Transforming Energy Use – Aiming for the Impossible? Hans-Joachim Ziesing

1. Transforming Energy Use – Aiming for the Impossible? Hans-Joachim Ziesing GMF and Ecologic“What Price Energy Transformation?”2nd Strategy Seminar: Resources and Climate ChangeRoyal Embassy of Denmark, BerlinFebruary 28-29, 2008

2. Agenda What changes do we need to make in all components of our industrial societies in order to switch supplies to sustainable and secure sources? Is it possible to shift the focus of the energy debate from the supply to the demand side – not through regulation, but with the help of information, “smart” technologies and incentives? Which sectors of human activity are more amenable to energy use transformation, which are less so (mobility)? This session links the resource/environment perspective of the 2nd seminar with the economic, regulatory and supply-security aspects of the 1st seminar.

3. Characteristics of post-TAR stabilization scenarios

4. IEA: World-wide primary energy consumption by sources 1990 to 2030

5. IEA: World-wide CO2 emissions by regions and countries 1990 to 2030

6. Reduction of worldwide CO2 emissions by 2050 to a level 50% lower than 1990

7. Impacts of a 20% reduction of primary energy on energy productivity by 2020 in EU-27

8. IPCC Both bottom-up and top-down studies indicate that there is substantial economic potential for the mitigation of global GHG emissions over the coming decades, that could offset the projected growth of global emissions or reduce emissions below current levels.

9. Global economic potential for the mitigation of GHG emissions

10. McKinsey: Costs and Potentials ofGreenhouse Gas Abatement in Germany

11. IPCC:National policies and instruments (I) A wide variety of national policies and instruments are available to governments to create the incentives for mitigation action. General findings about the performance of policies are: • Integrating climate policies in broader development policies makes implementation and overcoming barriers easier. • Regulations and standards generally provide some certainty about emission levels. They may be preferable to other instruments when information or other barriers prevent producers and consumers from responding to price signals. However, they may not induce innovations and more advanced technologies.

12. IPCC:National policies and instruments (II) • Taxes and charges can set a price for carbon, but cannot guarantee a particular level of emissions. Literature identifies taxes as an efficient way of internalizing costs of GHG emissions. • Tradable permits will establish a carbon price. The volume of allowed emissions determines their environmental effectiveness, while the allocation of permits has distributional consequences. Fluctuation in the price of carbon makes it difficult to estimate the total cost of complying with emission permits. • Financial incentives (subsidies and tax credits) are frequently used by governments to stimulate the development and diffusion of new technologies. While economic costs are generally higher than for the instruments listed above, they are often critical to overcome barriers.

13. IPCC:National policies and instruments (III) • Voluntary agreements between industry and governments are politically attractive, raise awareness among stakeholders, and have played a role in the evolution of many national policies. The majority of agreements has not achieved significant emissions reductions beyond business as usual. However, some recent agreements, in a few countries, have accelerated the application of best available technology and led to measurable emission reductions. • Information instruments (e.g. awareness campaigns) may positively affect environmental quality by promoting informed choices and possibly contributing to behavioral change, however, their impact on emissions has not been measured yet. • RD&D can stimulate technological advances, reduce costs, and enable progress toward stabilization.

14. IPCC: Sector policies and measures Energy supply • Reduction of fossil fuel subsidies • Taxes or carbon charges on fossil fuels • Feed-in tariffs for renewable energy technologies • Renewable energy obligations • Producer subsidies Transport • Mandatory fuel economy, biofuel blending • CO2 standards for road transport • Taxes on vehicle purchase, registration, use and motor fuels, road and parking pricing • Influence mobility needs through land use regulations, and infrastructure planning • Investment in attractive public transport facilities and non motorised forms of transport

15. IPCC: Sector policies and measures Buildings • Appliance standards and labelling • Building codes and certification • Demand-side management programmes • Public sector leadership programmes, including procurement • Incentives for energy service companies (ESCOs) Industry • Provision of benchmark information • Performance standards • Subsidies, tax credits • Tradable permits • Voluntary agreements

16. (IPCC): Changes in lifestyle and behaviour patterns can contribute to climate change mitigation across all sectors. And to add: Without changes in lifestyle and behaviour patterns we will not succeed.

17. Thanks for listening hziesing@t-online.de