Upload
chiquita-nunez
View
16
Download
0
Embed Size (px)
DESCRIPTION
The current position: a policy stocktake and reflection on the role of economic modelling to date. Sarah Hendry, Department for Environment, Food & Rural Affairs, UK ABARE workshop, Canberra, May 2003. Our energy future: creating a low carbon economy www.dti.gov.uk/energy/whitepaper. - PowerPoint PPT Presentation
Citation preview
The current position: a policy stocktake and reflection on the role of economic modelling to date
Sarah Hendry,
Department for Environment, Food & Rural Affairs, UK
ABARE workshop, Canberra, May 2003
Our energy future: creating a low carbon economywww.dti.gov.uk/energy/whitepaper
“Our new energy policy will ensure that energy, the environment and economic growth are properly and sustainably integrated”
“The UK should put itself on a path towards a reduction in carbon dioxide emissions of some 60% from current levels by 2050”
The new goals of UK energy policy
• Putting ourselves on a path to 60% cuts in carbon emissions by 2050
• Maintaining reliability of energy supplies• Promoting competitive markets in the UK and
beyond• Ensuring that every home is adequately and
affordably heatedAim is to achieve these together
Political/policy context
RCEP recommendation: • UK target to cut
carbon emissions by 60% by 2050
• Based on framework of Contraction and Convergence model
UK Government position:• UK/Annex 1 countries have to make
deep long term emissions cuts to achieve UNFCCC objective
• No preconception about framework for future action
• Uncertainty of science and scenarios
• But 60% by 2050 is a reasonable approximation of what UK needs to do
Role of modelling…
• To test feasibility of desired policy approach• Commissioned analysis from Future Energy
Solutions using UK version of the MARKAL energy model (bottom-up technology model)
• Objective to consider options and costs for achieving long term reduction in carbon emissions
MARKAL energy model
M e n u o f e n e r g y t e c h n o l o g i e s
p r o d u c t i o n
c o n v e r s i o n
t r a n s m i s s i o n
u t i l i s a t i o n
O p t i m a l l e a s t c o s t m i x o ft e c h n o l o g i e s
U s e f u l e n e r g yd e m a n d
P r i m a r yf u e l p r i c e s
E m i s s i o n sc o n s t r a i n t s
Costs of 60% CO2 reduction
Key conclusion of 1st tranche of analysis: provided wider international engagement, costs of order of ½ - 2 % of GDP in 2050
…ie between £10-50bn against forecast GDP in 2050 of £2500bn
… approximately 0.01-0.02 percentage points reduction on assumed GDP growth rate of 2.25% a year
Further modelling…to clarify drivers behind results
Wide range of sensitivity analyses to determine what circumstances would increase costs:
What happens if …..• energy efficiency doesn’t deliver
• if level of low carbon innovation is constrained
• if gas use is limited
• if costs assumptions for new nuclear build are varied
• if options like new nuclear build and CO2 sequestration are excluded from consideration.
Key results…
• range of technology options become available to cut CO2
• energy efficiency improvement and innovation very important to reduced costs
• options in transport sector relatively high cost
• fuel/generation mix of options sensitive to assumed technology costs
• policy framework should reflect this uncertainty: tools should leave market to find lowest cost routes
Limitations of results?
• only as good as input data and assumptions
• lack of feedbacks eg from cost of technologies to level of energy demand
• UK only
• bottom –up model tends to assume availability of low cost technology and may underestimate hidden or transaction costs
Response to limitations
• Care in use and interpretation of results• explore assumptions and sensitivities• Test out various visions for future, not create a
single forecast• Care in policy conclusions – seek those that are
robust across the range and use insights into key drivers for low cost
• Seek expert input and peer review
Personal conclusions…
• Satisfactory approach for a [relatively] simple question
• Process as important as product: transparency & consultation were critical – both internally and externally
How can we deal satisfactorily with complex issues around further international action?
Suspicion that you commission modelling to tell you what you want to hear?