Download Energy and Climate Policy, presentation of Richard Baron, Head of

Energy and climate policy
Richard Baron, head of Climate Change Unit, IEA
IEA-FTS of Russia
Workshop on Global Energy Market Scenarios
Paris, 27 May 2010
[email protected]
© OECD/IEA 2010
 IEA climate policy work
 International climate policy after Copenhagen
 Domestic policy choices for effective CO2
emission reductions
© OECD/IEA 2010
IEA climate change policy work
Advise UNFCCC process
 Climate Change Expert Group (formerly Annex I Expert
Group on the UNFCCC)
 Technical input to negotiations since 1994
 After Copenhagen: focus on carbon market
mechanisms and reporting
Projects on energy and climate
 Design of domestic emissions trading systems
 Combining policy tools for least-cost climate strategies
 Nuclear power in a carbon constrained world
 Policy options for low-carbon electricity in China
 Monitoring progress in climate policy
 Climate / energy efficiency / renewables policy databases
 Evolution of CO2 emissions from power generation
© OECD/IEA 2010
International climate policy
 Copenhagen did not deliver a full
international climate policy framework
 The Copenhagen Accord takes several steps
forward
 More is needed
© OECD/IEA 2010
The Copenhagen Accord (1)
 Increase in global temperature should be below 2oC
 Aim of peak in global and national emissions “as
soon as possible”
 “Annex I” (developed) countries to set emissions
targets for year 2020
 Financing: Fast-track USD30 billion (2010-12) plus
USD100 billion a year by 2020
 The use of markets to pursue cost-effective
mitigation actions
 Technology mechanism
© OECD/IEA 2010
The Copenhagen Accord (2)
Non-Annex 1 countries:
 “Non-Annex I” (developing) countries will implement
mitigation actions by 2020 (pledges submitted)
 Domestic monitoring, reporting and verification
(MRV) for unilateral actions, with international
consultation
 Actions seeking international support to be
recorded in a registry and subject to international
MRV
© OECD/IEA 2010
World abatement emissions in the 450 Scenario
Excerpt from IEA Press Conference at COP15
Reference Scenario
40
Gt
Gt
42
35
Reference Scenario
Current
Pledges
33
38
OECD+
36
31
450 Scenario
34
13.8 Gt
3.8 Gt
32
OME
29
27
2007
2010
2015
2020
30
OC
28
© OECD/IEA 2009
26
2007 2010
450 Scenario
2015
2020
2025
2030
Current pledges point in the right direction but further efforts
needed to close the gap and to reach the 450 Scenario for 2oC
Source: IEA analysis based on pledges as of January 2010, and World Energy Outlook 2009
© OECD/IEA 2010
What is needed next, what is missing?
 Resolve the future of the Kyoto Protocol and its
carbon market instruments
 How to get from current unilateral pledges to a more
coordinated response to achieve the 2oC goal?
 How to best support CO2 emission reductions in
emerging economies?
 Engage economies on a low-carbon development path
– a true energy revolution
© OECD/IEA 2010
World energy-related CO2 emissions and
reductions per region and activity in 450 scenario
42
Abatement by technology, 2030
By region
World
40
38
Efficiency – 45%
Reference Scenario
OECD+
36
Renewables &
biofuels – 21%
Nuclear– 13%
CCS – 20%
Efficiency – 57%
34
13.8 Gt
3.8 Gt
32
Other Major
Economies
30
Other
Countries
28
450 Scenario
26
© OECD/IEA 2009
2007
2015
2020
2025
2030
Efficiency – 67%
Renewables &
biofuels – 19%
Nuclear – 8%
CCS – 6%
Efficiency – 55%
Renewables &
biofuels – 34%
Nuclear– 9%
Renewables &
biofuels – 23%
Nuclear– 10%
CCS – 10%
Source: Early excerpt of WEO 2009 for Bangkok UNFCCC meeting
The mitigation challenge is daunting – 3.8 GtCO2 needed by 2020
in the energy sector alone globally, with much mitigation to take
place in emerging economies
Source: World Energy Outlook, IEA 2009
© OECD/IEA 2010
Domestic climate policy
What is in the policy tool-kit?
 Carbon pricing (tradeable emission permits / carbon
taxes)
 Relative energy prices must be changed if we are to achieve
the decarbonisation of energy systems
 Energy efficiency policy measures
 Our energy services can be met with much less primary
energy, and often at lower cost. How?
 Targeted support to low-carbon technologies
 Renewables
 Nuclear
 Carbon capture and storage
 Targeted tool-kit for each technology, based on maturity and
cost-competitiveness, and general market conditions
© OECD/IEA 2010
Carbon pricing:
the EU Emissions Trading System
 More than 11,000 installations have been allocated a CO2
emissions goal – and corresponding CO2 allowances (EUAs)
 27 countries. Power generation and heavy industry only = 45%
of EU greenhouse gas emissions)
 Penalties for non-compliance: EUR 40-100/tCO2
 Three phases
 Trial: 2005-2007. Some over-allocation to industry
 Current (Kyoto): 2008-2012. Crisis affects industrial activity and
lowers CO2 price
 2013-2020: Evolution towards auctioning of allowances (i.e.
government revenues). Reduction goal: -21% from 2005
 Concerns: long-term price signal / competitiveness
 Australia, Brazil, Japan, Korea, Mexico, New Zealand, US are
considering adopting Emissions Trading Systems
© OECD/IEA 2010
A price on CO2 now guides energy
investments in Europe
Today’s EU electricity prices: EUR 50/MWh
EUR 15/tCO2 adds about EUR 13/MWh for a coal-based plant
CO2 now a key component in EU electricity prices
© OECD/IEA 2010
Energy efficiency: a prerequisite
 At the core of an effective response to reduce CO2
 A large potential for cost-effective energy savings exist in all
countries / economies
 It is critical to tap that potential to allow cleaner, more
expensive energy carriers needed for decarbonisation
 Consumers face significant barriers (information,
split incentives, transaction costs, access to capital)
 A CO2 price alone not likely to break these barriers
 Targeted policy tools are needed
 Minimum energy performance standards
 Labelling of end-use equipment (electric appliances)
 Fiscal measures
 Check IEA 25 concrete recommendations on
energy efficiency to G8 and progress to date:
http://www.iea.org/G8/docs/Efficiency_progress_g8july09.pdf
© OECD/IEA 2010
Summarising challenges & opportunities
 Still lacking an international framework to enhance the
ambition of climate policy goals
 A matter for the international negotiation only?
 Domestic climate policy is moving along in many
developed and developing countries
 Climate policy goals are an integral part of energy policy in most
developed countries
 Interest in the ‘upsides’ of climate policy for energy goals
 Lower reliance on fossil fuels and less tensions on international
markets
 Lower local pollution and improve air quality
 Lower energy cost through energy efficiency-driven savings
 How to best manage the transition to low-carbon?
 Significant infrastructure change (e.g. to decarbonise electricity)
 How can all economic activities survive under a CO2 constraint? How
to manage winners and losers?
 Finding least-cost combinations of policies is essential for
sustainable climate policy
© OECD/IEA 2010