No-lose targets as an option to integrate non-Annex I countries in global emission reduction efforts - A game-theoretical analysis

No-lose targets set emission reduction targets and define incentives for meeting the target, in contrast to binding reduction targets that use penalties to ensure compliance. In this thesis, two theoretical frameworks are introduced to analyse the potential of no-lose targets to contribute to global emission reduction efforts. In order to complement the highly stylized theoretical frameworks, a quantitative analysis applying marginal abatement cost curves is conducted

No-lose targets as an option to integrate non-Annex I countries in global emission reduction efforts - A game-theoretical analysis

No-lose targets set emission reduction targets and define incentives for meeting the target, in contrast to binding reduction targets that use penalties to ensure compliance. In this thesis, two theoretical frameworks are introduced to analyse the potential of no-lose targets to contribute to global emission reduction efforts. In order to complement the highly stylized theoretical frameworks, a quantitative analysis applying marginal abatement cost curves is conducted

Engaging the Public with CCUS: Reflection on a European Project Approach

The aim of this paper is to share our approach for a societal engagement and participation process that is implemented as part of two sequential research projects on CCUS. The two projects are both funded under the European Union’s (EU) Horizon 2020 research program. The first one, STRATEGY CCUS (2019-2022), develops strategic development plans for eight regions in South-East Europe; the second, Pilot STRATEGY (2021-2026), partly builds on the first project; Pilot STRATEGY aims at enabling three of the eight regions to start developing their storage resources concretely and to support two further regions in continuing to explore CCUS as an option. Both projects were designed in a way that they integrate geological, technical and economic research with social sciences, with a focus on the regional level. The paper provides an overview on the concept, objectives and the methodologies for the engagement process. It further includes reflections identifying room for improvement and provides recommendations for other projects. Overall, we find that the situation is characterized by low levels of awareness regarding CCUS, but some openness to discuss it. Specific expectations vary and the societal view is not always in line with the current scientific knowledge and the technological development. Important recommendations include building strong interdisciplinary teams that also implement processes for self-reflection.info:eu-repo/semantics/publishedVersio

The EU ETS and dynamic allocation in phase IV - an ex-ante assessment

Fear of lowering firms’ competitiveness and carbon leakage is the reason for large amounts of allowances in the European Union’s Emissions Trading System (EU ETS) still being allocated for free. At the same time, unadjusted free allocation of allowances in times of economic recession is partly responsible for the large surplus of allowances that has cumulated in the EU ETS and that is lowering prices in the market. For Phase IV, the introduction of dynamic allocation has been proposed to react to significant changes in production, to prevent the accumulation of further surplus on the one hand and to protect installations from severe under allocation on the other. A reserve of about 400 million allowances is planned for that purpose. This paper analyses the demand for certificates from this reserve under different assumptions on production development as well as different design options for Phase IV. The analysis builds on freely available allocation data from Phase III along with projections of production trends from different time periods in the past. In most of the scenarios, the 400 million allowances are sufficient to fulfil demand for allowances from dynamic allocation until at least the second half of Phase IV (often even for the whole of Phase IV). Even though certain aspects analysed are now not fully compatible with the agreed-upon Phase IV revision, the analysis indicates that the amount of allowances foreseen for dynamic allocation is sufficient for Phase IV. In particular the threshold value of 10% that was introduced in the legislation will ensure that the demand of allowances is likely well below the demand found in the different scenarios in this analysis that neglects this threshold value

Achievability of the Paris targets in the EU - the role of demand-side-driven mitigation in different types of scenarios

With the Paris target of limiting global warming to well below 2 °C until 2100, at best even 1.5 °C, the question arises what this implies for the EU’s mitigation targets and strategies. In this article, the reduction of carbon intensities and energy uses in the most ambitious mitigation scenarios for the EU, France, Germany, Italy, and the UK are compared to those of the EU in global 1.5 and 2 °C scenarios. An index decomposition analysis is applied to energy supply and each end-use sector (industry, buildings, and transport) to identify the main differences. From this, we derive conclusions concerning policies and indicators for an EU mitigation strategy compatible with limiting global warming to 1.5 °C. The index decomposition shows that reducing energy use is a stronger lever in the evaluated national scenarios than in the international scenarios for all end-use sectors. The reasons for that are the lower utilization of CCS, the inclusion of additional technology options, and a detailed consideration of sufficiency in the national scenarios. The results suggest that including more ambitious demand-side mitigation options (sufficiency, energy efficiency, electrification, and fuel switching) can significantly reduce the need for negative emissions that are required in all the existing 1.5 °C-compatible global scenarios. Driving these options requires substantial enhancement of current policies for all end-use sectors. In addition, certain index decomposition approaches are shown to underrate the long-term contributions of demand-side mitigation. Accordingly, demand-side mitigation tends to be under-represented in progress indicators for the Paris Agreement, which calls for improvements

Going t o the Source: Using an Upstream Point o f Regulation f or Energy in a National Chinese Emissions Trading System

There are many choices within the design of an emissions trading system. In this paper we focus on one specific aspect – the point of regulation for the energy sector. This choice affects transaction costs; comprehensiveness, and hence the amount of emissions covered and the extent to which the potential cost-effectiveness gains are realised; and credibility of the system. We discuss how an “upstream” energy sector emissions trading system works and present arguments for going upstream (in particular, simplicity of administration) while also discussing arguments for other points of regulation in light of the Chinese circumstances. We present experiences with the New Zealand system, the only system that is entirely upstream for energy, showing ways to address issues that may arise with an upstream system. Ultimately the success of emissions trading depends on markets that operate in a relatively free and competitive way. Simply copying others’ systems to the context of a largely controlled economy such as the Chinese one is likely to be ineffective; each system must be uniquely tailored to local circumstances, possibly in China more than ever before. JEL code

An economic analysis of the interactions between renewable support and other climate and energy policies

The EU climate and energy policy landscape is characterized by a combination of instruments to achieve the EU 2020 and 2030 targets. In this paper, some of the most relevant interactions between RES-E support and a wide array of other climate and energy policies including the EU ETS, the Energy Taxation Directive and the Effort Sharing Directive in the European Union are assessed. A qualitative methodology is applied considering different assessment criteria such as effectiveness and efficiency of RES-E support and support costs but also distribution of costs between different stakeholder groups. Our analysis shows that, despite a common perception that interactions lead to conflicts, this is not really the case when the discussion is broadened and considers different assessment criteria. While adding one instrument or policy to another worsens one criterion, it usually improves another. Furthermore, the results of the interactions are not only specific to the policy, but also depend on the choice of instruments and design elements

EU ETS up to 2030: Adjusting the cap in light of the IPCC1.5°C special report and the Paris agreement: Ressortforschungsplan des Bundesministeriums für Umwelt, Naturschutz und nukleare Sicherheit; Project No. (FKZ) 3717 42 503 0 FB000200/ENG

We derive an EU ETS budget compatible with the Paris Agreement based on cost-effectiveness criteria, using a target of limiting global warming to 1.5 degrees Celsius with a 50 – 66% probability, and translate it into a cap reduction path. We derive a budget of about 30 Gt CO2e for the EU ETS for 2016-2050. We show that already about 25 Gt CO2e will be used until 2030 under current ETS parameters. We also show that cumulative GHG emissions of ETS sectors in the two most ambitious 1.5-degree-scenarios in the EU Commission’s Strategic Vision amount to 33 Gt CO2e until 2050, about 10% higher than our optimistic cost-effective budget. Thus, meeting the 2050 EU ETS budget under current 2030 parameters would require drastic – and probably unrealistic – additional efforts after 2030. A smoother and more credible emission pathway can be achieved through a cost-effective scenario reducing the cap by 61% until 2030, compared to 2005, corresponding to an LRF of 4.0% for 2021-2030 (5.8% if the LRF can only be adjusted in 2026). We show that a first step towards aligning the ETS cap with the Paris Agreement would be to use the potential for additional GHG savings due to recently increased EU targets for renewable energy and energy efficiency. The minimum required adjustment is to increase the reduction target for ETS sectors to at least 50% for 2030, compared to 2005, from currently 43%. This corresponds to a LRF of 2.9% for 2021-2030 or 3.5% if the LRF can only be adjusted in 2026. National coal-phase out policies planned in a number of EU member states until 2030 provide further cap adjustment potentials. If phased-out capacities are fully substituted by renewable electricity, emissions in ETS sectors could decline by 57% through 2030, approximating our cost-effective scenario and translating into an LRF of 3.6% for the period 2021-2030 or 4.9% if the LRF can only be adjusted in 2026