Policies for Energy
Systems Transformations – Chapter 22
Mark Jaccard
Simon Fraser University, Vancouver
www.markjaccard.com / twitter @MarkJaccard
GEA’s multiple policy objectives
Ensuring energy access for all - accelerating access in developing countries
Responding to environmental impacts and risks – minimizing environmental
effects and reconciling local versus global environmental objectives
Enhancing energy security – managing energy-related risks of geopolitics,
technological failures, natural disasters, and market volatility
Addressing market power – regulating or managing natural monopoly (grids
and pipelines) and preventing undue market influence (oil, electricity)
Managing energy endowments – benefitting current and future generations
by efficiently developing valuable resources, preventing corrupt forms
of rent-seeking, and husbanding resources or the wealth they generate
© GEA 2012
www.globalenergyassessment.org
2
GEA focus on access and environment
GEA focus on energy access and cleaner energy requires significant:
material development – technologies, infrastructure, buildings, urban
form, non-urban land-uses
human development – capacity building in education, law, finance,
communication, planning, and governance
Almost all GEA chapters include specific policies for material and human
development in their respective fields (transportation, urban areas,
buildings, renewables, financing clean energy, system operation, etc.).
Chapter 22 includes a listing of policies, as well as providing policy portfolios
that link to the GEA scenarios.
Specific policy chapters address energy access (ch.23), technology innovation
(ch.24), and capacity development (ch.25)
© GEA 2012
www.globalenergyassessment.org
3
The access-environment challenge
OECD must reduce energy use and
transform to zero carbon pollution
China energy access path
© GEA 2012
www.globalenergyassessment.org
4
China’s electricity: access + CO2
Electricity access
almost universal
(carbon pollution x 4)
projected
200 million without
electricity
© GEA 2012
www.globalenergyassessment.org
5
Policies for cleaner energy access
Integrate energy development within socio-economic development - poverty
alleviation, human capacity building, rural development, etc.
Reduce / remove subsidies to fossil fuel development and combustion.
Direct energy-related subsidies to lowest income groups, especially for
efficient, low emission devices (stoves) – equipment is key.
Build-in energy efficiency / renewables with new infrastructure, buildings,
energy systems (cogen., micro-grids), public transit, and urban form.
Improve attractiveness for domestic and foreign energy investments via
transparency and stability of legal-financial-regulatory system.
Link international efforts to reduce greenhouse gases with mechanisms to
incentivize zero-emission technologies and fuels in developing countries
(CDM, tax transfers, sectoral agreements, linked cap-and-trade)
© GEA 2012
www.globalenergyassessment.org
6
Evaluating policies for CO2 reduction
Policy performance depends on trade-off between four criteria:
Emission reduction effectiveness
Economic efficiency
Political acceptability (including perceptions of fairness)
Administrative feasibility
Categories of policies include:
Inducing voluntary action (labels, education, ads, training)
Subsidies (grants, low-interest loans, tax credits)
Standards (prescriptive and detailed, performance-based)
Pricing (taxes, cap-and-trade)
Compulsory policies
© GEA 2012
www.globalenergyassessment.org
7
Compulsory policies essential
Any of these can be
designed to be effective
climate policy
compulsory
non-compulsory
- information
- labels
- subsidies
standards
emissions pricing
These alone cannot
cap-and-trade
© GEA 2012
carbon tax
www.globalenergyassessment.org
8
Lessons from the climate policy trenches
Climate policy is inherently difficult:
Fossil fuels plentiful and low cost with continuous innovation
Vested interests delude themselves and others about climate science
Political systems rarely reward long-term focus
Need global action but lack effective global governance institutions
Public concern inevitably fluctuates, and likewise political motivation
Policy advisors need to understand and respond to these monumental
constraints.
Following are some suggestions for climate policy-making.
© GEA 2012
www.globalenergyassessment.org
9
Suggestions for climate policy-making - 1
Avoid proposals that require a rational model of policy-making.
- real-world policy-making is fragmented and chaotic
(transport, electricity, industrial policy, trade, urban development)
- must seize policy windows quickly!
Assume politicians will avoid compulsory policies
- “subsidies and information for efficiency is sufficient”
- “renewables will outcompete fossil fuels”
- “behavioral change by individuals and groups is the answer”
- “corporation social responsibility is the answer”
- “we’ll wait for global action!”
© GEA 2012
www.globalenergyassessment.org
10
Suggestions for climate policy-making - 2
Understand that politicians must focus on political acceptability
- don’t argue that only one type of compulsory policy is valid
- instead, design regulations or cap-and-trade for economic efficiency
Pay attention to the likely staying power of policies
- cap-and-trade creates supportive constituency (brokers, traders)
- RPS or FIT creates supportive constituency (renewable suppliers)
- legislate schedule for medium term rising emissions price or
decreasing cap, with eventual room for adjustment
- revenue-neutral carbon tax constrains future politicians from tax cut
- develop trusted institutions to sustain policy effort (California)
The issue of global action
- appearance as important as reality in terms of trade effects
- voluntarily negotiated agreement unlikely – need leaders and
sometimes forceful mechanisms (perhaps trade measures)
© GEA 2012
www.globalenergyassessment.org
11
Chapter 22: Lead Authors
Lawrence Agbemabiese (UNEP)
Christian Azar (Chalmers University of Technology, Sweden)
Adilson de Oliveira (Federal University of Rio de Janeiro, Brazil)
Carolyn Fischer (Resources for the Future, USA)
Brian Fisher (BAEconomics, Australia)
Alison Hughes (University of Cape Town, South Africa)
Michael Ohadi (University of Maryland, USA)
Kenji Yamaji (University of Tokyo, Japan)
Xiliang Zhang (Tsinghua University, China)