The EU Decarbonisation Roadmap 2050—What way to walk?

We carry out a detailed computable general equilibrium (CGE) analysis of the EU Decarbonisation Roadmap 2050 on a macroeconomic and on a sectoral level. Herein, we study a Reference scenario that implements existing EU policies as well as 3 unilateral and 3 global climate action scenarios. We identify global climate action with international emissions trading and the full equalisation of CO₂ prices across all (EU) sectors as an economically reasonable policy option to avoid additional costs of the Decarbonisation Roadmap to a large extent. This policy option may include CDM (Clean Development Mechanism in the sense of ‘where’-flexibility) in an extended form if there are countries without emissions caps. Moreover, we identify diverse sectoral effects in terms of output, investment, emissions and international competitiveness. We conclude that the successful realisation of the EU Decarbonisation Roadmap probably requires a wise and joint consideration of technology, policy design and sectoral aspects.     

Why should support schemes for renewable electricity complement the EU emissions trading scheme?

In virtually all EU Member States, the EU Emissions Trading Scheme (EU ETS) is complemented by support schemes for electricity generation from renewable energy sources (RES-E). This policy mix has been subject to strong criticism. It is mainly argued that RES-E schemes contribute nothing to emissions reduction and undermine the cost-effectiveness of the EU ETS. Consequently, many scholars suggest the abolition of RES-E schemes. However, this conclusion rests on quite narrow and unrealistic assumptions about the design and performance of markets and policies. This article provides a systematic and comprehensive review and discussion of possible rationales for combining the EU ETS with RES-E support schemes. The first and most important reason may be restrictions to technology development and adoption. These may be attributed to the failure of markets as well as policies, and more generally to the path dependency in socio-technical systems. Under these conditions, RES-E schemes are required to reach sufficient levels of technology development. In addition, it is highlighted that in contrast to the EU ETS RES-E support schemes may provide benefits beyond mitigating climate change.     

What is the global potential for renewable energy?

World energy demand is projected to rise to 1000 EJ (EJ = 10¹⁸ J) or more by 2050 if economic growth continues its course of recent decades. Both reserve depletion and greenhouse gas emissions will necessitate a major shift from fossil fuels as the dominant energy source. Since nuclear power is now unlikely to increase its present modest share, renewable energy (RE) will have to provide for most energy in the future. This paper addresses the questions of what energy levels RE can eventually provide, and in what time frame. We find that when the energy costs of energy are considered, it is unlikely that RE can provide anywhere near a 1000 EJ by 2050. We further show that the overall technical potential for RE will fall if climate change continues. We conclude that the global shift to RE will have to be accompanied by large reductions in overall energy use for environmental sustainability.     

Do Intermittent Renewables Threaten the Electricity Supply Security?

Around the globe, intermittent renewable energies in the form of wind and solar power are on the rise. Their subsidization can be seen as a market intervention, which may deter optimal investment. Thus, this study tests the effect of renewable energies on investment in conventional electricity generation technologies. We estimate a dynamic investment model for 14 European economies for the period 2004–2016 and find a non-negligible negative impact of intermittent renewables on investment in peak-load capacity (mainly gas), while base-load (particularly coal) plants are unaffected. However, the production flexibility of gas-fired plants represents a particularly vital function to balance the supply intermittency of wind and solar. Thus, dispatchable conventional power plants are still necessary to back the system under scarcity events, such as unfavorable weather conditions during high electricity demand. Policymakers should be aware of the adverse effects of RES on investment in peak-load plants and may consider a redesign of the current system, for example by introducing capacity markets.     

Learning from experience? The development of the Renewables Obligation in England and Wales 2002–2010

The UK has enviable renewable resources, both onshore (wind) and offshore (wind, wave and tidal) (The Offshore Valuation Group, 2010). The government has had policy mechanisms in place since 1990 to encourage these resources to be developed. The current mechanism, the Renewables Obligation (RO), was specifically designed to emphasise competition and therefore to fit in with the UK’s overall strategic approach to energy policy. However, as yet, it has not delivered the capacity that it was designed to do, and as a result the UK faces a difficult challenge in attempting to meet European-wide renewable energy targets for 2020, as well as longer term decarbonisation targets. This paper explores some of the major reasons why the RO has performed so poorly to date and considers the prospects for improvement up to 2020. It concludes that the strategic emphasis on competition in the support mechanisms has played a key role in limiting renewables development, but that the mechanism has changed significantly since it was introduced. However, these changes, together with proposals for electricity market reform, still do not address important elements of risk in comparison with a standard Feed In Tariff.     

«Would you say that the price you pay for electricity is fair?» Consumers' satisfaction and utility reforms in the EU15

The research question addressed by this paper is a simple one: are European consumers happy with the price they pay for electricity supply services after two decades of reforms? We focus on self-assessed consumers' satisfaction as reported in three waves of the Eurobarometer surveys, 2000-2002-2004, conditioning on a set of indicators of public ownership and liberalisation across the EU-15. After controlling for individual and country characteristics, we find that consumers are happier with the prices they pay when in their country there are both public ownership and liberalisation. We discuss this finding.     

Emissions trading in China: A conceptual ‘leapfrog’ approach?

China is well aware of the advantages of quantity-based economic instruments (i.e., emissions trading) for domestic pollution control, but pilot studies and experimental programs in Taiyuan, Hong Kong/Guangdong, and other locations have not been successful. This paper proposes a very different type of emissions trading program, designed with Chinese implementation concerns in mind. It has three component parts: (1) a real-time intermittent control system (ICS) strategy designed to address public health concerns in the near term; (2) software-oriented Predictive emissions monitoring systems (PEMS) targeting process parameter (rather than emission) reporting from individual emission sources; and (3) real-time emissions markets responding to the ICS constraint. The technical and political difficulties associated with implementing such a system are recognized as daunting. However, such an approach would ‘leapfrog’ over existing systems, allowing the country to develop a comprehensive air pollution control strategy as economic growth occurs, continuously improving air quality in a cost efficient manner, utilizing both advanced technology and market-based control approaches in a manner consistent with China's unique environmental needs. It would also lay the groundwork for the eventual pricing of CO₂ and other greenhouse gases within China.     

Renewable energy applications in Greece—What is the public attitude?

Large-scale integration of Renewable Energy Sources (RES) applications is thought to be imperative for Greece in view of meeting the targets of 2020, which dictate that 20% of the national gross energy consumption and 40% of the national gross electricity consumption should be covered by RES. However, availability of suitable sites for the installation of such applications is questioned, since apart from the fact that many locations of high RES potential and adequate infrastructure have already been allocated, the society opposition often sets additional barriers. The present study focuses on the assessment of the levels of social acceptability for selected RES technologies (wind, small hydro and photovoltaics) in a representative region of Southern Greece. The specific area is of major interest since, apart from the operating and scheduled installations of RES applications in the next years, the local population is also familiar with the long-term operation of a lignite-based power station (850 MW). One three-part questionnaire has been deployed for conducting the survey based on a representative sample of local inhabitants. According to the results obtained, high levels of acceptability of renewable energy applications have been encountered although the need for additional public information regarding RES exploitation has also been designated.     

Status and perspectives of renewable energy policy and deployment in the European Union—What is needed to reach the 2020 targets?

This article evaluates the status of current RES deployment, policies and barriers in the EU-27 member states and compares it to the required to meet the 2020 targets. The evaluation relies strongly on the quantitative deployment status and policy effectiveness indicators. European RES deployment and policy has progressed strongly in recent years, but the growth here has been mainly driven by effective policies in a small or medium number of top runner countries. Across Europe, the highest average policy effectiveness over six years was reached for onshore wind (4.2%), biofuels (3.6%) and biomass electricity (2.7%), while in the heat sector, all technologies score below 2%. Comparing the recent progress to the required growth for meeting the 2020 target, it appears that some countries largely exceed the interim targets of the RES Directive 2009/28/EC. Despite this, Europe will need additional policy effort to reach the 2020 target. Critical success factors include implementing effective and efficient policies that attract sufficient investments, reducing administrative and grid related barriers, especially in currently less advanced countries, upgrading the power grid infrastructure, dismantling financial barriers in the heat sector, realising sustainability standards for biomass, and lowering energy demand through increased energy efficiency efforts.     

Comparison of the evolution of energy intensity in Spain and in the EU15. Why is Spain different?

Energy intensity in Spain has increased since 1990, while the opposite has happened in the EU15. Decomposition analysis of primary energy intensity ratios has been used to identify which are the key sectors driving the Spanish evolution and those responsible for most of the differences with the EU15 energy intensity levels. It is also a useful tool to quantify which countries and economic sectors have had most influence in the EU15 evolution. The analysis shows that the Spanish economic structure is driving the divergence in energy intensity ratios with the EU15, mainly due to strong transport growth, but also because of the increase of activities linked to the construction boom, and the convergence to EU levels of household energy demand. The results can be used to pinpoint successful EU strategies for energy efficiency that could be used to improve the Spanish metric.     

The Jo'burg Summit: What did it really mean for renewables?

It was a summer of sustainable development. From the 26th August to 4th September 2002, the spotlight of global media attention settled firmly on Johannesburg in South Africa for the World Summit on Sustainable Development (WSSD). The task for Governments, NGOs and civil society was clear: to develop a concrete plan of action to follow through on the many promises that were made ten years ago at the Rio Earth Summit. If the avalanche of news reports and analysis left you feeling a little confused, disappointed or even slightly depressed, you are in good company. The sobering truth is that it is hard to conclude that Johannesburg was anything other than a failure. Few, if any, groups are publicly satisfied with the headline outcomes. However, behind this widespread despondency, it is possible to identify some important progress, especially in the field of renewable energy. Stephen Peake reports.     

The origin of soot in flames: is the nucleus an ion?

There are two schools of thought on how soot originates in a fuel-rich flame. On the one hand, the ionic theory postulates that small ions, such as C₃H₃⁺, act as nuclei, so that species such as C₂H₂ and C₄H₂ add on to them, and occasionally liberate H₂ in a repetitive growth process. Once these ions become large (≈2000 a.m.u.) they supposedly dissociate and produce an uncharged, but large, hydrocarbon “molecule,” which can grow, coalesce or coagulate to give soot particles. Simultaneously this dissociation produces a very small ion, which repeats the process of adding on C₂, C₃, and C₄ species, etc. The other school of thought believes that fairly similar processes occur, but the species involved are not ions, but uncharged radicals and molecules. This present study has spectroscopically monitored the level of sooting in the earliest stages of its production in a premixed, oxyacetylene flame at 1 atm. If soot originates from ions such as C₃H₃⁺, the addition of a relatively large quantity of easily ionized cesium removes C₃H₃⁺ ions from the flame. In that case there should also be less soot produced. When either distilled water or a strong aqueous solution of CsCl was nebulized into the sooting flame, the intensity of the emission fell by the same amount. This was by only 1% in the earliest part of the burned gas, but rose to a larger drop farther downstream of the reaction zone. Thus cesium itself has no effect on the sooting level early in this premixed flame, indicating that there is no evidence here for ions acting as nuclei for soot. However, the addition of water alone does inhibit the production of soot.     

What lessons have been learned in reforming the Renewables Obligation? An analysis of internal and external failures in UK renewable energy policy

Despite operating a delivery programme for RES-E since 1990, UK targets and policy goals have not been achieved. In response, the Government reformed the RO. This article re-examines UK renewable energy policy by analysing the internal and external failures of the various mechanisms to determine if Government has learnt from previous experience in reforming the RO. Government did not learn from their own actions during the NFFO/RO transition, evidenced by high-levels of similarity in internal/external failures. The reformed-RO is expected to significantly increase deployment, has provided a ‘renewables package’ by comprehensively addressing both internal/external failures but major internal failures (price/financial risk) still remain, resulting in contiguous failures over two decades and two mechanism changes (NFFO, RO, RO/reformed-RO). Success will again be heavily dependent on a select few technologies and new/untested measures to combat external failures. Mechanism-extension to 2037 is probably the single most important factor underlying potential deployment increases. However, introducing a FIT-like system via the sheer number of ‘bolt-on’ reforms to counter policy failures indicates loss of direction and clarity. Overall, although Government appears to have learnt some of its lessons from the past two-decades, significant doubt remains whether renewable energy policy objectives will be met via the latest mechanism change.     

Can the future EU ETS support wind energy investments?

This article discusses how the future Emissions Trading Scheme legislation should be designed to allow the European Union to comply with the 20% CO₂ emissions reduction target, while at the same time promoting wind energy investments. We examine whether CO₂ prices could eventually replace the existing support schemes for wind and if they adequately capture its benefits. The analysis also looks at the effectiveness of the clean development and joint implementation mechanisms to trigger wind projects and technology transfer in developing countries. We find out that climate policy is unlikely to provide sufficient incentives to promote wind power, and that other policies should be used to internalise the societal benefits that accrue from deploying this technology: CO₂ prices can only reflect the beneficial impact of wind on climate change but not its contribution to the security of supply or employment creation. A minimum price of around €40/tCO₂ should be attained to maintain present support levels for wind and this excludes income risks and intermediation costs. Finally, CDM improves the return rate of wind energy projects in third countries, but it is the local institutional framework and the long-term stability of the CO₂ markets that matters the most.     

Should we educate the public about exergy?

The author explains his views that the public is often confused when it discusses energy, and needs to be better educated about exergy if energy issues and problems are to be addressed appropriately.     

What causes the change in energy demand in the economy?: The role of technological change

This paper proposes a simple and theoretically clear approach to the estimation of technological change in a multisector general equilibrium framework. This study employs the Multiple Calibration Decomposition Analysis (MCDA) to evaluate technological change that is responsible for changes in energy use and carbon dioxide emissions in the Japanese economy in the oil crises period from 1970 to 1985. The MCDA serves as an elementary way of separating structural change due to technological change from that due to price substitution effects, capturing the interdependence among economic sectors. The empirical result provides a better understanding of the effects on the economy of technological change in that significant period.     

The unbundling regime for electricity utilities in the EU: A case of legislative and regulatory capture?

Theory and empirics suggest that by curbing competition, incumbent electricity companies which used to be, and here are referred to as, Vertically Integrated Utilities (VIUs), can increase their profitability through combined ownership of generation and transmission and/or distribution networks. Because curbing competition is generally believed to be welfare-reducing, EU law requires unbundling (separation) of the VIU networks. However, the EU allows its member states the choice between incomplete (legal) and complete (ownership) unbundling. There is tantalizing anecdotal evidence that VIUs have tried to influence this choice through questionable means of persuasion. Such means of persuasion should be more readily available in countries with a more corrupted political culture. This paper shows that among the old EU member states, countries which are perceived as more corrupt are indeed more likely to apply weaker forms of unbundling. Somewhat surprisingly, we do not obtain a similar finding for the EU member states that acceded in 2004. We provide a conjecture for this observation.     

Understanding ‘local’ opposition to wind development in the UK: How big is a backyard?

In recognition of the environmental and economic threats posed by climate change; decisive steps are now being taken to stabilise greenhouse gas emissions. One sector receiving particular attention within the UK is that of electricity generation. As such, the government has introduced ambitious targets for increasing renewable generating capacity within the country. Wind turbines are expected to play a significant role in meeting these targets; however, despite high levels of support for the technology in principle, specific projects are often delayed or rejected on account of local opposition. This study aimed to establish how attitudes towards development might vary with respect to increasing distance from the identified sites. Participants were required to register their opinion towards development at a number of on- and off-shore locations in the UK. The results indicated that participants were most favourable to offshore development and least favourable to development at the identified sites. Attitudes to onshore development indicated that so long as a proposed location was anticipated to be ‘out of sight’ it was considered in relatively general terms. The results are discussed with reference to site visibility and landscape concerns and clearly support calls for a shift towards community-focussed development strategies.     

What is behind the increase in oil prices? Analyzing oil consumption and supply relationship with oil price

The continuing increases in oil prices have renewed the argument over the real culprits behind these movements. The growth in demand for oil in international markets, especially from the United States and China, is often identified as the main source of consumption pressure on prices, and thus the upward trend in oil prices. This paper uses unit root tests with two endogenous breaks to analyze the characteristics of oil prices, production, and consumption for several countries. By taking into account structural breaks, we find that many countries’ oil consumption and oil prices are stationary, while other countries are not. We also perform causality tests to determine the direction of any possible relationship between oil price and oil consumption and production. Our statistical analysis reveals that production variables cause oil prices, while oil prices tend to cause consumption. As a result, we claim that the blame for the recent fluctuations in oil prices is more appropriately associated with supply factors, not consumption influences.     

Too difficult to govern? An assessment of the governability of transport biofuels in the EU

Transport biofuels are currently the subject of heated debate in the EU. In the past decade the deployment of these technologies has been justified by claims of attractive environmental, geopolitical and rural development benefits. However, expectations have rapidly turned into deep criticism regarding the sustainability of these technologies and the desirability of pursuing the biofuel path. This situation has generated an on-going controversy and policy deadlock at EU level. This study explores these issues from a governance perspective. Employing the concept of system governability, derived from interactive governance theory, it attempts to shed some light on the problems facing the governance of biofuels and on how the quality of the governance system could be improved. The analysis showed that the governability of the system decreased substantially in the period 2003–2012 due to increasing governing needs and decreasing governing capacity. The quality of the governance system can be improved by (i) improving governing capacity by reducing conflicts among governing actors, advancing consistency among institutions and creating capacity at international and global level; and (ii) promoting advanced technologies and adjusting societal ambitions and expectations regarding biofuels.