and the energy system. Employment in the models is determined by a combination of structural change, the revenue recycling, aggregate GDP effects and the reaction in the labour market

  29. 3. Main results3.3 The decarbonisation scenarios Employment S1 : Higher Energy Efficiency S2 : Diversified Supply technologies S3 : High RES S4 : Delayed CCS S5 : Low Nuclear

  30. 3. Main results3.3 Selected empl. results – broader economy Employment

  31. 3. Main results3.3 Selected empl. results – broader economy Employment

  32. 3. Main results (9)3.3 Selected empl. results – energy sector Employment • Decomposed results for the whole energy sector by NACE (such as in Section 3.1) are not available (energy sector spread around several lines in the previous slide) • Employment results in the power generation sector in the electricity sector are determined by: • input assumptions on the electricity fuel mix (consistent between the models); • coefficients used to determine number of jobs per unit of generation capacity. • (Not by differences in modelling specification)

  33. 3. Main results (10)3.3 Selected empl. results – power gen sectorBaseline Employment

  34. 3. Main results (11)3.3 Selected empl. results – power gen sectorBaseline vs other scenarios Employment

  35. 3. Main results (11)3.3 Selected results – sensitivity analysis Employment • Results across models are fairly robust. • Relatively low sensitivity • Labour intensity of new technologies (measured as jobs per GW capacity); • baseline rates of GDP growth • Relatively high sensitivity (E3ME) • Recycling options of carbon tax revenues(E3ME) • Fossil fuel prices (oil price depends partly on the level of decarbonisation ambitions of the EU trading partners)(E3ME) • Investment crowding out effects

  36. Thank you

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