Download OECD / IEA JOINT WORKSHOP THE DESIGN OF SUSTAINABLE

Climate-Relevant
Policy Assessment
in the OECD and IEA
Jan Corfee Morlot, OECD
Global and Structural Policy Division, Environment
email: [email protected]
OECD
Overview of current work
1.
2.
3.
4.
5.
6.
7.
OECD
Outlooks and policy frameworks
National policy reviews
Sectoral policy evaluations
Analysis of policy instruments
Beyond the OECD
Databases and indicators
Conclusions
1. Outlooks and policy frameworks
• …assess climate policies in the context of
environment, energy and sustainable
development policies
• Environment Outlook:
– Aggressive policies are required for significant
improvements in efficiency and penetration of
new technologies
– ….
OECD
Environmental issues: traffic lights
•Some air pollutants
(lead, CFCs, NOx, SOx)
•Water use
•Agricultural pollution
•Surface water quality
•Over-fishing
•Forest coverage in
OECD regions
•Hazardous waste &
toxic emissions from
industry
•Greenhouse gas
emissions
•Energy production &
use
•Motor vehicle &
aviation air pollution
•Biodiversity & Tropical
forest coverage
•Forest quality in OECD
•Chemicals in the
regions
Environment
OECD
Ancillary Benefits or “Multiple”
Benefits of GHG Mitigation
Sector
GHG Policy Objective
Ancillary Benefit (examples)
Electricity
production
Fuel switching away from oil
and coal to fuels with low or
no GHG emissions
•Improved local/regional air and water
quality
•Improves human health
•Preserve eco-system and freshwater
Limits forest die-back (due to acid rain)
Transport
Lower emission vehicles and
demand side management
•Lowers congestion in cities
•Improves human health costs from air
pollution
Agriculture
Minimise use of fertilisers
•Lowers nitrogen run-off from agricultural
land, improving water quality
Manufactur
-ing
Prioritise investments in
energy and materials
efficiency
•Improve resource efficiency of industrial
operations
•Long term and often short term financial
savings accrue; lower energy costs
1. Outlooks & policy frameworks
• World Energy Outlook (2002):
– Reference Scenario: Global energy-related CO2
emissions grow by 70% over the period 20002030
– Alternative scenario: in OECD countries,
energy-related CO2 emissions are stabilised
only towards the end of the period
OECD
Key Factors Affecting Energy-Related Carbon Emissions
in OECD, 1970-2020
1.8
1.8
1.6
1.6
CO 2 Emissio ns
1.4
1.2
1.4
1.2
C arbo n Intensity
1
0.8
1
TPE S
0.8
Ener gy Intensi ty
GDP
0.6
0.6
0.4
0.4
19 70
19 75
19 80
19 85
19 90
19 95
20 00
20 05
20 10
20 15
20 20
Source: IEA and OECD
• GDP, TPES, CO2 increase relatively rapidly
• Carbon intensity declines slowly, levels off recent yrs
• Energy intensity steady decline
OECD
2. National policy reviews
• Environment Performance Reviews (EPRs):
– peer reviews of OECD Member Countries’
progress towards achieving domestic
environmental objectives and international
commitments (similar to UNFCCC reviews)
– Includes systematic review of climate policies
– 4 countries per year; second cycle started in
2001
OECD
2. National policy reviews (cont)
• Special “sustainable development” chapters
of OECD Economic Surveys
– focus on cost-effectiveness of policies
– climate as selected issue for review
• IEA Country Reviews
– 6 IEA Member countries reviewed annually
– includes review of climate/energy policies and
trends (energy/carbon intensity)
OECD
3. Sectoral policy assessment
• Energy policy (IEA): renewables, nuclear,
gas, coal, electricity
• Sustainable construction and buildings
• Environmentally sustainable transport
• Sustainable consumption and waste
• Industry/manufacturing
• Agriculture
OECD
4. Policy instruments: making
markets work for SD and Climate
• Phase out (environmentally harmful)
subsidies
• Make greater use of environmental taxes;
remove distortionary tax provisions
• Set up tradable permits systems for GHG
emission
OECD
Phasing-out subsidies
• Environmentally harmful subsidies in
OECD countries are estimated at $ 400
billion in 2000, 1.9 % of GDP.
– Source: OECD (2001)
• Non-OECD countries: $ 340 billion, 6.3 %
of GDP (1994-1999 average).
– Source: van Beers and de Moor (2001)
OECD
Phasing-out subsidies (cont)
• Agriculture: 310 billion $, 1.3% OECD
GDP (2001)
– Induce intensive farming, conversion of
forest and wetlands into agricultural land,
overuse of fertilisers and pesticides, over
production (EU CAP)
• Energy production: 20-30 billion $ p.a. (of
which 1/3 to support coal production)
OECD
Implementing green tax reforms
• Environmentally related taxes in OECD
countries:
– 7 % of total tax revenue (OECD average)
– 2.5 % of GDP (range 1- 4.5%)
• Price elasticities, including cross-price
elasticities, high enough to justify broader
use of taxes
OECD
d e Em
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Million US dollars
Revenues raised on environmentally related tax-bases
21 OECD Member countries, 1995
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
OECD
Removing distortionary tax
provisions
• Tax rate variations or exemptions such as:
–
–
–
–
under-taxing transport diesel fuel
under-taxing coal
tax free aviation fuel (and airlines tickets)
almost complete energy tax exemption to the
industrial sector
• Tax exemptions for specific activities: more
than 1000 recorded in the OECD tax
database.
OECD
New work on national policy instruments
OECD Assessments
• Environmentally-related taxes
– looks at obstacles to a broader use of tax instruments,
including competitiveness issues (e.g. in the steel
sector)
• Environmentally-harmful subsidies
– comprehensive review and quantification in different
sectors according to their environmental harm
• VA and emission trading in the policy mix
OECD
GHG trading systems
Linking national systems
• Benefits to linking: it broadens abatement
opportunities, increases market liquidity, reduces
costs
• Few technical barriers to linking
• Without design solutions, linking can reduce
environmental performance of systems
• Some design solutions required to remove
barriers, though these will involve additional
administrative costs
OECD
New work on emission trading
• OECD and IEA work including work of the
Annex I Expert Group
– develop strategic guidelines on good practice
and ex-post evaluations
– share information on (and analysis of) recent
developments of domestic trading policies
– study issues related to linkages between
domestic systems
– assess transition issues: Kyoto/global markets
OECD
5. Beyond the OECD
• Work on PAMs in the Annex I Expert
Group:
– Assessment of PAMs by sector (energy supply,
transport, industry workshops)
– Review technology-related PAMs
• Strengthening institutions in EIT countries
– Implementation of Convention & Protocol
– Enforcement of environmental policies
– Environmental finance mechanisms
OECD
5. Beyond the OECD (cont)
• Development Co-operation: Integrating the Rio
Conventions
• Jt. Project on Development and Climate:
– How to enhance adaptation through development plans and
development co-operation projects
• Benefits of climate policies
– a framework to assess long term direct and ancillary benefits
• Technology Co-operation : CTI and IEA Implementing
Agreements
• Adverse effects of changes in fossil fuel export markets
(IEA)
OECD
6. Databases and Indicators
• OECD/IEA/EU database on
environmentally-related taxes available at
www.oecd.org/env/tax-database
• IEA database on energy-related climate
policies: multi-year data allow for some
trend analysis
OECD
Dealing With Climate Change: Policies
and Measures in IEA Member Countries
 Since
1999, IEA has continually collected, reviewed
and classified information on energy-related
greenhouse gas mitigation measures.
over 800 records, the “Dealing with Climate
Change” project is one of the most extensive sources
of policy information on the subject
 With
OECD
Energy Production
OECD
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nl
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la
nd
Au
Policy Sector by Country, 1999-2001
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Industry
Transport
Buildings
Policy Type by Region, 1999-2001
100%
90%
80%
Share of all PAMs
70%
60%
50%
40%
30%
20%
10%
0%
IEA North America
Fiscal
OECD
Tradable Permits
Regulatory Instruments
IEA Europe
Voluntary Agreements
IEA Pacific
RD&D
Policy Process and Outreach
New work on PAMs databases
• OECD/IEA/EU database on economic
instruments (e.g. taxes, tradeable permits...)
available soon
• New IEA searchable web-site on all energyrelated climate change policies in countries
– including renewable energy policies
• IEA analyses of specific technology and fuel
options (including renewable energy, natural gas,
and carbon capture and storage)
OECD
7. Conclusions: PAMs in OECD
• Significant action to date in Member countries
• Some success in de-coupling (e.g. c-intensity)
• OECD emissions still on the rise - much
remains to be done
• OECD and IEA have a mandate to assess
performance and promote good practice
• Need to learn together and begin to look beyond
OECD for lessons (e.g. Annex I and non-Annex I)
OECD
7. Conclusions: Role of FCCC
Subsidiary Bodies
SBs play a unique role to:
• Assess progress through
national communications
• Review key
developments, emission
trends, drivers and key
indicators
• Identify and share
lessons amongst all
Parties
OECD
• More detailed information can be found on
the OECD and IEA websites:
– www.oecd.org/env/cc
– www.iea.org/envissu
• …and in the OECD/IEA Information Paper
“Climate-relevant policy assessment in the
OECD, IEA, NEA and ECMT”
OECD