Burden-Sharing Rules for Stabilizing Greenhouse-Gas Concentrations and Their Equity Implications

This paper focuses on the equity aspects of international burden sharing for global CO2 emission stabilization. It first summarizes and classifies five equity principles that may play a role in allocating emission entitlements to countries. These principles are then used to examine ten burden-sharing rules -- proposed in the published literature of the field -- by analyzing the degree to which each rule incorporates the five equity principles. The burden-sharing rules surveyed are not readily comparable because they do not use a common global emission (reduction) goal. For that reason, our paper carries out a detailed examination of three sets of quantitative emission entitlements, which are based on three typical burden-sharing rules -- the equal emissions per capita approach, the carbon intensity approach, and the Triptych approach -- with the idea of comparing their implications for carbon emission entitlements for 67 countries and 9 world regions. To make the three rules comparable, we used a global carbon emission target that leads asymptotically to an atmospheric CO2 concentration of 550 ppmv. Reducing carbon emissions to meet this concentration target requires significant global efforts. No burden-sharing scheme aiming at this target can therefore be expected to lead to a negligible burden on all countries. Depending on the equity principle chosen, a scheme can allocate more of the global burden to developing countries or to industrialized countries. Developing countries receive relatively higher entitlements under the equal emissions per capita approach whereas industrialized countries are relatively better off under the carbon intensity approach. The Triptych approach leads to in-between allocations for most countries. Only countries with high carbon intensity in 1990 (for example China, Russia, and Poland) receive the highest entitlements under this burden-sharing rule. In some countries and regions, emission entitlements as calculated by any of the three burden-sharing rules are so tight that it appears unrealistic to assume that domestic measures alone can be successful in limiting their actual emissions to the emission entitlements assigned to them. It would therefore seem natural to assume that the calculated entitlements determine the initial allocation of tradable emission allowances of countries or regions. Although we make this assumption, we considered any numerical determination of carbon trade flows to be outside the scope of our paper

Roadmap to Deploying Technologies for Sustainable Development

The study found that a radical transition to energy systems based on renewable and fuel cells is plausible if one takes a long time span (over 100 years). The resulting global energy system would contribute to achieving sustainable development. The potential of advanced technologies for CO2 emission mitigation and energy conservation is enormous in all end-use sectors. In particular, contribution of advanced transportation technologies is significant and reliance on oil in that sector reduces from current level of 97% to 8%. The study suggests that, if successful, technology policies could lead to a path towards sustainable development that does not deteriorate life style and, generally, is consistent with ever-increasing economic prosperity, i.e., allows more cars, permits the world population to travel more and more, lets everyone enjoy high-quality energy service. We illustrate that such a future is possible and achievable, provided an appropriate targeted policy effort is made

Energy-Productivity Convergence Across Developed and Developing Countries in 10 Manufacturing Sectors

This paper provides an empirical analysis of energy-productivity convergence across 56 developed and developing countries, in 10 manufacturing sectors, for the period 1971 to 1995. We find that, except for the non-ferrous metals sector, cross-country differences in absolute energy-productivity levels tend to decline, particularly in the less energy-intensive industries. Testing for the catch-up hypothesis using panel data confirms that in all manufacturing sectors energy-productivity growth is, in general, relatively high in countries that initially lag behind in terms of energy-productivity performance seem to be persistent; convergence is found to be country-specific rather than global, with countries converging to different steady states and several failing to catch up. Finally, we find that country-specific factors, such as energy price and investment ratio, do explain the observed cross-country differences in energy-productivity performance, but only to a very limited extent. Hence, further research is needed to identify what accounts for the observed persistence in cross-country energy-productivity differentials

Analysis of Energy Intensity Developments in Manufacturing Sectors in Industrialized and Developing Countries

This paper studies the development of energy intensity over time and its relationship with the sectoral economic development. Three variables are analyzed with respect to their impact on energy intensity; total sectoral economic activity, sectoral gross fixed capital formation and industrial energy prices. Panel analysis was conducted for ten manufacturing industries using pooled data of 39 countries between 1971 and 1996. This study finds that capital formation has the effect of increasing energy intensity and this effect is stronger where sectoral output is larger. The innovative value of this study deals with a large number of countries and describes in detail the manufacturing industries for which empirical evidence is provided. Another focus of this study is on the generation of an industrial energy intensity database which includes estimates of industrial energy prices for different countries. The database includes most of the Organization for Economic Cooperation and Development countries as well as other countries in Asia and Latin America

Public R&D Innovation: The Case of Wind Energy in Denmark, Germany and the United Kingdom

This paper examines the impact of public research and development (R&D) support on cost reducing innovation for wind turbine farms in Denmark, Germany and the United Kingdom (UK). First we survey the literature in this field. The literature indicates that in Denmark R&D policy has been more successful than in Germany or the UK in promoting innovation of wind turbines. Furthermore, such studies point out that (subsidy-induced) capacity expansions were more effective in the UK and Denmark in promoting cost-reducing innovation than in Germany. The second part of the paper describes the quantitative analysis of the impact of R&D and the capacity expansion on innovation. This is calculated using the two-factor learning curve (2FLC) model, in which investment cost reductions are explained by cumulative capacity and the R&D based knowledge stock. Time-series data were collected for the three countries and organized as a panel data set. The parameters of the 2FLC model were estimated, focusing on the heterogeneity of the parameters across countries. We arrive at robust estimations of a learning-by-doing rate of 5.4% and a learning-by-searching rate of 12.6%. The analysis underlies the homogeneity of the learning parameters, enhancing the validity of the 2FLC formulation

Technological progress towards sustainable development

The purpose of this paper is twofold. First, to present an analysis of a comprehensive set of global energy scenarios that has been undertaken to identify key energy technologies for achieving sustainable development. Secondly, to describe tools that could aid policy makers using insights in the dynamics of technological progress to promote the development of promising technologies throughresearch and development (R&D) and procurement. As an operational working definition of sustainable development we use the following four criteria: (1) Economic growth sustains throughout the whole time horizon; (2) socio-economic inequity among world regions is reduced "significantly" during this century; (3) reserves-to-production (R/P) ratios of exhaustible primary energy carriers do not decrease substantially from today's values; and (4) short- to medium-term environmental impacts (e.g., acidification) are reduced towards meeting critical loads and carbon emissions at the end of the century are below today's levels. Applying these criteria in an analysis of a representative set of global economy-energy-environment scenarios shows that in sustainable-development scenarios, hydrogen fuel cells and solar photovoltaic cells emerge as key technologies in the long run. Natural gas technologies, in particular fuel cells and combined-cycle power plants, could provide for an efficient medium-term transition to these key technologies. The question then becomes which policies can promote the development of these technologies. We think that an important tool to tackle this question is provided by an improved concept of technological learning. According to that concept, technological progress, expressed as specific technology cost, is a regular function of not only cumulative installed capacity but also of R&D expenditures. This tool can assist in determining how much money should be spent for which energy technology on procurement (capacity expansion) and how much money for R&D. The results of first model runs aiming at eventually formulating policy guidance are presented

Experiments with a Methodology to Model the Role of R&D Expenditures in Energy Technology Learning Process

This paper presents the results of using a stylized optimization model of the global electricity supply system to analyze the optimal research and development (R&D) support for an energy technology. The model takes into account the dynamics of technological progress as described by a so-called two-factor learning curve (2FLC). The two factors are cumulative experience ("learning by doing") and accumulated knowledge ("learning by searching"); the formulation is a straightforward expansion of conventional one-factor learning curves, in which only cumulative experience is included as a factor, which aggregates the effects of accumulated knowledge and cumulative experience, among others. The responsiveness of technological progress to the two factors is quantified using learning parameters, which are estimated using empirical data. Sensitivities of the model results to the parameters are also tested. The model results also address the effect of competition between technologies and of CO2 constraints. The results are mainly methodological; one of the most interesting is that, at least up to a point, competition between technologies in terms of both market share and R&D support - need not lead to "lock-in" or "crowding-out"

Technological Progress Towards Sustainable Development

The purpose of this paper is twofold. First, to present an analysis of a comprehensive set of global energy scenarios that has been undertaken to identify key energy technologies for achieving sustainable development. Secondly, to describe tools that could aid policy makers using insights in the dynamics of technological progress to promote the development of promising technologies throughresearch and development (R&D) and procurement. As an operational working definition of sustainable development we use the following four criteria: (1) Economic growth sustains throughout the whole time horizon; (2) socio-economic inequity among world regions is reduced "significantly" during this century; (3) reserves-to-production (R/P) ratios of exhaustible primary energy carriers do not decrease substantially from today's values; and (4) short- to medium-term environmental impacts (e.g., acidification) are reduced towards meeting critical loads and carbon emissions at the end of the century are below today's levels. Applying these criteria in an analysis of a representative set of global economy-energy-environment scenarios shows that in sustainable-development scenarios, hydrogen fuel cells and solar photovoltaic cells emerge as key technologies in the long run. Natural gas technologies, in particular fuel cells and combined-cycle power plants, could provide for an efficient medium-term transition to these key technologies. The question then becomes which policies can promote the development of these technologies. We think that an important tool to tackle this question is provided by an improved concept of technological learning. According to that concept, technological progress, expressed as specific technology cost, is a regular function of not only cumulative installed capacity but also of R&D expenditures. This tool can assist in determining how much money should be spent for which energy technology on procurement (capacity expansion) and how much money for R&D. The results of first model runs aiming at eventually formulating policy guidance are presented

International comparisons of sectoral energy- and labour-productivity performance. Stylised facts and decomposition of trends

This paper addresses the interplay between economic growth, energy use, change in sectoral composition and technological change, by exploring trends in energy- and labour productivity development for 14 OECD countries and four sectors over the period 1970-1997. A cross-country decomposition analysis reveals that in some countries structural changes contributed considerably to macroeconomic energy-productivity growth while in other countries they partly offset energy-efficiency improvements. In contrast, structural changes only play a minor role in explaining macroeconomic labour-productivity developments. We also find labour productivity growth to be higher on average than energy productivity growth. Over time, this bias towards labour productivity growth is increasing in Transport, Agriculture and Manufacturing, while it is decreasing in Services