EU Research and Innovation (R&I) in renewable energies: The role of the Strategic Energy Technology Plan (SET-Plan)

The SET-Plan established a strategy to use Research and Innovation (R&I) to green the EU energy sector while ensuring a secure supply and increasing EU competitiveness. The strategy sets clear objectives and programming plans and takes stock of existing initiatives in the energy sector, fosters a cooperative approach to R&I, introduces a high-level steering group (the SET-Plan Steering Group) to monitor progress, creates a dedicated information system (the SETIS) to fill the void in policy information and produces estimates of financial needs over the programming period. In this respect, the SET-Plan could serve as a blueprint for R&I strategies to tackle other societal challenges. To be effective, such strategies should further clarify the hierarchy of existing objectives and instruments, introduce specific instruments to pull the demand of new technologies, strengthen links with education and training policies and formalize links with the governance structures of existing initiatives.     

Energy consumption and economic growth in the light of meeting the targets of energy policy in the EU: The bootstrap panel Granger causality approach

The aim of the paper is to assess linkages between energy consumption and economic growth in the light of compliance with the EU energy policy targets stated in the climate and energy package for 2020 in the European Union member states in the period 1993–2011. The study is divided into two main stages. During the first one, using cluster analysis methods, four groups of countries which met three energy policy targets stated in the package at similar levels were identified. During the second stage, the bootstrap Granger panel causality approach proposed by Kònya (2006) was used to verify the hypothesis of causality between energy consumption and economic growth in the countries from four groups created in the previous step. The global financial crisis was also taken into account. The results obtained reveal that the level of compliance with energy policy targets influences linkages between energy consumption and economic growth. The results indicate causal relations in the group of countries with the greatest reduction of greenhouse gas emissions, the highest reduction of energy intensity and the highest share of renewable energy consumption in total energy consumption. In the remaining groups the results mostly confirm the neutrality hypothesis.     

Energy efficiency trends and policy in Slovenia

The energy dependency of Slovenia is high (52.1%), but it is a little lower than the average energy dependency in the EU 27 (53.8%). Slovenia imports all its petroleum products and natural gas and partly coal and electricity. The energy intensity of Slovenia is higher by about 50% than the average in the EU 27. The target of the EU Directive on energy end-use efficiency and energy services adopted in 2006 is to achieve a 9% improvement of EE (energy efficiency) within the period 2008-2016. The new target of the EU climate and energy package “20-20-20 plan” is a 20% increase in EE by 2020. Since 1991 the Slovenian government has been supporting energy efficiency activities. The improvement of EE was one of the targets of strategic energy documents ReSROE (Resolution on the Strategy of Use and Supply of Energy in Slovenia from 1996 and ReNEP (Resolution on the National Energy Programme) from 2004 adopted by the Slovenian National Assembly (Parliament) in previous years. The Energy Act adopted in 1999 defines the objective of energy policy as giving priority to EE and utilization of renewable energy sources. The goals of the “National Energy Action Plan 2008-2016 (NEEAP)” adopted by the Slovenian government in 2008 include a set of energy efficiency improvement instruments in the residential, industrial, transport and tertiary sectors. The target of the NEEAP is to save final energy in the 2008-2016 period, amounting to at least 4261 GWh or 9% of baseline consumption. The indicators of energy efficiency trends show considerable improvement in the period from 1998 to 2007. The improvement of EE was reached in all sectors: manufacturing, transport and households. The paper analyses the structure, trends of energy consumption and energy efficiency indicators by sectors of economic activity. A review of energy efficiency policy and measures is described in the paper.     

Transition towards a low carbon economy: A computable general equilibrium analysis for Poland

In the transition to sustainable economic structures the European Union assumes a leading role with its climate and energy package which sets ambitious greenhouse gas emission reduction targets by 2020. Among EU Member States, Poland with its heavy energy system reliance on coal is particularly worried on the pending trade-offs between emission regulation and economic growth. In our computable general equilibrium analysis of the EU climate and energy package we show that economic adjustment cost for Poland hinge crucially on restrictions to where-flexibility of emission abatement, revenue recycling, and technological options in the power system. We conclude that more comprehensive flexibility provisions at the EU level and a diligent policy implementation at the national level could achieve the transition towards a low carbon economy at little cost thereby broadening societal support.     

CO2 emission from China's energy sector and strategy for its control

This paper identifies the main features of CO₂ emission from fossil energy combustion in China. Then it estimates China's future energy requirements and projects its CO₂ emission from 2010 to 2020 based on the scenario analysis approach. China's rate of carbon productivity growth is estimated to be 5.4% in the period 2005–2020, while the CO₂ intensity of GDP will reduce by about 50% but CO₂ emission in 2020 will still be about 40% higher than prevailing in 2005 because of rapid growth of GDP. This estimation is based on the assumption that China will implement a sustainable development strategy in consideration of climate change issues. The main objectives of the strategy are to implement an “energy conservation first” strategy, to develop renewable energy and advanced nuclear technology actively, to readjust the country's economic structure, and to formulate and legislate laws and regulations, and to build institutions for energy conservation and development of renewable energy. It concludes that international measures to mitigate CO₂ emission will limit world fossil fuel consumption. China is not placed to replicate the modernization model adopted by developed countries and has to coordinate economic development and carbon dioxide emission control while still in the process of industrialization and modernization. China has to evolve a low carbon industrialization model. This is the key to the success of sustainable development initiatives in China.     

How ambitious are China and India’s emissions intensity targets?

Several developing economies have announced carbon emissions targets for 2020 as part of the negotiating process for a post-Kyoto climate policy regime. China and India’s commitments are framed as reductions in the emissions intensity of the economy by 40–45% and 20–25%, respectively, between 2005 and 2020. How feasible are the proposed reductions in emissions intensity for China and India, and how do they compare with the targeted reductions in the US and the EU? In this paper, we use a stochastic frontier model of energy intensity to decompose energy intensity into the effects of input and output mix, climate, and a residual technology variable. We use the model to produce emissions projections for China and India under a number of scenarios regarding the pace of technological change and changes in the share of non-fossil energy. We find that China is likely to need to adopt ambitious carbon mitigation policies in order to achieve its stated target, and that its targeted reductions in emissions intensity are on par with those implicit in the US and EU targets. India’s target is less ambitious and might be met with only limited or even no dedicated mitigation policies.     

Global energy security and the implications for the EU

The following article will analyse the global and geopolitical dimensions of the future international energy security and its implications for Europe and the EU-27. In this context, I will discuss to which extent the EU's newly proclaimed “Energy Action Plan” of the EU Spring summit of 2007 and its declared common energy (foreign) policy are a sufficient strategy to cope with the new global and geopolitical challenges. The article concludes the following: (1) The interlinkage between globally designed traditional energy security concepts – that rely just on economic factors and “market-strategies” – and domestic as well as regional political stability demands new thinking with regard to both energy supply security and foreign and security policies. (2) Although after the Russian–Ukrainian gas conflict in January 2006, energy security has forced its way up the European energy and foreign policy agendas, the EU-27 member states have largely failed to forge a coherent European energy security and energy foreign policy strategy after their Spring summit of 2007 because its declared political solidarity has been still lacking. But the 2nd Strategic Energy Review of November 2008 has recommended new initiatives to overcome this lack by promoting concrete infrastructure and other projects for enhancing Europe's supply security and its political solidarity as part of a common energy (foreign) policy. If the EU is able to implement the March 2007 and November 2008 decisions, the EU oil and gas demand will drastically reduce and freeze at current levels. In this case, Putin's energy policies by using Russia's energy resources and pipeline monopolies as a political instrument to enforce its economic and geopolitical interests will be proved as self-defeating in Russia's long-term strategic interests. It will reduce Gazprom's gas exports to a much smaller EU gas market than originally forecasted as the result of a deliberate EU policy of decreasing its overall gas demand and by diversifying its gas imports.     

Situation and measures of China’s CO<Subscript>2</Subscript> emission mitigation after the Paris Agreement

Global response to climate change has entered the phase of full implementation of the Paris Agreement. To control the global temperature rise below 2°C, all countries must make more efforts to reduce emission. China has combined its goal of emission reduction for combating climate change with its domestic sustainable development strategy to promote energy revolution and the transition of economic development to low-carbon patterns. Through reinforcing the commitment and action before 2020, the CO₂ intensity of GDP can decrease by more than 50% by 2020 compared with that of 2005, and the external commitment target of a 40%–45% decrease can be over fulfilled. Currently, under the new economic normal, China further strengthens the policy measure, vigorously saves energy, enhances energy use efficiency and the economic output benefit, and simultaneously develops new and renewable energy and accelerates energy structural decarbonization, so that the annual decrease rate of the CO₂ intensity of GDP keeps a high level of more than 4% and remains increasing. Thus, the decrease rate of the CO₂ intensity of GDP will exceed the GDP growth rate, and then CO₂ emission will peak around 2030. This will promote the fundamental turning of economic development mode, and lay a foundation for the establishment of a sustainable energy system with near-zero emissions and with new and renewable energy as the main body in the second half of this century. China implements the concept of green low-carbon development and accelerates the low carbon transition of energy and economy to achieve win-win results in economic growth and CO₂ emission mitigation, and these policies and actions will also provide experiences for many other developing countries. On the other hand, China will continue to play a positive and constructive leading role in the implementation of the Paris Agreement internationally, and promote the construction of new mechanisms of win-win cooperation, fairness and justice and common development for global climate governance. Moreover, China will make an effort to build a community of common destiny for mankind, promote pragmatic cooperation among countries, especially among developing countries, and take combating climate change as a new development opportunity for jointly moving toward climate-friendly low-carbon economic development path.     

Decomposition analysis of CO2 emission in long-term climate stabilization scenarios

To achieve the stabilization of greenhouse gas (GHG) concentrations in the atmosphere, the international community will need to intensify its long-term efforts. Many EU countries have released national long-term scenarios toward 2050, and their ambitious targets for CO₂ emission reduction are aiming at a decrease of more than 50% of today's emission. In April 2004, Japan began a research project on its long-term climate policy. This paper discusses the long-term scenarios in other countries and the medium-term scenarios in Japan to support the development of a Japan's long-term climate stabilization scenario. In this study, CO₂ emission is decomposed with an extended Kaya identity (indexes: CO₂ capture and storage, carbon intensity, energy efficiency, energy intensity, economic activity) and a Reduction Balance Table is developed.     

Greenhouse gas emission reduction perspectives in the Baltic States in frames of EU energy and climate policy

The goal of this paper is to estimate the perspectives of the Baltic States: Estonia, Latvia and Lithuania on meeting the new European Union climate commitments, i.e., to reduce greenhouse gas emissions by 20% to the year 2020 in comparison with 1990. This ambitious target could be reached based on other EU climate and energy package commitments: increase of the share of renewables and improvement of energy efficiency as tools for fulfilling the GHG emissions reduction target.The paper gives an overview on the current situation and future plans of the Baltic States in the field of energy efficiency, consumption of renewables and reduction of GHG emissions.     

CO2, GDP and RET: An aggregate economic equilibrium analysis for Turkey

There is a worldwide interest in renewable electricity technologies (RETs) due to growing concerns about global warming and climate change. As an EU candidate country whose energy demand increases exponentially, Turkey inevitably shares this common interest on RET. This study, using an aggregate economic equilibrium model, explores the economic costs of different policy measures to mitigate CO₂ emissions in Turkey. The model combines energy demands, capital requirements and labor inputs at a constant elasticity of substitution under an economy-wide nested production function. Growing energy demand, triggered by economic growth, is met by increased supply and initiates new capacity additions. Investment into RET is encouraged via the incorporation of (a) endogenous technological learning through which the RET cost declines as a function of cumulative capacity, and (b) a willingness to pay (WTP) function which imposes the WTP of consumers as a lower bound on RET installation. The WTP equation is obtained as a function of consumer income categories, based on data gathered from a pilot survey in which the contingent valuation methodology was employed. The impacts of various emission reduction scenarios on GDP growth and RET diffusion are explored. As expected, RET penetration is accelerated under faster technological learning and higher WTP conditions. It is found that stabilizing CO₂ emissions to year 2005 levels causes economic losses amounting to 17% and 23% of GDP in the years 2020 and 2030, respectively.     

How much will the energy service directive contribute to the 20% EU energy savings goal?

The Energy Service Directive (ESD) of the European Union (EU) stipulates that member states realize 9% energy savings for the period 2008–2016. A harmonized calculation approach, consisting of a combination of top-down and bottom-up methods, will be developed to determine the savings of energy efficiency improvement measures. However, it is unclear which part of all realized energy savings is eligible in meeting the ESD target. One can argue that not all savings, especially the autonomous efficiency gains, should be accounted for, but only savings due to (new) policy. An analysis is made of the way the methods can be applied, how baseline choices define the savings and whether these represent policy-induced savings. It is shown that the given target could be met with total energy savings that equal 1.0% of ESD energy use per year, hardly more than realized at present. With other choices, the target is met with total savings of 1.6% per year. The savings found are made comparable with the 2.4% yearly savings derived from the 20% savings target for 2020 formulated by the EU. Given the large gap between ESD savings and the savings target, it is concluded that the methods and baselines used should be chosen such that the ESD target leads to realized savings after 2008 at the upper side of the margin.     

CO2 and energy efficiency car standards in the EU in the context of a decarbonisation strategy: A model-based policy assessment

The European Union introduced CO₂ emission standards on cars as an obligation to manufacturers to reduce carbon footprint of cars in EU transportation. The car industry is already marketing low carbon emitting technologies to adjust to the 95 gCO₂/km target set for 2020. An alternative policy option is setting energy efficiency standards, measured as energy consumption per kilometre. A policy based on a long-term commitment on continuously decreasing standards and the choice of the focus between CO₂ or energy efficiency will strongly influence car technology choice. The aim of this paper is to assess these candidate policies for the EU in terms of effectiveness, costs and emission implications until 2050 on the basis of scenarios quantified using the PRIMES-TREMOVE energy economic transport model. The scenarios assume various configurations of the standards and the assessment draws on comparisons to a Reference scenario which does not strengthen standards after 2025. The analysis shows that restructuring the EU car fleet towards significant reductions of energy consumption and CO₂ emissions is affordable provided that preconditions are met regarding technology progress and development of refuelling/recharging infrastructure. CO₂ standards allow a diversified use of technologies, while efficiency standards are more “risky” favouring a single technology.     

Energy supply security and geopolitics: A European perspective

The security of energy supply to the EU is examined in the context of two storylines. Markets and Institutions exemplifies an economically and politically integrated, multilateral world with effective institutions and markets. Regions and Empires involves a world broken up in rival political and economic blocks, competing for resources and markets via political, economic and military power. It is shown that these storylines have a significant impact on the development of the energy market, on the way in which energy supply may be secured and on the effect and applicability of the several types of instruments available. The current EU is geared towards enlargement and a deepening of economic integration, based on the tenets of the post-1945 multilateral world system. The present world tends towards Regions and Empires and suggests that the EU may have to reorient its energy security policy. Energy policy must become an integral part of EU external trade and foreign relations and security policy. The EU should develop its own strategy, actively investing in dialogues with producer countries in the Persian Gulf and Africa and with Russia. Sustainable prosperity and governance in these regions will support EU energy security.     

Air pollution policy in Europe: Quantifying the interaction with greenhouse gases and climate change policies

This paper uses the computable general equilibrium model WorldScan to analyse interactions between EU's air pollution and climate change policies. Covering the entire world and seven EU countries, WorldScan simulates economic growth in a neo-classical recursive dynamic framework, including emissions and abatement of greenhouse gases (CO₂, N₂O and CH₄) and air pollutants (SO₂, NO_x, NH₃ and PM_2.5). Abatement includes the possibility of using end-of-pipe control options that remove pollutants without affecting the emission-producing activity itself. This paper analyses several variants of EU's air pollution policies for the year 2020. Air pollution policy will depend on end-of-pipe controls for not more than two thirds, thus also at least one third of the required emission reduction will come from changes in the use of energy through efficiency improvements, fuel switching and other structural changes in the economy. Greenhouse gas emissions thereby decrease, which renders climate change policies less costly. Our results show that carbon prices will fall, and may even drop to zero when the EU agrees on a more stringent air pollution policy.     

China's key role in climate protection

China is in the process of becoming the fourth main global player in the world economy, together with the US, the EU, and Japan. Due to an energy mix with 75% dependence on coal, a high energy intensity and low energy prices, it is, after the US, the world's second largest emitter of CO₂. China's recoverable fossil fuel reserves have a CO₂ emission potential of some 225 Gt (the current global CO₂ emission is about 22 Gt/yr). Under a business-as-usual (BAU) scenario, all of it would be released to the atmosphere by 2040. This emission may cause a significant disruption of the climate system, resulting in severe adverse climatic and ecological impacts on China and the world. To avoid this outcome, an equitable climate-protection strategy is introduced to explore an alternative energy/climate future. Using a macroeconomic approach, it is shown that under BAU conditions, the year 2100 emissions of CO₂ will increase above 1990 levels by 370 and 96% for China and the US, respectively. In contrast, for the climate-protection conditions required by the Climate Convention, CO₂ emissions must decrease by 36% for China and by 90% for the US below 1990 levels. Using a microeconomic-engineering approach, the total CO₂ reduction potential is found to be about 4600 Mt for 13 specific measures over a 10-yr period. The incremental costs range from US$ 0.09 to 18.55 per ton of CO₂ reduction for coal-saving stoves and solar cookers, respectively. The total reduction costs for China would be about US$ 2 billion per year or ∼0.4% of the 1994 GDP of China. This estimate does not allow for benefits from saved resources and avoided damages. We conclude with a discussion of various avenues for obtaining needed technological and financial support for China.     

How much market do market-based instruments create? An analysis for the case of “white” certificates

Among the diverse economic instruments to foster energy efficiency (EE) and climate protection, tradable certificates have been investigated for renewable energy, and the EU directive on an emissions-trading scheme for CO₂ certificates has been approved in 2003. In contrast, tradable energy efficiency—or “white”—certificates have only lately been considered as a market-based tool to foster EE as compared with standards and labelling, for example. Theoretically, there is little doubt about the advantages. In practice, however, some fundamental problems arise. Critical issues are the design of an efficient artificial market for white certificates, its compatibility with the European emissions-trading system, the identification of a suitable target group for an EE obligation and the measurement of energy savings as compared with a reference use of energy. We use the theoretical framework of transaction cost economics to elaborate these issues. We conclude that transaction costs and investment specificity will restrict markets for white certificates in practice. Long-term contracts rather than spot trade will be the prevailing form of governance for EE investments.     

Applying resource efficiency principles to the analysis of EU-27 bioenergy options by 2020 – Findings from a recent study for the European Environment Agency

The Renewable Energy Directive sets a target for the European Union (EU) to consume 20% of its final energy from renewable sources by 2020 and further targets are under discussion. EU renewable energy targets will lead to a substantial increase in the demand for bioenergy. As for other sectors, it is important, therefore, to apply the principles of the EU Resource efficiency roadmap to bioenergy production: producing more output with less material input and minimising adverse environmental impacts during the entire production life cycle. This paper uses that concept to analyse the most resource efficient ways for reaching the 2020 bioenergy targets (as set out in National Renewable Energy Action Plans).Scenario analysis with three different storylines is used to model environmental and land use implications plus total bioenergy potential and GHG reductions in 2020 from the agricultural, forest, and waste sectors. These storylines vary in environmental ambition level and economic and political assumptions and explore plausible bioenergy development paths. They show substantial variance in terms of environmental impact and the GHG efficiency between different bioenergy pathways.The modelling shows that under Storyline 1 bioenergy targets of the National Renewable Energy Action Plans would be achieved with CO₂ eq emissions of 44 kg GJ⁻¹, i.e. 62% less GHG emission than if the energy were generated using fossil fuels. In contrast, stricter environmental constraints in Storyline 3 lead to a substantially lower CO₂ eq burden of 25 kg GJ⁻¹, which represents an 80% reduction compared to fossil fuels.     

First‐mover advantages of the European Union's climate change mitigation strategy

This paper assesses the costs and benefits for the European Union (EU) as a first mover in climate change mitigation. Scenarios of EU and global climate action to 2050 are quantified using the GEME3‐RD model, a global multi‐sectoral computable general equilibrium model with endogenous technology progress and detailed representation of the clean energy technologies. The model includes two‐factor learning curves (stock and research and development funding) for clean energy technologies, such as electric vehicles, carbon capture and storage, and renewable and efficient appliances. Funding of research and development is endogenously derived as a production factor enabling productivity improvement. The scenarios compare stylised climate strategies, which are asymmetric by world region and have different emission reduction profiles over time. Assuming that strong climate mitigation action will be undertaken only after 2030, the scenarios compare two main strategies for the EU: pursuing strong emission reduction unilaterally until 2030 versus deferring action for the period after 2030. Asymmetric climate action by region enables asymmetric innovation and manufacturing of clean energy technologies. The macroeconomic assessment of the climate action strategies does not only depend on costs of clean technologies but also on induced technology progress implying asymmetric effects on manufacturing and trade by region, taking into account spillovers. The model‐based projections show clear advantages for the EU as a first mover in climate change mitigation compared with a delaying of climate action until 2030. Delayed climate action until 2030 implies higher gross domestic product losses for the EU compared with unilateral action until 2030. The model finds benefits of early action by the EU driven by activity and progress related to clean energy technologies as the EU can achieve competitive advantages over other world regions pursuing climate action later. Copyright © 2016 John Wiley & Sons, Ltd.     

Biodiesel: A new Oildorado?

Guaranteeing tax reductions and exemptions, the European governments intend to increase the share of biofuels in total EU fuel consumption to 5.75% by 2010. The financial support of this EU objective is frequently justified by expected positive environmental impacts, most notably the mitigation of climate change, and by favorable employment effects in the agricultural sector. This paper investigates the environmental and economic implications of the support of rapeseed-based biodiesel as a substitute for fossil diesel. Based on a survey of recent empirical studies, we find that the energy and greenhouse gas balances of this environmental strategy are clearly positive. Yet, it appears to be unclear whether the overall environmental balance is also positive. Most importantly, though, biodiesel is not a cost-efficient emission abatement strategy. Thus, for the abatement of greenhouse gases, we recommend more efficient alternatives based on both renewable and conventional technologies.