UK energy in a global context: synthesis report

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Reducing Carbon emissions through transport taxation, GFC Briefing Paper 6

Road transport and aviation are, or are becoming, major sources of carbon emissions which will need to be reduced if the UK’s carbon dioxide (CO2) reduction targets are to be met. However, since 1980 the real costs of motoring have fallen while those of other transport modes have risen, and rising incomes have also increased transport demand, offsetting efficiency increases. Increased road transport taxation, which could be introduced as part of a green fiscal reform, will be essential if demand is to be managed and carbon emissions from road transport reduced. Taxes on vehicle purchase, ownership and use have different effects, and can be used to pursue different policy goals. For example, taxes on purchase and ownership can incentivise manufacturers to develop low carbon vehicles and people to buy them. Tax measures on vehicle use are needed to reduce congestion and overall energy use. This briefing discusses experience with road transport and aviation taxes in the UK and other European countries, and considers how they might develop to take account of increasingly stringent CO2 reduction targets and other issues such as the increasing diversity of road fuels, and the need to maintain government income. In particular, any shift to electric vehicles may require a parallel shift to road user charging if revenues from transport taxes, and incentives to reduce the damaging effects of road transport apart from emissions, are to be maintained. Each tax introduced will affect some people more than others. Increasing fuel duty is progressive overall because most low-income households do not have a car, but there are concerns about the impact on low income motorists, particularly in rural areas, which can be at least partially addressed if the revenues are recycled in a progressive manner. Increasing taxation on air travel is even more progressive because most leisure flying is by the wealthiest 20 per cent of the population and those on low incomes fly very little

Climate change and fuel poverty

The research examined the possible effects of rapid climate change on fuel poverty (needing to spend more than 10% of income to maintain a satisfactory level of warmth and other energy services in the home). One particular concern was the prospect that there might be a shutting off of the Gulf Stream, which warms Britain and the rest of north-western Europe. Computer simulations of the climate indicate that shutting down the Gulf Stream would cool England by about 3°C. Climate is not the only variable that will affect future levels of fuel poverty. The other main ones are what will happen to the energy efficiency of the building stock, to incomes and to energy prices. The aim of the project was to examine what might happen to each of these four dimensions and construct three scenarios in each dimension (most likely, high and low) to capture the range of variation in possible outcomes. A total of 81 (3x3x3x3) scenarios were modelled and analysed. Since any changes in the climate system take decadesto play out, but it is extremely difficult to predict social, economic and technological changes even 25 years in the future, it was decided to set an objective for this research of looking forward to 2030.

The Natural Capital Indicator Framework (NCIF): A framework of indicators for national natural capital reporting

It is now widely recognised that components of the environment play the role of economic assets, termed natural capital, that are a foundation of social and economic development. National governments monitor the state and trends of natural capital through a range of activities including natural capital accounting, national ecosystem assessments, ecosystem service valuation, and economic and environmental analyses. Indicators play an integral role in these activities as they facilitate the reporting of complex natural capital information. One factor that hinders the success of these activities and their comparability across countries is the absence of a coherent framework of indicators concerning natural capital (and its benefits) that can aid decision-making. Here we present an integrated Natural Capital Indicator Framework (NCIF) alongside example indicators, which provides an illustrative structure for countries to select and organise indicators to assess their use of and dependence on natural capital. The NCIF sits within a wider context of indicators related to natural, human, social and manufactured capital, and associated flows of benefits. The framework provides decision-makers with a structured approach to selecting natural capital indicators with which to make decisions about economic development that take into account national natural capital and associated flows of benefits.Comment: 26 pages, 3 figures, 1 table, 1 graphical abstrac

An illustrative application of the CRITINC framework to the UK

This paper sets out an illustrative application to the UK of a new framework for identifying critical natural capital (CNC). This involves classifying the characteristics of natural capital and the environmental functions to which it gives rise, and then defining standards of environmental sustainability for these functions. The framework then relates these functions to the economic system, through the input/output tables, in order to identify the pressures on the functions and hence the extent to which the functions are not being maintained at a sustainable level. The framework is worked though in some detail for water, with less detailed application of it to air, land and habitats. The methodology can be used to identify areas of environmental unsustainability and the processes to which this unsustainability is due, so that policies to move towards sustainability may be more easily identified

A bridge to a low carbon future? Modelling the long-term global potential of natural gas

This project uses the global TIMES Integrated Assessment Model in UCL (‘TIAM-UCL’) to provide robust quantitative insights into the future of natural gas in the energy system and in particular whether or not gas has the potential to act as a ‘bridge’ to a low-carbon future on both a global and regional basis out to 2050. This report first explores the dynamics of a scenario that disregards any need to cut greenhouse gas (GHG) emissions. Such a scenario results in a large uptake in the production and consumption of all fossil fuels, with coal in particular dominating the electricity system. It is unconventional sources of gas production that account for much of the rise in natural gas production; with shale gas exceeding 1 Tcm after 2040. Gas consumption grows in all sectors apart from the electricity sector, and eventually becomes cost effective both as a marine fuel (as liquefied natural gas) and in medium goods vehicles (as compressed natural gas). It next examines how different gas market structures affect natural gas production, consumption, and trade patterns. For the two different scenarios constructed, one continued current regionalised gas markets, which are characterised by very different prices in different regions with these prices often based on oil indexation, while the other allowed a global gas price to form based on gas supply-demand fundamentals. It finds only a small change in overall global gas production levels between these but a major difference in levels of gas trade and so conclude that if gas exporters choose to defend oil indexation in the short-term, they may end up destroying their export markets in longer term. A move towards pricing gas internationally, based on supply-demand dynamics, is thus shown to be crucial if the if they are to maintain their current levels of exports. Nevertheless, it is also shown that, regardless of how gas is priced in the future, scenarios leading to a 2oC temperature rise generally have larger pipeline and LNG exports than scenarios that lead to a higher temperature increase. For pipeline trade, the adoption of any ambitious emissions reduction agreement results in little loss of markets and could (if carbon capture and storage is available) actually lead to a much greater level of exports. For LNG trade, because of the significant role that gas can play in replacing future coal demand in the emerging economies in Asia, markets that are largely supplied by LNG at present, we demonstrate that export countries should actively pursue an ambitious global agreement on GHG emissions mitigation if they want to expand their exports. These results thus have important implications for the negotiating positions of gas-exporting countries in the ongoing discussions on agreeing an ambitious global agreement on emissions reduction

A portfolio of powertrains for the UK: An energy systems analysis

AbstractThere has recently been a concerted effort to commence a transition to fuel cell vehicles (FCVs) in Europe. A coalition of companies released an influential McKinsey-coordinated report in 2010, which concluded that FCVs are ready for commercial deployment. Public–private H2Mobility programmes have subsequently been established across Europe to develop business cases for the introduction of FCVs. In this paper, we examine the conclusions of these studies from an energy systems perspective, using the UK as a case study. Other UK energy system studies have identified only a minor role for FCVs, after 2030, but we reconcile these views by showing that the differences are primarily driven by different data assumptions rather than methodological differences. Some energy system models do not start a transition to FCVs until around 2040 as they do not account for the time normally taken for the diffusion of new powertrains. We show that applying dynamic growth constraints to the UK MARKAL energy system model more realistically represents insights from innovation theory. We conclude that the optimum deployment of FCVs, from an energy systems perspective, is broadly in line with the roadmap developed by UK H2Mobility and that a transition needs to commence soon if FCVs are to become widespread by 2050

Charging for Domestic Waste: combining environmental nd equity considerations

Compared with most other EU member states, the UK has relatively low rate of recycling of household waste, and sends a relatively high proportion of disposal in landfill. Under the provisions of the EU Landfill Directive, this situation will hve to change radically in the next ten years, with much less waste being sent to landfill, in a context in which the qunaity of household waste continues to increse at about 3% per year. A number of national policy documents have in recent years proposed how this challenge might be addresed, most recently the report from the Strategy Unit in 2002, Waste Not, Want Not.

Economic Instruments for a Socially Neutral Nationl Home Energy Efficiency Programme

The research reported in this paper was conducted under the project 'The Social Impacts of Environmental Taxes: Removing Regressivity', funded by the Joseph Rowntree Foundation under its Prograamme on Environment and Social Concerns. The project is investigating the socil implications of environmental txtes and charges in realtion to four environment issues - the household use of energy, water and transport, and the generation of waste. The is a report of the component on the household use of energy.