Options for Post-Kyoto Agreements The Rationale and Architecture for Broadening Climate Policy

1. post 2012 climate policywww.feem.it Options for Post-Kyoto AgreementsThe Rationale and Architecture for Broadening Climate Policy Stefan P. SchleicherUniversity of GrazandAustrian Institute of Economic Research (WIFO)

2. The end of stand-alone climate policy • Stand-alone climate policy is over • Policy makers reflect this shift in consumer attitudes and behavior of business • Instead of reminding of co-benefits of climate policies it might be sufficient just to focus on joint needs for restructuring the development patterns of our economies • Mobility system • Energy supply system • Policy platforms on long-term development issues with a strong emphasis on technological change might replace climate negotiations • But climate will benefit from these technology choices

3. The shift from climate policy to economic development • Development has become a dominating issue in all countries • Climate policy should take a pro-active position in this respect • The essential choice for development relates to technologies • The range of choices is obviously most often not realized • Many statements about the costs of implementing technologies are premature • e.g. system costs of electricity services

4. Options for reshaping climate international policy • The motivation for climate policy will be dominated by other issues • Security of energy supplies • Technological change as the key to competitiveness and development • There will be no post-Kyoto agreement without China (and India) • China has become the second largest emitter • Options for a post-Kyoto architecture • EU and/or US will aim for bilateral agreements with China (within WTO?) • These agreements might merge into a new post-Kyoto strategy • The issue of caps (in the current Kyoto Protocoll) will be dominated by technology strategies

5. The Business-as-usual perspective:IEA World Energy Outlook • +2% CO2pro Jahr

6. The anti-thesis: The Pacala-Socolow proposal “Humanity already possesses the fundamental scientific, technical, and industrial know-how to solve the carbon and climate problem for the next half-century and climate problem over the next half-century.” S. Pacala and R. Socolow Stabilization Wedges: Solving the Climate Problem for the Next 50 Years with Current TechnologiesScience, Vol. 305, August 13, 2004.

7. The 3 x 50 strategy Innovation for the 2.000 watt society

8. Current technologies for GHG stabilization in 50 years (1)

9. Current technologies for GHG stabilization in 50 years (2) • Efficiency and conservation • Cars (4x -> 2 billion cars)60 instead 30 miles/gallon 5000 instead of 10000 miles per year • Buildings-25% energy • Power plantsfrom 40 to 60% efficiency

10. Current technologies for GHG stabilization in 50 years (3) • Decarbonization • Electric power plantsGas substitutes coal • New renewablesWind, thermal and photovoltaic solar • Carbon capture and hydrogen storage • Post-combustion carbon capture and storage in electricity generation • Pre-combustion carbon separation and hydrogen storageas substitute for fossil fuels • Carbon sinks

11. An economic evaluation of the Pacala-Socolow proposal • Wait before you count • Many statements about the costs of new technologies were (are) premature • Most economic models need to be adjusted for dealingwith technological transitions • Interaction of stock and flow relationships • Welfare from stocks and flows

12. A few additions: What is needed • Forward-looking perspective for technological change • What are the feasible paths for the penetration of certain technologies? • Which path should be chosen? • What are the the adequate instruments? • Structures before strategies • Models are more reliable as to the set of feasible transition paths than the effects of traditional instruments as taxes • Innovative instruments are needed