No full-text available
To read the full-text of this research,
you can request a copy directly from the authors.
Patt, Lilliestam 2018 The case against carbon prices
Abstract
Professor Dr. Anthony Patt is head of the Climate Policy Group in the Department of Environmental Systems Science at ETH Zürich, Switzerland. His research focus is on technological pathways and public policies for climate change mitigation and adaptation. He is a Coordinating Lead Author in Working Group III of the Intergovernmental Panel on Climate Change. He obtained his PhD at Harvard University's Kennedy School of Government. He is the author of “Transforming Energy: Solving Climate Change with Technology Policy” (Cambridge University Press, 2015).
• Download : Download high-res image (204KB)
• Download : Download full-size image
Professor Dr. Johan Lilliestam is head of the Renewable Energy Policy Group in the Department of Environmental Systems Science at ETH Zürich, Switzerland. His research focus is policies and strategies for a transition to a completely renewable energy system, including the effects of interactions between different energy policies. He obtained his PhD at the Central European University in Budapest, Hungary. Before joining the ETH, he worked at the Potsdam Institute for Climate Impact Research (PIK) in Potsdam, Germany, and the International Institute for Applied Systems Analysis (IIASA) in Laxenburg, Austria. He currently holds a grant from the European Research Council for his work on policy interactions.
• Download : Download high-res image (202KB)
• Download : Download full-size image
... In most countries around the world, carbon pricing exists alongside other climate and energy policies to form a policy package. This is because carbon policies alone cannot solve various institutional, political, and regulatory barriers to decarbonisation (Jaffe et al 2005, Twomey 2012, Bertram et al 2015, Klenert et al 2018, Mehling and Tvinnereim 2018, Patt and Lilliestam 2018, Rosenbloom et al 2020. Thus, although policies co-exist together because of different policy objectives, the interconnected nature of energy flows and sectoral overlap of policies means that it is critical to understand the interaction between carbon pricing and other non-market energy policies. ...
To help meet its near-term NDC goals and long-term net-zero 2070 target, the Government of India has planned to establish a Carbon Credit Trading Scheme (CCTS), i.e. a domestic emission trading scheme (ETS). An ETS is an inherently cost-effective policy instrument for emission reduction, providing the greatest flexibility to reduce emissions from within and across sectors. An effective ETS requires design features that consider country-specific challenges and reflect its role within the larger policy package to achieve long-term emission reduction. Within the Indian context and in this study we therefore investigate—(i) what might be the role of the ETS in achieving India’s long-term mitigation targets? (ii) How might the various sectors interact under an emissions cap? (iii) How might the ETS interact with existing energy and climate policies? We do this analysis by running four main scenarios using the integrated assessment model GCAM (v6.0), adapted to India-specific assumptions and expectations. These scenarios are—(i) NZ (net-zero), (ii) NZ + ETS, (iii) NZ + CC (command and control), and (iv) NZ + RPO (renewables purchase obligations) + ETS. The NZ scenario assumes India’s near-term and long-term climate commitments of net zero by 2070. Scenarios with ETS (ii) and (iv) apply an emissions cap on four sectors—electricity, iron and steel, cement, and fertilizer. The scenario with CC applies a homogenous emission cap on each of the chosen sectors but does not allow cross-sectoral trading. The last scenario includes renewables purchase obligations (RPOs along with an ETS. We show that under a specific ETS emissions cap: (i) the electricity sector emerges as the largest source of cost-effective greenhouse gas (GHG) reduction options; (ii) ETS with trading across sectors is around 24% more cost-effective than ETS with trading only within sectors, (iii) RPOs can be complementary to an ETS although the impact of RPOs on GHG reductions in the electricity sector would need to be considered when setting the level of the ETS cap (or emissions intensity targets) or the RPO targets to avoid low carbon prices, and (iv) the direction and volume of financial transfers across sectors depends on allocation targets set by the government. Based on these results we provide design recommendations for India’s ETS.
Effective climate change mitigation necessitates swift societal transformations. Positive social tipping processes, where small triggers initiate qualitative systemic shifts, are potential key mechanisms towards instigating the desired emissions mitigation. A necessary foundation for societal tipping processes is the creation of enabling conditions. Here, we assess future sea level rise estimates and social survey data within the framework of a network-based threshold model to exemplify the enabling conditions for tipping processes. We find that in many countries, the level of climate change concern is already sufficient, suggesting the enabling conditions and opportunities for social activation already exist. Further, drawing upon the interrelation between climate change concern and anticipation of future sea level rise, we report three qualitative classes of tipping potential that are regionally clustered, with the greatest potential for tipping in western Pacific Rim and East Asian countries. These findings propose a transformative pathway where climate change concern increases the social tipping potential, while extended anticipation time horizons can trigger the system towards an alternative trajectory of larger social activation for climate change mitigation.
Cement production is responsible for approximately 7% of anthropogenic CO2-equivalent (CO2e) emissions, while characterised by low margins and the highest carbon intensity of any industry per unit of revenue. Hence, economically viable decarbonisation strategies must be found. The costs of many emission reduction strategies depend on geographical factors, such as plant location and proximity to feedstock or on synergies with other cement producers. The current literature lacks quantification of least-cost decarbonisation strategies of a country or region's total cement sector, while taking stock of these geospatial differences. Here, we quantify which intervention ensembles could lead to least-cost, full decarbonisation of the European cement industry, for multiple European regions. We show that least-cost strategies include the use of calcined clay cements coupled with carbon capture and storage (CCS) from existing cement plants and direct air capture with carbon storage (DACCS) in locations close to CO2 storage sites. We find that these strategies could cost €72–€75 per tonne of cement (tcement⁻¹, up from €46–€51.5 tcement⁻¹), which could be offset by future costs of cement production otherwise amounting to €105–€130 tcement⁻¹ taking the cost of CO2e emission certificates into account. The analysis shows that for economically viable decarbonisation, collaborative and region-catered approaches become imperative, while supplementary cementitious materials including calcined clays have a key role.
Climate change and its associated mitigation policies have an impact on people’s livelihoods. Therefore, how best to react to such impacts is currently a prominent topic in academic and policymaking debates. The article contributes to this new and rapidly developing academic discourse by identifying different understandings of the social dimension within current paradigms of the green transition and analysing policymakers’ understandings of this dimension in Germany and the European Union. The integration of the social dimension ultimately depends on underlying understandings of redistribution and the state-society relationship. The market-liberal Green Economy approach is dominant in the discourse; its narrow social dimension is mostly seeking to increase the acceptance of climate policy through earmarking revenues of carbon trading. Green Keynesian arguments, which examine structural policies and allow for more integrated approaches of social protection are fighting to be heard. Ideas from the Degrowth sphere gain only fragmented access to the policy debates, as they are often framed as unrealistic and politically unfeasible. An interest-based understanding of the welfare state would be suited to mediate interests within the transformation process and socially legitimise climate policy, but current Green Economy discourses primarily aim for social policy to fulfil an appeasing role.
A carbon tax is one of the fundamental cost-effective market tools to limit global temperature and reduce greenhouse gases emissions. In this study, using the provisions of the Paris Agreement and the shadow price of carbon, the potential role of the carbon tax on carbon emission reduction in the agricultural sector of Iran is investigated. To this end, the GMM (generalized method of moments) approach and data for 28 provinces of Iran during 2001–2017 is implemented. The own price and income elasticity of diesel are calculated at −0.26 and 0.32, respectively. Results indicated that each 300 Rial ($0.0.0071) increase in diesel price led to a 44 kg/capita decrease in carbon emission. Each 10% decrease in electricity price led to a 1.5% decrease in diesel consumption and a 0.21% decrease in per capita carbon emission. To comply with Paris Agreement, the recommended carbon tax will be 0.360 Dollar/liter. According to carbon shadow price in the agriculture sector of Iran, to cover external costs from agriculture products, the carbon tax should be determined at 1.459 Dollar/liter. In the short term, such a high tax rate may affect the welfare of producers. Hence, moderating fuel prices, transferring fossil fuel subsidies to providing clean energy sources, electrification of agricultural wells, use of solar panels in the agricultural sector, modernization of agricultural machinery, and equipment that use less fuel are recommended.
A crucial task to accelerate global decarbonisation is to understand how to enable fast, equitable, low-carbon transformations in Coal and Carbon Intensive Regions (CCIRs). In this early literature review we underlined the relevance of the boundary concept of social-ecological tipping points (SETPs) and showed that the research and policy usage of SETPs applied to accelerate structural regional sustainability transformations faces three key challenges: (I) integrating theoretical and empirical contributions from diverse social and ecological sciences, together with complexity theory (II) designing open transdisciplinary assessment processes able to represent multiple qualities of systemic change and enable regionally situated transformative capacities, and (III) moving away from one-directional metaphors of social change, or static or homogeneous conceptions of individual agency and single equilibrium in energy transitions; and instead, focus on understanding the conditions and capacities for the emergence of systemic transformations and regenerative processes across multiple levels and forms of agency. We refer to these complex and place-situated processes as learning to enable regional transformative emergence.
Sanayi devriminden bu zamana atmosfere salınan sera gazı emisyonlarının, negatif dışsallık yaratarak toplumsal refaha zarar verdiği ve en büyük piyasa başarısızlıklarından biri olan iklim değişikliğine yol açtığı görülmektedir. Çeşitli ekonomik araçlar kullanılarak kamu müdahalesi sayesinde emisyonlar azaltılabilir. Karbon emisyonunu maliyetli kılarak dışsal maliyetlerin içselleştirilmesini sağlayan karbon fiyatlandırılması bu araçlardan bir tanesidir. Emisyon salımını maliyetli kılan bu araç, üreticileri, tüketicileri ve hükümetleri düşük karbon içerikli alternatif arayışlara teşvik ederken, aynı zamanda enerji verimliliği ve malzeme verimliliği çabalarını da artırır. Fiyatlandırma, karbon vergisi veya emisyon ticareti ile uygulanabilir. Ancak iki uygulamanın, pratikte farklı sonuçları ortaya çıkabilir. Bu çalışmanın birinci amacı iki temel karbon fiyatlandırma aracı olan karbon vergisi ve emisyon ticaret sistemini ve bunların etkilerini karşılaştırmalı olarak ortaya koymaktır. İkinci amacı ise, emisyon azaltımında kullanılan diğer araçlarla karşılaştırılmasıdır. Geniş bir literatür taraması neticesinde elde edilen sonuçlar, uygulanan ekonomik aracın tasarımı, piyasa koşulları ve ülkenin ekonomik yapısına göre farklı sonuçların ortaya çıkabildiğini göstermektedir.
This paper applies insights from the literature on transitions in major consumption–production systems to clarify the nature of the challenge of moving to a net-zero greenhouse gas (GHG) emission society. It highlights critical features of transitions including their multiactor/multicausal logic, phased development, and distributive impacts. Because current systems are so dependent on fossil energy resources, and on GHG-emitting industrial processes and agricultural practices, multiple transitions across a range of distinct consumption–production systems will be required for net zero. The transformation of each system faces different barriers and enabling conditions and is influenced by varied nonclimate-related disruptions. Important policy implications follow, including the need to focus on sector and regional transitions, link climate policy to other societal goals, and adopt policy mixes appropriate to the transition phase. The article discusses recent policy and politics-related findings from the transitions literatures including those dealing with policy mixes, transition intermediaries, and green industrial policy.
In response to the intensifying ecological crisis, a growing number of governments are adopting green deals designed to both revive their economies and put those economies on a sustainable development trajectory. The success of these plans will depend on their ability to put involved economies on a path to decoupling economic activities from their environmental impacts. The challenges are daunting in terms of financial capacity, institutional reforms, and international cooperation.KeywordsEuropean Green DealNextGeneration EUEcological decouplingInternational cooperation
While it is widely acknowledged that carbon pricing plays an important role in driving the transition towards a low-carbon energy system, its interaction with complementary instruments is discussed controversially. The analysis of combining carbon pricing with complementary policies has been mostly focused on the electricity sector, while the role of carbon pricing in the buildings sector has received only minor interest. In view of the newly introduced carbon pricing scheme for the buildings and transport sector in Germany, we analyze the interactions between the carbon pricing scheme with the existing policy instruments and assess the consistency of the policy mix for decarbonizing the buildings sector. Our analysis finds that the introduction of carbon pricing has a reinforcing effect on the instrument mix and adds to the consistency of the policy mix. The results highlight the importance of complementary policies in order to achieve deep decarbonization in the buildings sector. We conclude that carbon pricing, preferably implemented as a tax with a predictable and increasing price level, needs to be supplemented with a powerful mix of complementary measures.
Power sector plays a crucial role in the development of a country. Rise in population and industrial expansion in developing countries are reason to burdenize the central grid. Pakistan is a country in its developing stages. About 58% of its total energy generation is contributed by fossil fuel based conventional plants for which the fuel costs plenteous amount. In these circumstances it is indispensable to exploit naturally available renewable resources for electricity generation. This study proposes a hybrid hydro-kinetic/Photovoltaic/Biomass system integrated with grid to serve electricity in a residential area of district Kotli in AJK Pakistan. By evaluating available resources and total load demand data of residential consumers, a system design is modelled in HOMER to get techno-economic and optimal design analysis of the purposed system. Using several configurations and combinations of available energy generation systems and then by comparing their results, the most optimum system design is achieved in terms of initial cost, operating cost, cost per unit and net present cost of the system. To further refine the results, the effect of variations of different parameters like load demand, water flow speed and solar irradiance on system is investigated by performing sensitivity analysis on the system. Final results demonstrate that the purposed system is cost-effective and efficient to meet the load demand.
This study internalizes carbon pricing and other regulatory policy tools for decarbonizing the electricity generation mix of Sri Lanka. Carbon Pricing is shifted to the supply side as a decision-making tool. We consider 10/tCO2, 20/tCO2, 30/tCO2, 44/tCO2, 297/tCO2 as potential carbon prices. Other regulatory policy tools, such as mandatory renewable energy (RE) development, fuel switching, fossil fuel phasing out, fossil fuel development moratoriums, and mandatory RE utilization, are included as possible supporting tools. Three capacity-development scenarios and three optimization models with three objective functions are designed and implemented in the General Algebraic Modeling System (GAMS). Six policy options are presented for the Sri Lankan context considering cost, emission, and diversification. Results suggest a carbon price that falls between 44/tCO2 as suitable for Sri Lanka. The study contributes to the ongoing debate on the effectiveness of carbon pricing by empirically testing the effectiveness of carbon prices in the electricity generation planning of a developing country. The findings support the emerging consensus of adopting other regulatory policy tools along with carbon prices to achieve deep decarbonization. The study also assesses the role LNG could play in a developing country’s electricity generation mix. We recommend transitioning from coal to LNG as an intermediate decarbonization policy option until the RE capacities are developed to make the near-zero emission mix a reality.
There is an ongoing discussion about the effectiveness of carbon pricing, with a strong division between optimists and pessimists. A recent review study by Lilliestam, Patt and Bersalli (2020) of the impact of carbon pricing on low-carbon innovation and deep carbonization concludes that there is no evidence for such an impact. We evaluate this study and identify various shortcomings of it, which together cast strong doubts on its main conclusion. Instead, we conclude, based on the studies reviewed by the authors and additional, overlooked literature, that carbon pricing has had a small but positive and significant effect on low-carbon innovation. Our evaluation provides lessons for undertaking a systematic and objective review of research on this topic. Since the main goal of carbon pricing is changing choices by firms and consumers that affect carbon emissions, we also point the reader towards recent evidence for the broader effectiveness of carbon pricing.
Airborne wind energy (AWE) is a new power generation technology that harvests wind energy at high altitudes using tethered wings. The potentially higher energy yield, combined with expected lower costs compared to traditional wind turbines (WTs), motivates interest in further developing this technology. However, commercial systems are currently unavailable to provide more detailed information on costs and power generation. This study estimates the economic value of AWE in the future electricity system, and by that indicates which cost levels are required for AWE to be competitive. A specific focus is put on the relation between AWE systems (AWESs) and WTs. For this work, ERA‐5 wind data are used to compute the power generation of the wind power technologies, which is implemented in a cost‐minimizing electricity system model. By forcing a certain share of the annual electricity demand to be supplied by AWESs, the marginal system value (MSV) of AWE is investigated. The MSV is found to be affected by the AWE share, the wind resource, and the temporal distribution of the AWES's electricity generation. The MSV of AWE is location‐ and system‐dependent and ranges between 1.4 and 2.2 at a low share of AWE supply (0%–30%). At higher shares, the MSV drops. The power generation of WTs and AWESs are related, implying that the wind technologies present a similar power source and can be used interchangeably. Thus, the introduction of AWESs will have a low impact on the cost‐optimal wind power share in the electricity system, unless an AWES cost far below the system‐specific MSV is attained.
The European Green Deal aims at climate neutrality for Europe by 2050, implying a significant acceleration of emission reductions. To gain the necessary support, it needs to reduce regional and social inequalities in Europe. We present objectives in terms of jobs, growth and price stability to complement the emission reduction targets and sketch a proof-of-concept investment profile for reaching these goals. Substantial additional annual public investments, of about 1.8% of pre-COVID-19 GDP, are proposed for the next decade. Their allocation includes retrofitting the European building stock, consciously fostering a renewal of the European innovation system as well as complementary measures in the fields of education and health. The scenario outlined in this article is meant as an input to the urgently needed discussion on how the European Green Deal can shift the EU economy to a new development path that realises a carbon-neutral Europe by 2050 while strengthening European cohesion.
Integrated assessment models (IAMs) have emerged as key tools for building and assessing long term climate mitigation scenarios. Due to their central role in the recent IPCC assessments, and international climate policy analyses more generally, and the high uncertainties related to future projections, IAMs have been critically assessed by scholars from different fields receiving various critiques ranging from adequacy of their methods to how their results are used and communicated. Although IAMs are conceptually diverse and evolved in very different directions, they tend to be criticised under the umbrella of 'IAMs'. Here we first briefly summarise the IAM landscape and how models differ from each other. We then proceed to discuss six prominent critiques emerging from the recent literature, reflect and respond to them in the light of IAM diversity and ongoing work and suggest ways forward. The six critiques relate to (a) representation of heterogeneous actors in the models, (b) modelling of technology diffusion and dynamics, (c) representation of capital markets, (d) energy-economy feedbacks, (e) policy scenarios, and (f) interpretation and use of model results.
Realizing a decarbonized society in consistent with the Paris Agreement, a fundamental transformation of the entire economic and social system is needed, and not only carbon intensive sectors but also all sectors and all stakeholders including households must be decarbonized. This chapter demonstrates increasing expectations for carbon pricing in Japan in this global policy context. After the review of the global trend of carbon pricing, historical progress of carbon pricing in Japan and the existing nation-wide carbon tax, i.e. the Global Warming Countermeasure Tax, is explained. There are also two sub-national carbon pricing schemes in Japan, Tokyo ETS and Saitama ETS, which are explained in Chaps. 10.1007/978-981-15-6964-7_6 and 10.1007/978-981-15-6964-7_7 respectively, and not focused in this chapter. We examine the claim that Japan has already implemented high level carbon pricing in terms of various forms of energy taxes. Based on the effective carbon rate which is defined by OECD as the sum of explicit carbon prices and fossil fuel taxes per carbon emission, the nationwide average effective carbon rate of Japan is lower than the average effective carbon rates of OECD countries and its key partner countries. The current carbon pricing schemes in Japan are too modest to realize decarbonization transition and there is a room to upgrade them to exploit full potential of carbon pricing. This chapter discusses adequate levels of carbon prices in compatible with decarbonization transition.
In order to achieve the temperature goals of the Paris Agreement, the world must reach net‐zero carbon emissions around mid‐century, which calls for an entirely new energy system. Carbon pricing, in the shape of taxes or emissions trading schemes, is often seen as the main, or only, necessary climate policy instrument, based on theoretical expectations that this would promote innovation and diffusion of the new technologies necessary for full decarbonization. Here, we review the empirical knowledge available in academic ex‐post analyses of the effectiveness of existing, comparatively high‐price carbon pricing schemes in the European Union, New Zealand, British Columbia, and the Nordic countries. Some articles find short‐term operational effects, especially fuel switching in existing assets, but no article finds mentionable effects on technological change. Critically, all articles examining the effects on zero‐carbon investment found that existing carbon pricing scheme have had no effect at all. We conclude that the effectiveness of carbon pricing in stimulating innovation and zero‐carbon investment remains a theoretical argument. So far, there is no empirical evidence of its effectiveness in promoting the technological change necessary for full decarbonization.
This article is categorized under:
• Climate Economics > Economics of Mitigation
Abstract
Our review of empirical ex‐post evaluations of the effects of existing carbon pricing schemes reveals some effects on operational shifts, mainly switching coal to gas power, but no effect on the technological change necessary for full decarbonization.
Many economists, businesses, and policymakers view carbon pricing as the single best policy approach to address climate change. Such optimism, however, tends to neglect the political conflicts surrounding climate policy and the necessity to accelerate the ongoing low-carbon energy transition. To unveil these conflicts, we analyze the responses of key actors to public consultations in 2015-16 concerning the EU emissions trading system (ETS) and the EU renewable energy directive. From this, we identify a prominent policy position contending that climate policy should focus on the ETS given its purported efficiency. Some actors who share this position use the ETS as a Trojan Horse-a strategy to divert attention from, and fend off, more ambitious climate action in the form of complementary renewable energy policies. Such political strategies do not just undermine carbon pricing but impede the energy transition at large. However, we also find energy industry incumbents that express support for a much stronger ETS and more effective climate policy. Therefore, it seems that the 'Trojan Horse strategy' may fail and the low-carbon transition might gain increasing support from a broad range of stakeholders. Even so, we argue that any singular climate policy approach risks political capture and that a mix of policies will be necessary to accelerate the ongoing transition.
Key Policy Insights:
- Major European industry actors tend to advocate the EU ETS as the primary climate policy instrument.
- Some European industry actors have used the EU ETS as a Trojan Horse-to fend off strict climate action and to slow down the low-carbon energy transition.
- Political conflicts surrounding individual climate policies reflect much larger struggles over the direction and pace of the energy transition.
- Climate policy should not rely too heavily on a single instrument but rather include a mix of measures that promote both low-carbon innovation and the decline of carbon-intensive industries, technologies and practices.
Carbon pricing is often presented as the primary policy approach to address climate change. We challenge this position and offer “sustainability transition policy” (STP) as an alternative. Carbon pricing has weaknesses with regard to five central dimensions: 1) problem framing and solution orientation, 2) policy priorities, 3) innovation approach, 4) contextual considerations, and 5) politics. In order to address the urgency of climate change and to achieve deep decarbonization, climate policy responses need to move beyond market failure reasoning and focus on fundamental changes in existing sociotechnical systems such as energy, mobility, food, and industrial production. The core principles of STP can help tackle this challenge.
Accelerating innovation is as important as climate policy
The Intergovernmental Panel on Climate Change's fifth assessment report emphasizes the importance of bioenergy and carbon capture and storage for achieving climate goals, but it does not identify solar energy as a strategically important technology option. That is surprising given the strong growth, large resource, and low environmental footprint of photovoltaics (PV). Here we explore how models have consistently underestimated PV deployment and identify the reasons for underlying bias in models. Our analysis reveals that rapid technological learning and technology-specific policy support were crucial to PV deployment in the past, but that future success will depend on adequate financing instruments and the management of system integration. We propose that with coordinated advances in multiple components of the energy system, PV could supply 30–50% of electricity in competitive markets.
Climate change will be an ecological and humanitarian catastrophe unless we move quickly to eliminate greenhouse gas emissions. Policy experts advise us that we need to make major changes to our lifestyles, and our governments need to agree globally binding treaties and implement market instruments like carbon taxes. This advice is a mistake: it treats technological innovation as being at the periphery of the climate policy challenge, whereas it needs to be at its core; we will phase out emissions when and only when the technologies to replace fossil fuels are good enough, and policies need-quickly-to support these new technologies directly. Anyone with an interest in climate change and energy policy will find this book forward-thinking and invaluable. Professional policy-makers, climate and energy policy researchers, and students of energy and public policy, economics, political science, environmental studies, and geography will find this book especially stimulating.
'Frank Geels's book gives us a new perspective on how society moves from one technological regime to another. Understanding these transitions is essential if we are to get to grips with what we need to do to switch our societies to more sustainable states and how technologies figure in that switch.' - Ken Green, Institute of Innovation Research, The University of Manchester, UK This important book addresses how long term and large scale shifts from one socio-technical system to another come about, using insights from evolutionary economics, sociology of technology and innovation studies. These major changes involve not just technological changes, but also changes in markets, regulation, culture, industrial networks and infrastructure.
How well do our assumptions about the global challenges of energy, environment and economic development fit the facts?
Energy prices have varied hugely between countries and over time, yet the share of national income spent on energy has remained surprisingly constant. The foundational theories of economic growth account for only about half the growth observed in practice. Despite escalating warnings for more than two decades about the planetary risks of rising greenhouse gas emissions, most governments have seemed powerless to change course.
Planetary Economics shows the surprising links between these seemingly unconnected facts. It argues that tackling the energy and environmental problems of the 21st Century requires three different domains of decision-making to be recognised and connected. Each domain involves different theoretical foundations, draws on different areas of evidence, and implies different policies.
The book shows that the transformation of energy systems involves all three domains - and each is equally important. From them flow three pillars of policy – three quite distinct kinds of actions that need to be taken, which rest on fundamentally different principles. Any pillar on its own will fail.
Only by understanding all three, and fitting them together, do we have any hope of changing course. And if we do, the oft-assumed conflict between economy and the environment dissolves – with potential for benefits to both. Planetary Economics charts how.
This paper provides a comprehensive discussion of the market value of variable renewable energy (VRE). The inherent variability of wind speeds and solar radiation affects the price that VRE generators receive on the market (market value). During windy and sunny times the additional electricity supply reduces the prices. Because the drop is larger with more installed capacity, the market value of VRE falls with higher penetration rate. This study aims to develop a better understanding on how the market value with penetration, and how policies and prices affect the market value. Quantitative evidence is derived from a review of published studies, regression analysis of market data, and the calibrated model of the European electricity market EMMA. We find the value of wind power to fall from 110% of the average power price to 50–80% as wind penetration increases from zero to 30% of total electricity consumption. For solar power, similarly low value levels are reached already at 15% penetration. Hence, competitive large-scale renewable deployment will be more difficult to accomplish than as many anticipate.
As the most efficient market-based mitigation instrument, carbon tax is highly recommended by economists and international organizations. Countries like Denmark, Finland, Sweden, Netherlands and Norway were the first adopters of carbon tax and as such, research on the impacts and problems of carbon tax implementation in these countries will provide great practical significance as well as caution for countries that are to levy the tax. Different from the existing studies that adopt the model simulation approaches, in this article, we comprehensively estimate the real mitigation effects of the five north European countries by employing the method of difference-in-difference (DID). The results indicate that carbon tax in Finland imposes a significant and negative impact on the growth of its per capita CO2 emissions. Meanwhile, the effects of carbon tax in Denmark, Sweden and Netherlands are negative but not significant. The mitigation effects of carbon tax are weakened due to the tax exemption policies on certain energy intensive industries in these countries. Notwithstanding, in Norway, as the rapid growth of energy products drives a substantial increase of CO2 emissions in oil drilling and natural gas exploitation sectors, carbon tax actually has not realized its mitigation effects.
Concerns about global climate change have substantially increased the likelihood that future policy will seek to minimize carbon dioxide emissions. As such, even today, electric utilities are making resource planning and investment decisions that consider the possible implications of these future carbon regulations. In this article, we examine the manner in which utilities assess the financial risks associated with future carbon regulations within their long-term resource plans. We base our analysis on a review of the most recent resource plans filed by 15 electric utilities in the Western United States. Virtually all of these utilities made some effort to quantitatively evaluate the potential cost of future carbon regulations when analyzing alternate supply- and demand-side resource options for meeting customer load. Even without federal climate regulation in the US, the prospect of that regulation is already having an impact on utility decision-making and resource choices. That said, the methods and assumptions used by utilities to analyze carbon regulatory risk, and the impact of that analysis on their choice of a particular resource strategy, vary considerably, revealing a number of opportunities for analytic improvement. Though our review focuses on a subset of US electric utilities, this work holds implications for all electric utilities and energy policymakers who are seeking to minimize the compliance costs associated with future carbon regulations.
Large increases in productivity are typically realized as organizations gain experience in production. These "learning curves"
have been found in many organizations. Organizations vary considerably in the rates at which they learn. Some organizations
show remarkable productivity gains, whereas others show little or no learning. Reasons for the variation observed in organizational
learning curves include organizational "forgetting," employee turnover, transfer of knowledge from other products and other
organizations, and economies of scale.
This paper examines the dynamics of allocation under increasing returns within a model where agents choose between technologies competing for adoption and where each technology improves as it gains in adoption. It shows that the economy, over time, can become locked-in, by "random" historical events, to a technological path that is not necessarily efficient, not possible to predict from usual knowledge of supply and demand functions, and not easy to change by standard tax or subsidy policies. Rational expectations about future agents' technology choices can exacerbate this lock-in tendency. It discusses the implications for economic history, policy, and forecasting. Copyright 1989 by Royal Economic Society.
World Energy Outlook 2018: Executive Summary
International Energy Agency. (2018). World
Energy Outlook 2018: Executive Summary.
https://webstore.iea.org/download/
summary/190?fileName=English-WEO2018-ES.pdf.
Chapter 2. Mitigation pathways compatible with 1.5 C in the context of sustainable development
- J Rogelj
- D Shindell
- K Jiang
- S Fifita
- P Forster
- V Ginzburg
- C Handa
- H Kheshgi
- S Kobayashi
- E Kriegler
Rogelj, J., Shindell, D., Jiang, K., Fifita, S.,
Forster, P., Ginzburg, V., Handa, C., Kheshgi,
H., Kobayashi, S., Kriegler, E., et al. (2018).
Chapter 2. Mitigation pathways compatible
with 1.5 C in the context of sustainable
development. In Global Warming of 1.5 C,
Intergovernmental Panel on Climate
Change., ed. (IPCC).
Report of the High-Level Commission on Carbon Prices.
- High-Level Commission on Carbon Prices
Chapter 2. Mitigation pathways compatible with 1.5°C in the context of sustainable development
- Rogelj