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1
Seminar zur Energiewirtschaft:
Ausgewählte Fragen der Energie- und
Umweltökonomik
Vladimir Udalov
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- Time: Mo, 10-12
- Room: M.16.11
- Contact:
Email: udalov@wiwi.uni-wuppertal.de
Phone: 0202/439-3176
Room: M.12.12
Office hours: Thursday, 15-16
3
- Economic activity takes place within, and is part of, the system which
is the earth and its atmosphere.
- This system is called “the natural environment”.
The Natural Environment
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The Natural Environment
Environment
Recycling
Energy
Waste /
Pollution
Consumption
individuals
Production
firms
Capital
stock
Natural
Resources
5
- The outer heavy black lined box represents the environment, which is
a thermodynamically closed system.
- The environment receives inputs of solar radiation. Some of that
radiation is absorbed and drives environmental processes. Some is
reflected back into space.
- Within the environment there is an economic activity involving
production and consumption.
The Natural Environment
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- Using labor, energy and capital stock firms produce products which
are sold to the consumers.
- Not all of production is consumed. Some of the output from
production is added to the capital stock.
- Many of the activities involved in production and consumption give
rise to waste products to be discharged into the natural environment.
The Natural Environment
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The Natural Environment
Environment
Recycling
Energy
Waste /
Pollution
Consumption
individuals
Production
firms
Capital
stock
Natural
Resources
8
The Energy Chain
9
The Energy Chain
- The energy which humans use comes from primary energy sources.
These are the energy sources which occur in the nature.
- In most cases, these primary energy sources cannot be used directly.
They are therefore for the most part converted into secondary energy
sources.
- The secondary energy sources are transported to the “consumers”,
who use them. In energy statistics, they are then described as end-
energy energy.
- The consumers ultimately need useful energy in the form of space
heat, hot water, light, sound, etc. This energy is called useful energy.
- Warm rooms, hot water, lighting rooms, etc. determine the energy
services.
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Exercise
- One person needs 2000 kcal per day and produces 1 kWh per day.
- Primary energy consumption in Germany is 13757 PJ (2013).
- 1KJ = 0,2366 cal = 0,000278 kWh.
- Calculate the primary energy consumption (in kWh) per person per
day in Germany in 2013.
Kilo- K 10^3 thousand
Mega- M 10^6 million
Giga- G 10^9 billion
Tera- T 10^12 trillion
Petra- P 10^15 quadrillion
Exa- E 10^18 quintillion
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Primary Energy
Primary
Energy
Secondary
Energy
Useful
Energy
Useable
Energy
Energy
Services
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Renewable vs. Non-Renewable Sources
- Natural resources are of several types. One distinguishing
characteristic is whether the resource exists as a stock or a flow.
- The difference lies in whether the level of current use affects future
availability.
- In the case of flow resources there is no link between current use and
future availability (example: solar radiation, wave and wind power).
- Stock resources are defined by the fact that the level of current use
does affect future availability.
- Non-renewable resources are minerals, including the fossil fuels.
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Reserves vs. Resources
- Reserves refer to an estimate of the amount of fossil fuels that can
technically and economically be expected to be produced from a
geological formation.
- Resources refer to an estimate of the amounts of fossil fuels that are
believed to be physically contained in the source rock.
- Static lifetime is the reserves-to-production ratio (RPR or R/P) and is
the remaining amount of a non-renewable resource, expressed in
time.
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Static Lifetime
207 19864 110 62
14251264
756675
157
0
200
400
600
800
1000
1200
1400
1600
Hard coal Brown coal Natural gas Uranium Crude oil
Static Lifetime of Resources (in years, 2008)
Reserves Resorces
Source: Statista
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Availability of Primary Energy
Source: BP
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The Strategic Ellipse
Strategic ellipse: with about
70% of world oil reserves
and about 65% of world
natural gas reserves.
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Global Primary Energy Supply by Source
Source: iea
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Consumption per capita by Region (2012)
Source: BP Statistical Review of World Energy
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Energy and Economic Development
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The Natural Environment
Environment
Recycling
Energy
Waste /
Pollution
Consumption
individuals
Production
firms
Capital
stock
Natural
Resources
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Environmental pollution
- Emissions from fossil fuel and biomass burning account for most
energy-related air pollution in most parts of the world.
- Energy-related emissions are released through the entire spectrum of
energy activities, from upstream emissions during fossil fuel
extraction and production to end-use emissions from fossil fuels
burned for transport, heating, cooking and the like.
Primary
Energy
Secondary
Energy
End-
Energy
Useful
Energy
Energy
Services
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Energy–related environmental pollution
- Carbon dioxide is a colourless gas formed during the combustion of
any material containing carbon.
- Burning releases CO2 into the atmosphere.
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CO2 emissions by fuel (2010)
Key point: Combustion
of coal has driven the
growth in global
emissions in recent
years. Although there
was a decline in 2009
due to the financial
crisis, this anomaly was
short term and the trend
has returned to its
previous trajectory.
Source: iea
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CO2 emissions by sector (2010)
Key point: The
combined share of
electricity and heat
generation and
transport represented
nearly two thirds
of global emissions in
2010.
Source: iea
25
Top 10 emitting countries in 2010
Key point: The top 10
emitting countries
account for
nearly two-thirds of the
world CO2 emissions.
Source: iea
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CO2 per capita per country
Source: iea
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CO2 emissions per GDP by region (2010)
Key point: Emission
intensities in economic
terms vary greatly
around the world
Source: iea
Emission Intensity
tracks how many
kilograms of CO₂ are
emitted for each unit
of GDP produced
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Global Carbon Dioxide Emissions
Source: Global Carbon Project (2013)
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CO2 emission and its consequences
- Carbon dioxide is a ‘greenhouse gas,’ and is one of the primary
causes of human-induced climate change.
- With higher CO2 concentrations come expectations of a stronger
greenhouse effect and therefore warmer global temperatures:
The greenhouse effect is the warming of the earth’s atmosphere
caused by a build-up of carbon dioxide and other greenhouse or
trace gases that act like a pane of glass in a greenhouse, allowing
sunlight to pass through and heat the earth but preventing a
counterbalancing loss of heat radiation.
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The Greenhouse Effect and Global Warming
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Global Warming
Source: Natioanal Climatic Data Center
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Global Warming
- Although there is a considerable year-to-year variability in annual-
mean global temperature, an upward trend can be clearly seen.
- Firstly over the period from about 1920-1940, with little change or a
small cooling from 1940-1975, followed by a sustainable rise over the
last three decades since then.
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Global Warming
Source: IPCC
34
Consequences of the Global Warming
Source: IPCC
35
Consequences of the Global Warming
- “The benefit of strong, early action on climate change outweight the
costs”
- “The costs of stabilising the climate are significant but manageable;
delay would be dangerous and much more costly”
(Lord Nicolas Stern, 2006)
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Consequences of the Global Warming
- “During the twentieth century we were largely on a comfortable, and a
fairly predictable energy path of a mature, fossil fueled civilization
- Things are different now. The world’s energy use is at the epochal
crossroads
- The new century cannot be an energetic replica of the old one and
reshaping the old practices and putting in place new energy
foundations is bound to redefine our connection to the universe ”
(Smil, 2003)
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Conclusion
- Energy is essential either for production or consumption.
- Today’s energy system is basically based on fossil fuels.
- Divergent geographical location between production and
consumption of fossil fuels.
- Increase in CO2 emissions due to combustion of fossil fuels.
- The significant and continuous increase in CO2 emissions causes
global warming which poses the risk of rapid, drastic changes in
human and natural systems.
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Topics
Production Transport MarketEnergy
Use
Industry
Households
Transportation
Topics:
• Hotelling
• Peak Oil
Topics:
• Natural
Monopoly
• Hold Up
problem
Topics:
• Merit Order
• Electricity
Prices
Topics:
• Pollution
• Negative
Externality
• Policy
Instruments
Topics:
• Environmental
concern
• Green Behavior
• Pro-
environmental
motivations
Non-
renewable
resources
Renewable
resources
Topics:
• Support
Schemes
Topics:
• Green Growth
• Energy Efficiency
• Rebound Effect
• Environmental Kuznets Curve
Topics:
• RE and Electricity prices
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