Transcript Slide 1

Universidad de La Laguna - 15 May 2008 – Economia del Cambio Climatico
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Socio-economic evaluation of the EU climate policy: 20-20-2020
Bert Saveyn
Joint Research Centre (JRC)
IPTS - Institute for Prospective Technological Studies
Seville - Spain
http://ipts.jrc.ec.europa.eu/
http://www.jrc.ec.europa.eu/
Overview
Universidad de La Laguna - 15 May 2008 – Economia del Cambio Climatico
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Presentation of the European Union, European Commission,
JRC and IPTS
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Climate Action and Renewable Energy
3.
Socio-Economic Modelling
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Universidad de La Laguna - 15 May 2008 – Economia del Cambio Climatico
1. EUROPEAN UNION
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1. Institutions of European Union
Universidad de La Laguna - 15 May 2008 – Economia del Cambio Climatico
1. European Commission
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•
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Representing the interests of the Union as a whole
Brussels
Joaquin Almunia, Commissioner for Economic and Monetary Affairs
2. European Parliament
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•
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Directly elected by European’s citizens
Strasbourg, Luxemburg, Brussels
E.g. Fernando Fernandez Martin, Josep Borrell
3. Council of the European Union
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•
•
Representing the interests of the Member States (European Council + 9 different)
Brussels
Jose Luis Zapatero (European Council), Pedro Solbes (ECOFIN), etc.
4.
Court of Justice
5.
Court of Auditors
Other bodies: European Central Bank, European Investment Bank,
European Personal Selection Office, European Ombudsman, etc.
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1. Decision-Making in the European Union
Universidad de La Laguna - 15 May 2008 – Economia del Cambio Climatico
Proposal
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Passing Laws
+
Annual Budget
Implementation
European
Parliament
European
Commission
Council of
European
Union
European
Commission
Council of European Union:
• Common Foreign and Security Policy (Javier Solana)
• Justice and “interior affairs (e.g. immigration)
• International Agreements
European Commission:
• Enforcing European Law (e.g. Donana road; Endesa deal; Microsoft)
• Representing EU in international stage (e.g. Climate; WTO)
1. European Commission
Universidad de La Laguna - 15 May 2008 – Economia del Cambio Climatico
• 27 Commissioners
– President Jose Manuel Barroso
– DG Agri, DG Mare, DG Regio, DG Enterprise, DG ECFIN, DG TREN, etc.
– DG Environment is leading Climate negotiations (in coordination with other
services)
• DG JRC
– Located in Ispra, Geel, Petten, Karlsruhe, Brussels and Sevilla
– Policy-making on scientifically robust foundation
– Costumers are Commission Services, EU institutions and agencies, and
Member States
• IPTS: Institute for Prospective Technological Studies
– 180 Staff since 1994 in Sevilla
– Competitiveness and Sustainability Unit
 Socio-Economic analysis/modelling of Energy, Climate, Transport
 Environment: EIPPC writes sector-specific BREF’s
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Universidad de La Laguna - 15 May 2008 – Economia del Cambio Climatico
2. Climate Action and Renewable
Energy
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2. The EU’s commitment to combat climate change
Universidad de La Laguna - 15 May 2008 – Economia del Cambio Climatico
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• Commitment to limit global temperature increase to +2°C above preindustrial levels
• Kyoto target: - 8 % of baseline emissions by 2008-2012 for EU-15
plus individual targets for most new Member States (EU-12)
• European Commission and European Council (2007):
– Pursue a 30 % GHG emission reduction target (compared to 1990) in international
negotiations for industrialized countries by 2020
– Take a firm commitment for a 20 % reduction by 2020 for the EU (compared to
1990) already now, independent of any international agreement
2. ETS
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• European Emission Trading Scheme (ETS)
– Largest emission trading scheme (multi-country, multi-sector)
– Energy intensive sectors
– Phase I: 2005-2008; Phase II: 2008-2012
– National Allocation Plan
• Currently: Update of ETS
– Phase III: Beyond 2012
– 21% reduction in 2020 compared to 2005
– Inclusion of other sectors (e.g. Aluminium and Aviation) up to 50% of total emissions
– Extension to other GHG than CO2
– Auctioning vs. Grandfathering
– Clean Development Mechanism and Joint Implementation
– European Allocation Plan
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2. Non- Emission Trading Sectors
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• For Sectors not included in ETS:
– About 50% of all emissions
– 10% reductions in 2020 compared to 2005
– Specific Targets for Member States based on GDP/capita (“burden sharing”)
• EU Sector specific actions:
– Agreement to reduce specific car emissions (130 g/Km CO2)
– Buildings directive
• Actions for higher Energy Efficiency
• Etc.
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2. Renewable Energy
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• 12% Renewable Energy by 2010
• 20% Renewable share of final energy consumption in 2020
– Burden Sharing of Renewable Energy across EU countries
– Support Mechanisms: Feed-in tariffs vs. Tradable Green Certificates
• 10% Biofuels in transport in 2020
– production being sustainable
– second generation biofuels commercially available
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2. What does the JRC?
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Provide policy advice
Estimation of
the impacts of
climate change
(PESETA)
Mitigation
scenarios
(POLES)
Economic
impact of
policies
(GEM-E3)
Co-benefits
of policies
on air pollution
(TM5)
Forecast and
scenarios
Assistance in emission inventories; emission database (EDGAR)
Techno-economic characteristics
of energy technologies (SETRIS)
technical characteristic
costs
environmental impact
Participate in
technology development
CCS
H2
Renewables
Data services
Universidad de La Laguna - 15 May 2008 – Economia del Cambio Climatico
3. Socio-Economic Modelling
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3. Why do we need models?
Universidad de La Laguna - 15 May 2008 – Economia del Cambio Climatico
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Economic Models are
– an input for Impact Assesment
– a complement for Cost-Benefit Analysis
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Since 2003 an Impact Assessment support every EU policy.
– Effects of policy proposals in their economic, social and environmental dimensions.
– Simplify and improve the regulatory environment.
•
Impact assessment in 4 steps:
– It identifies the problems and the objectives.
– It identifies the main options for achieving the objective
– It analyses their likely impacts in the economic, environmental and social fields.
– It outlines advantages and disadvantages of each option and examines possible
synergies and trade-offs.
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Impact assessment is an aid to political decision, not a substitute for it. It informs
decision-makers of the likely impacts of proposals, but it leaves the decision to
them.
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3. Types of Models
Universidad de La Laguna - 15 May 2008 – Economia del Cambio Climatico
• Partial Equilibrium Models
• Input Output Models
• General Equilibrium Models
• Econometric Models
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3. Partial Equilibrium
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• Partial equilibrium analysis means that the effects of policy actions
are examined only in the markets which are directly affected.
• Results are obtained independently from prices and quantities
demanded and supplied on other goods' markets.
• Producer and consumer surplus is used to measure the welfare
effects on agents in the market.
• It assumes that the sector has little if any impact on other sectors of
the economy.
3. A simple Partial Equilibrium Model
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Fuel
Price
Supply 1
1 euro
Demand
1000Km
Km Driven
3. A simple Partial Equilibrium Model
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Fuel
Price
Supply 2
Carbon
Tax
1,5 euro
DWL
Supply 1
1 euro
Demand
800Km
1000Km
Km Driven
3. Partial Equilibrium Models in EU Policy
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• POLES Model
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Simulation model for energy sector with detail on various energy technologies
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Data input: Projections of GDP, value-added by sector, population, growth by sectors
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Output: Final Energy Consumption, Demand for fuel, coal, gas and electricity; Energy prices
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Various versions with more sector detail as for steel, cement, bio-fuels
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IPTS, Seville
• MARKAL/TIMES
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Dynamic optimization model representing all energy demand and supply activities and technologies
for a country with a horizon of up to 50/60 years.
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IPTS, Seville
• TREMOVE
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Assessing the effect of various transport and environment policies on the transport sector for
European countries.
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IPTS, Seville
• PRIMES Model
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Market-driven behaviour of economic agents for energy system
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Used for e.g. Climate Policies
3. Poles Simulation
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Technologies that can reduce global CO2 emissions from energy
combustion
45000
avoided emissions
40000
35000
Mt CO2
30000
25000
20000
Energy savings
15000
10000
Fossil fuel switch
Renewable energies
Nuclear energy
5000
0
1990
Carbon sequestration
Emission of reduction case
2000
2010
2020
2030
2040
2050
3. Input Output modellen
Universidad de La Laguna - 15 May 2008 – Economia del Cambio Climatico
• Usefull for multi-sector analysis
• Only relations between industrial sectors
• Data: Input Output Table
• No substitution between sectors or factors
– Leontief Production function
• Estimations are the upper limit of the real effects
– Interpretation: short term effects
– Total effects is sum of effects (additive)
• Predecessor of General Equilibrium Models
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3. Input Output Table
Universidad de La Laguna - 15 May 2008 – Economia del Cambio Climatico
Inter-industry flows
Inter-industry flows
Value Added: Labour
Value Added: Capital
Import
OUTPUT
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H
H
d
e
m
a
n
d
G
O
V
d
e
m
a
n
d
E
x
p
o
r
t
s
O
U
T
P
U
T
3. Input Output Table: Simple Example
Universidad de La Laguna - 15 May 2008 – Economia del Cambio Climatico
Ind. 1
Inter-industry flows
Ind. 1
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Ind. 2
Labour
Capital
Import
Output
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Ind. 2
H
H
G
O
V
E
x
p
O
u
t
40
20 10 10 100
20
10
10 20 20 80
10
20
10
100
10
10
10
80
3. General Equilibrium Models
Universidad de La Laguna - 15 May 2008 – Economia del Cambio Climatico
• 4 types of economic agents: Each agent pursues its own interest
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Goods (industrial firms)
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Consumers and households
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Government
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Rest of the World
• Simultaneous optimal behaviour
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Interaction of all markets
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Interaction of all agents
• Market Equilibrium between demand and supply for all goods and
production factors (e.g. energy, capital and labor)
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Supply and Demand adjust through change in prices
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Substitution between production factors and goods (CES-production function)
• Total Effects = f(effects of all sectors and agents)
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Substitution typically mitigates the effects
• Data-intensive: Social Accounting Matrix (SAM)
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3. Social Accounting Matrix
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(Adapted from Berck and Hoffmann, 2002)
3. GEM models in EU Policy
Universidad de La Laguna - 15 May 2008 – Economia del Cambio Climatico
• GEM-E3: Economy, Energy and Environment
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EU 27 (Eurostat/2000)
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World Version with 18 economic blocs (GTAP 6/2001)
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Dynamic model (recursive dynamics) with investment
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Extensive environmental dimension (GHG and local pollutants)
• Policy instruments
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Standards
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Taxes
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Permits (Auctioning or Grandfathering)
• Suitable for economy-wide environmental and economic policies
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Climate policies
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Labour market reforms
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Tax reforms (Double Dividend?)
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3. GEM-E3
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3. Emission Reductions
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2020
2030
Emission
targets
(compared to
1990)
Domestic
emissions
(compared to
1990)
Emission
targets
(compared to
1990)
Domestic
emissions
(compared to
1990)
USA
-23 %
-4 %
-39 %
-21 %
EU27
-31 %
-21 %
-46 %
-35 %
FSU
-42 %
-39 %
-54 %
-51 %
Japan
-26 %
-24 %
-41 %
-37 %
3. GDP Change
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Impact on GDP
2020
GDP 2005=100
2030
GDP 2005=100
baseline
reduction
Annualised
change
from 2005
baseline
reduction
Annualised
change
from 2005
USA
156.8
154.6
-0.15%
194.9
190.1
-0.20%
EU27
135.1
132.3
-0.19%
158.1
152.2
-0.24%
FSU
214.1
208.8
-0.37%
298.8
287.6
-0.47%
Japan
130.4
129.3
-0.08%
162.6
160.0
-0.11%
Brazil
165.4
164.8
-0.04%
244.6
242.3
-0.09%
India
205.6
204.3
-0.10%
331.6
328.9
-0.11%
China
213.1
212.4
-0.05%
317.2
314.5
-0.11%
World
155.3
153.2
-0.14%
200.8
196.2
-0.19%
3. Welfare change of households
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Impact on welfare
2020
Welfare 2005=100
2030
Annualised
change
Welfare 2005=100
Annualised
change
baseline
reduction
from 2005
baseline
reduction
from 2005
USA
142.9
140.7
-0.10%
178.3
171.9
-0.15%
EU27
131.9
128.1
-0.20%
147.9
138.6
-0.26%
FSU
172.3
165.9
-0.25%
213.6
196.4
-0.34%
Japan
126.9
125.7
-0.06%
147.9
144.6
-0.09%
Brazil
126.9
126.4
-0.03%
251.4
246.6
-0.08%
India
187.0
184.4
-0.09%
283.0
277.5
-0.08%
China
172.3
172.0
-0.01%
221.8
219.1
-0.05%
World
150.7
148.3
-0.10%
189.0
182.2
-0.15%
Econometric Models
Universidad de La Laguna - 15 May 2008 – Economia del Cambio Climatico
• Using Time Series
• Estimating aggregates
– E.g. GDP, consumption, total production, etc.
• Less detail for industrial sectors
• Complement to GEM
• QUEST model (by Ecfin)
– Macro-economic report by Mr Almunia
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Usefull links
Universidad de La Laguna - 15 May 2008 – Economia del Cambio Climatico
1. European Union
–
Institutions: http://europa.eu/institutions/index_en.htm
–
DG JRC: http://ec.europa.eu/dgs/jrc/index.cfm
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IPTS: http://www.jrc.es/
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Employment: http://europa.eu/epso/index_en.htm
2. Climate and Energy Policies
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Climate Change: http://ec.europa.eu/environment/climat/home_en.htm
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Renewable Energy: http://ec.europa.eu/energy/res/index_en.htm
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Emission Trading Scheme: http://ec.europa.eu/environment/climat/emission.htm
3. Socio-Economic Models
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Impact Assessment: http://ec.europa.eu/governance/impact/index_en.htm
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GEM-E3: http://www.gem-e3.net/
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Reference report: http://ftp.jrc.es/eur23032en.pdf
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