Spencer, Thomas and Marcey, Celine and Colombier, Michel and Guerin, Emmanuel (2011): Decarbonizing the EU power sector: policy approaches in the light of current trends and long-term trajectories. Published in:
Download (1MB) | Preview
ASSESSMENT European climate policy is gradually shifting towards a long-term perspec- tive. The electricity sector has a crucial role to play in the long-term decar- bonization of the EU economy. It makes up a significant share of EU emis- sions and can contribute to the reduction of emissions in other sectors, particularly buildings and transport. The EU 2008 Climate and Energy Package (CEP) took a significant step towards a low-carbon future, initi- ating a very ambitious program of renewables expansion and strengthen- ing the ETS. However, the omissions and internal inconsistencies of the CEP are becoming more and more evident. This relates in particular to the absence of long-term, comprehensive signals for decarbonization and the imbalance between the ETS, energy efficiency and renewables objectives. This risks delaying and distorting investment in low-carbon infrastructure and ideas, raising the ultimate cost of climate policy. In view of the inertias within the electricity sector, it is imperative for the EU to set a long-term signal for the decarbonization of the sector by set- ting 2030 objectives for the ETS and complementary policies. The EU’s decarbonization strategy needs to be robust against future uncertainties; strengthening a technology neutral instrument like the ETS can provide a key part of a comprehensive signal to develop the full range of decarbon- ization options. The instrument imbalance also needs to be addressed. Demand side policies should be the point of departure for supply side interventions: ETS caps should be set so as to achieve carbon scarcity after energy efficiency and RES objectives have been taken into account. A short-term adjustment of scarcity in the ETS may create some incen- tives for low-carbon investment. However, it would not address the funda- mental concern, namely the lack of policy information regarding the post 2020 environment in which these investment will amortize.
|Item Type:||MPRA Paper|
|Original Title:||Decarbonizing the EU power sector: policy approaches in the light of current trends and long-term trajectories|
|Keywords:||European climate policy; 2050 decarbonization; European emissions trading scheme; renewables policy|
|Subjects:||Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q50 - General|
|Depositing User:||Thomas A. Spencer|
|Date Deposited:||25. Nov 2011 20:29|
|Last Modified:||16. Feb 2013 07:05|
Abrell, J. et al (2011), “Assessing the Impact of the EU ETS Using Firm-Level Data”, Brussels: Bruegel.
Accenture and Barclays Capital (2011), “Carbon Capital: Financing the low-carbon economy”.
Alfsen, K. (2010), “Technology change and the role of non-state actors”, in Birmann et al (eds), “Global Climate Governance Beyond 2012: Architecture, Agency and Adaptation”, Cambridge: CUP.
Australian Productivity Commission (2011), “Carbon Emission Policies in Key Economies”, Melbourne: APC.
Blyth, W. and D. Bunn (2011), “Coevolution of policy, market and technical price risks in the EU ETS”, Energy Policy, 39.
Bosetti, V. and D. Victor (2011), “Politics and Economics of Second-Best Regulation of Greenhouse Gases: The Importance of Regulatory Credibility”, The Energy Journal, 32.
Bowen, A. et al. (2009), “Meeting the Climate Challenge: Using Public Funds to Leverage Private Investment in Developing Countries”, Section 2 - Analytical framework: The case for public sector action, LSE Grantham Institute.
Capros, P. et al (2008), “Model-based Analysis of the 2008 EU Policy Package on Climate Change and Renewables”, E3MLab/NTUA.
del Río González, P. (2008), “Policy implications of potential conflicts between short-term and long-term efficiency in CO2 emissions abatement”, Ecological Economics, 65.
Egenhofer, C. et al (2010), “The EU Emissions Trading System and Climate Policy towards 2050: Real incentives to reduce emissions and drive innovation?”, Brussels: CEPS.
Ecofys, “Financing Renewable Energy in the European Energy Market”, Utrecht: Ecofys.
Ellerman, D. et al (eds) (2010), “Pricing Carbon: The European Union Emissions Trading Scheme”, Cambridge: CUP.
ENTSO-E (2010), “ENTSO-E Report System Adequacy Forecast 2010-2025”, Brussels: ENTSO-E.
Eurelectric (2010), “Power Statistics: 2010 Edition Synopsis”, Brussels: Eurelectric.
Eurelectric (2010b), “The Financial Situation of the Electricity Industry – A View to the Future Challenges”, Brussels: Eurelectric.
Eurelectric (2011), “Power Choices: Pathways to Carbon Neutral Electricity in Europe by 2050”, Brussels: Eurelectric.
European Council (2009), Brussels European Council 29/30 October 2009, Presidency Conclusions.
European Climate Foundation (2010), “Roadmap 2050: A Practical Guide to a Prosperous, Low-Carbon Europe”, Brussels: ECF.
European Climate Foundation (2011), “Financing for a zero-carbon power sector in Europe: A financial sector’s view on the decarbonisation of the European power sector”, Brussels: ECF.
European Commission (2010), “EU Energy Trends to 2030 – 2009 Update”, Brussels: EC.
European Commission (2010b), “Analysis of options to move beyond 20% greenhouse gas emission reductions and assessing the risk of carbon leakage” Commission Staff Working Document, Background information and analysis Part II, SEC(2010) 650
European Comission (2011), “A Roadmap for moving to a competitive low carbon economy in 2050”, Impact Assessment, SEC(2011) 288 final, Brussels: EC.
European Commission (2011b), 2010 Compliance Data.
European Commission (2011c), “Commission Staff Working Paper, Annexes to the Impact Assessment Accompanying the Document Directive of the European Parliament and of the Council on Energy Efficiency and Ammending and Subsequently Repealing Directives 2004/8/EC and 2006/32/EC”, Brussels: EC.
European Wind Energy Association (2011), “Pure Power: Wind energy targets for 2020 and 2030”, Brussels: EWEA.
Fankhauser, S. and C. Hepburn (2010), “Designing carbon markets. Part I: Carbon markets in time”, Energy Policy, 38.
Finkenrath, M. (2011), “Cost and Performance of Carbon Dioxide Capture from Power Generation”, Paris: IEA.
Fuss, S. et al (2008), “Investment under market and climate policy uncertainty”, Applied Energy, 85.
Galharret, S. and E. Guérin (2011), “The EU Climate and Energy Package: Elements to assess its current performance and suggestions on the way forward”, Paris: Iddri.
Gény, F. (2010), “Can Unconventional Gas be a Game Changer in European Gas Markets?”, Oxford: Oxford Institute for Energy Studies.
Guivarch, C. and C. Hood (2011), “Early retirement of coal-fired generation in the transition to low-carbon electricity systems”, in IEA, “Climate and Electricity Annual”, Paris: IEA.
Guivarch, C. and J. Rozenberg (2011), “Short-Term / Long-Term Coherence of Emissions Reduction Pathway”, Cambridge: Climate Strategies.
Hood, C. (2011), “Electricity market design for decarbonisation”, IEA, “Climate and Electricity Annual”, Paris: IEA. Institutional Investors Group on Climate Change (2011), “IIGCC (2010), “Shifting Private Capital to Low Carbon Investment: An IIGCC Position Paper on EU Energy and Climate Policy”, London: IIGCC.
International Energy Agency (2007), “Climate Policy Uncertainty and Investment Risk”, Paris: IEA.
International Energy Agency (2010), “Energy Technology Perspective 2010: Scenarios and Strategies to 2050”, Paris: IEA.
International Energy Agency (2010b), “World Energy Outlook 2010”, Paris: IEA.
International Energy Agency (2011), “Electricity Information 2011”, Paris: IEA.
Kettunen, J. et al (2011), “Investment Propensities under Carbon Policy Uncertainty”, The Energy Journal, 32.
Neuhoff, K. (2007), “Investment under Climate Policy Uncertainty”, Cambridge: Climate Strategies.
Neuhoff, K. (2011), “Climate Policy After Copenhagen: The Role of Carbon Pricing”, Cambridge: CUP.
Nuclear Energy Association (2011), “Carbon Pricing, Power Markets and the Competitiveness of Nuclear Power”, Paris: NEA/OECD.
Organization for Economic Cooperation and Development (2011), “Projected Costs of Generating Electricity – 2010 Edition”, Paris: OECD/IEA/NEA.
Paltsev. S.. J.M. Reilly, H.D. Jacoby and J.F. Morris (2009), The Cost of Climate Policy in the United States. Joint Program Report Series.
Linares, P. and I. Pérez-Arriaga (2009), “Promoting Investment in Low-Carbon Technologies”, European Review of Energy Markets, 3.
Rogge, K. et al (2011), “The innovation impact of the EU Emission Trading System — Findings of company case studies in the German power sector”, Ecological Economics, 70.
Rogge, K. et al (2011b), “Relative Importance of different Climate Policy Elements for Corporate Climate Innovation Activities: Findings for the Power Sector”, Cambridge: Climate Strategies and CPI.
Rothwell, G. (2006), “A Real Options Approach to Evaluating New Nuclear Plants”, The Energy Journal, 27.
Robert Schuman Centre for Advanced Studies/Florence School of Regulation (2011), “EU 2050 Low-Carbon Energy Future: Visiton and Strategies”, Florence: RSCAS.
THINK (2011), “Transition Towards a Low Carbon Energy System by 2050: What Role for the EU?”, THINK.
Victor, D. (2011), “Global Warming Gridlock: Creating More Effective Strategies for Protecting the Planet”, Cambridge: CUP.
Vogt-Schilb, A. and S. Hallegatte, “When Starting with the Most Expensive Option Makes Sense: Use and Misuse of Marginal Abatement Cost Curves”, Washington: the World Bank.
Unruh, G. (2002), “Escaping carbon lock-in”, Energy Policy, 30.
Wiesenthal, T. et al (2009), “R&D Investment in the Priority Technologies of the European Strategic Energy Technology Plan”, Seville: JRC.
Weisenthal, T et al (2010), “Quantitative Assessment of the Impact of the Strategic Energy Technology Plan on the European Power Sector”, Seville: JRC.
Winskel, M. (2002), “When Systems are Overthrown : The `Dash for Gas' in the British Electricity Supply Industry”, Social Studies of Science, 32.
Yang, M. (2008), “Evaluating the power investment options with uncertainty in climate policy”, Energy Economics, 30.
70Watt Consulting, Carbon Quaterly.