Upload
calista-esty
View
214
Download
0
Tags:
Embed Size (px)
Citation preview
The EU Energy and Climate Policy and Its Macroeconomic Impacts on the EU Economy
Symposium on Options for Energy
Environmental Policy in Japan
July 6, 2013
Unnada Chewpreecha, Cambridge Econometrics
06/07/2011
Disclaimer
• This presentation does not necessarily represent the views of the European Commission (EC) or any collaborating institution
Overview
• The EU Energy and Climate policy• Assessing macroeconomic impacts using
E3ME and E3MG• Headline results
Overview
• The EU Energy and Climate policy• Assessing macroeconomic impacts using
E3ME and E3MG• Headline results
The EU Energy and Climate Policy
• Headline 20-20-20 energy and climate change targets for 2020
20% cut in GHG emissions (from
1990 levels)
20% share of renewable energy
20% improvement in
energy efficiency (from 2005)
The EU Climate and Energy Package
• A set of binding legislation which aims to ensure the 20-20-20 targets are met
• Separate Energy Efficiency Plan and the Energy Efficiency Directive
EU ETSEffort sharing
at national level
RES targets at national
level
CCS framework
Complexity and Interaction with Other EU Targets and Policies• The 20-20-20 targets are overlapped
– e.g. RES target could undermined the EU-ETS
• But one target alone will not necessary lead to other targets being met– market failure e.g. pricing mechanism alone may not lead to
RES and or energy-efficiency targets being met
• Complexity in designing national targets to achieve one single EU target
• Other factors undermining EU-ETS– recent economic crisis – EU ETS allowance prices collapse, structural reform of ETS – no incentive for industries to invest in low carbon technologies
Complexity and Interaction with Other EU Targets and Policies
• Link to other EU 2020 Targets such as employment and R&D and other EU policies such as resource efficiencies– need careful policy considerations to avoid contradictions– examples:
• increase in biocrops leads to higher food price• material tax increase costs of investment goods• EU ETS and competitiveness
– negative impacts can be avoided/mitigated through measures such as Environmental Tax Reform (ETR)
Examples of Energy and Climate Policies in the EU
Freezers/refrigerators (+labeling) Regulation
2009/643/EC
Recast of the EPBD
2010/31/EU9
TVs (+labeling) Regulation
2009/642/EC
Circulators Regulation
2009/641/EC
Labelling regulation for tyres
2009/1222/EC
Electric motors
Regulation 2009/640/EC
GHG Effort Sharing Decision
2009/406/EC*
Regulation Euro VI for heavy duty
vehicles 2009/595/EC
RES directive
2009/28/EC (Power
Generation)
RES directive
2009/28/EC (Transport))
GHG Effort Sharing Decision
2009/406/EC*
EU-ETS
MBI
Regulations
key
EU Policies Beyond 2020
• 2030 framework and 2050 roadmap• Continue the momentum of 2020 targets and
taking account of long-term climate goal (2°C degree)
• Build on the experience of, and lessons learnt from, the 2020 framework and identify where improvements can be made.
EU Policies Beyond 2020
Total
Power (CO2)
Industry (CO2)
Transport (incl. CO2 aviation, excl. maritime)
Residential and services (CO2)
Agriculture (Non-CO2)
Other Non-CO2 emissions
-100 -80 -60 -40 -20 0 20 40
GHG Reduction (%) Compared to 1990
2050
2030
2005
source(s): 2050 Roadmap, DG Climate Action, European Commission
Overview
• The EU Energy and Climate policy• Assessing macroeconomic impacts using
E3ME and E3MG• Headline results
Assessing Macroeconomic Impacts using E3ME and E3MG
• E3ME (Europe) and E3MG (world) models are:– computer-based econometric models…– covering economy, energy and emissions…– with detailed sectors (linked by IO tables) and regions (Japan)…– and endogenous technological progress
• They can be used for forecasting but are typically used for policy analysis
• They are versatile tools that can be used for economic and economy/environment analysis
• They have often been used to support the official European Commission policy impact assessments
Modelling Structure – E3 Model
ECONOMYas in national
accounts
TECHNOLOGYspecifications &
costs
ENVIRONMENTALEMISSIONS
as in environmentalstatistics
ENERGYas in energy
statistics
e.g. industrial emissions of SF6
funding R&D
pricesandactivity
investment
fuel usefuel prices and costs
fuel use
pollution-abatementequipment
fuel use
How Energy and Environment Taxes are Modelled in E3ME/E3MG
Increase in energy prices Reduction in energy consumption Reduction in emissions
IndustryHouseholds
Loss of real income
Lower spending
Loss of output
Loss of competitiveness
Worsening trade balance
Loss of jobs
Studies Using E3ME/E3MG
Topics E3ME/E3MG was used to..
EU ETS assess the economic impacts of different mechanisms for allocating ETS allowances
The Energy Taxation Directive
model the Europe-wide economic and environmental impacts of different energy taxation regimes
Environmental Tax Reform provide European economic and environmental impacts of different ETR regimes,
Energy Efficiency provide input to the proposed Energy Efficiency Directive by providing a quantitative assessment of the measures proposed to reduce energy demand.
Moving Beyond 20% provide input for DG CLIMA’s communication on changing the 2020 GHG target to 30% by assessing the economic impacts of a 30% target
Green Jobs model labour market implications of the EU climate and energy policies
Copenhagen targets analyse global economic impacts of the agreed Copenhagen targets
Studies Using E3ME/E3MG (cont)
Topics E3ME/E3MG was used to..
Non-CO2 trading scheme assessing the impacts of introducing an EU SO2/NOx trading scheme
Resource efficiency model EU resource efficiency policies through the E3ME material sub-model which covers physical resources such as food, feed, wood, metals, minerals,
Carbon leakage examine the extend of carbon leakage for EU industries as a result of EU climate policies
REDD provide an assessment of the two-way linkages between REDD and global carbon markets. E3MG was expanded to incorporate marginal abatement cost curves specific to the forestry sector
Global 2c scenario investigate global economic implications of reaching the 2c target in 2050
Environmental harmful subsidies
investigate the implications of removing environmental harmful subsidies in the EU
other non-environmental applications
carry out analysis on trade, labour market, sector study, R&D and investment multipliers, commodity prices and government policies
Overview
• The EU Energy and Climate policy• Assessing macroeconomic impacts using
E3ME and E3MG• Headline results
Headline Results
• Results taken from CE work done for DG Employment “Studies on Sustainability Issues – Green Jobs; Trade and Labour”, 2011
• E3ME was used to estimate macroeconomic and labour market impacts of the EU energy and climate policies
Scenarios Summary
• Reference case where 20% renewables and GHG targets are met through mixture of MBIs and regulations
• Two scenarios where target is met differently• Two scenarios with additional targets (30%
GHG and 20% energy efficiency target)• Revenues from MBIs recycled via income tax
Headline Results: Impacts on GDP
-0.2%
-0.1%
0.0%
0.1%
0.2%
0.3%
0.4%
0.5%
2005 2010 2015 2020 2025
EU27 GDP
Source(s): E3ME, Cambridge Econometrics.
S5
S6
S4
ref
S3
% difference from baseline Ref + Energy efficiency target is also met
Ref: 20% Renewable + GHG targets met (mix MBIs & regulations)
Ref: through MBIs
Ref: through regulations
Ref+ 30% GHG targets met (mix MBIs & regulations)
Headline Results: Impacts on Employment
Results Summary
• Positive GDP and employment results are driven by investment in renewables
• MBIs generate revenues to be recycled while regulations increase costs but no revenues
• Large amount of investment requires to meet energy efficiency target (IEA 2010 estimates for every 1% reduction in energy consumption, the EU buildings sector must invest €31.4bn a year)
Revenue Recycling and Investment
Increase in energy prices Reduction in energy consumption Reduction in emissions
IndustryHouseholds
Loss of real income
Lower spending
Loss of output
Loss of competitiveness
Worsening trade balance
Loss of jobs
Revenue recycling: lower income tax
Investment
Sensitivity: Revenue Recycling
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
Different Revenue Recycling Methods
GDP
Employment
% difference from baseline
Important Notes
• E3ME/E3MG modelling results form part of wider impact assessments
• Complement other analysis such as– other model types (CGEs)– quantitative analysis (e.g. CBA, input-output)– qualitative study, literature reviews– sector specific studies– survey and consultations
• All above need to be taken into account when carry out an impact assessment
Overview- Summary
• The EU Energy and Climate policy– 20-20-20 targets and beyond– issues and complexities
• Assessing macroeconomic impacts using E3ME and E3MG– overview of the models– model applications
• Headline results– macroeconomic impacts from EU energy and environmental
policies– implications of various revenue recycling methods
Thank you for your attention!
• The DG CLIMA web pages contain further information, including the full EC communication– http://ec.europa.eu/clima/policies/brief/eu/index_en.htm
• For full E3ME and E3MG projects and published papers as well as the model manual– www.e3me.com – www.e3mgmodel.com
• For further information on the modelling:– Unnada Chewpreecha, [email protected] or – Hector Pollitt, [email protected]