Christian Azar

Based on joint work with Björn Sandén

Chalmers University, Göteborg Sweden

http://www.frt.fy.chalmers.se

Near-term technology policies for long-term climate targets

Department of Physical Resource Theory

Changing the technologies we pick from the shelfChanging the technologies we pick from the shelf

Bringing new technologies to the shelfBringing new technologies to the shelf

Department of Physical Resource Theory

Technology change

Changing the technologies we pick from the shelf (I)

0

10

20

30

40

50

60

1970 1974 1978 1982 1986 1990 1994 1998 2002

TW

h p

er y

ear

BIOMASS

OIL

OTHERS

COAL

District heating in Sweden

Changing the technologies we pick from the shelf (II)

Changing the technologies we pick from the shelf (II)

• Higher price on carbon emissions– Tax, or– Cap and trade, and– Removal of existing subsidies to

fossil fuels

• Efficiency standards when– energy prices are insignificant, or – markets are not expected to work

well

Changing the technologies we pick from the shelf (III)

Changing the technologies we pick from the shelfChanging the technologies we pick from the shelf

Bringing new technologies to the shelfBringing new technologies to the shelf

Department of Physical Resource Theory

Technology change

Advanced energy technologies required

Supply consistent with a 350 ppm target

0

100

200

300

400

500

600

700

800

2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

EJ/yr

nuclear

coal

oil

solar H2

biomass

solar electr.

wind gas

solar heat

hydro

coal w capt.

gas w capt.

bio w capt.

Results from the GET model. Azar et al, 2005, Climatic Change

Shares of world primary energy supply 1850-2000

0%

50%

100%

1850 1900 1950 2000

biomass

coal

oil

gas

hydro nuclear

Bringing new technologies to the shelf (I)

• New advanced technologies required

• Price signals and long-term committments required to make this happen…

• … but not sufficient because of long time scales– knowledge spill over– Long term future discounted by private actors

• Role for government: invest in learning!

Bringing new technologies to the shelf (II): Public R&D funding in OECD on renewable energy

0

200

400

600

800

1000

1200

1400

1600

1800

2000

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

Mill

ion

US

$

Geothermal

Biomass

Ocean

Wind

Solar Thermal-Electric

Solar Photo-Electric

Solar Heating & Cooling0

200

400

600

800

1000

1200

1400

1600

1800

2000

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

Mill

ion

US

$

Geothermal

Biomass

Ocean

Wind

Solar Thermal-Electric

Solar Photo-Electric

Solar Heating & Cooling0

200

400

600

800

1000

1200

1400

1600

1800

2000

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

Mill

ion

US

$

Geothermal

Biomass

Ocean

Wind

Solar Thermal-Electric

Solar Photo-Electric

Solar Heating & Cooling

Source IEA (2003)

Bringing new technologies to the shelf (III)

• R&D is not sufficient. – Valley of death needs to be bridged

• Government supported market formation to ensure diffusion that enables learning by doing– Public procurement

– Market share requirements (e.g., green certificates, portfolios)

– Technology specific support (subsidies)

• EU biofuels directive and green certificates

versus

• Subsidies

”Governments should not pick the winners” – but how?

CONCLUSION (I)

The important thing with near-term action is not only the actual reductions that are made, but equally important, the extent to which the policy puts us in a position where it is politically feasible to negotiate, adopt and meet even stronger targets for subsequent abatement periods.

Our climate policies need not only to be cost-efficient but they must also bring new technologies to the shelf.

CONCLUSION (II)

• Price incentives for cost efficient carbon abatement at present (changing the technologies we pick from the shelf).

• Technology specific policies to enable future reductions (bringing new technologies to the shelf).

• Subsidies warranted only when learning can be expected and the technology is promising.

CONCLUSION (III)

Let a hundred flowers bloom strategy

Governments should consider the possibility to initiate large-scale programs, individually or jointly, as part of the UNFCCC/Kyoto protocol negotiations to develop the more advanced energy technologies that are required to meet the long-term objective of the UNCCC

CO2-concentration and temperature

Per capita emissions under contraction and convergence by 2050

0

0.5

1

1.5

2

2.5

2000 2010 2020 2030 2040 2050

tC/c

ap/y

ear The European

Union

China

550 ppm

450 ppm

350 ppm

Criteria by which near-term policiesshould be judged

• Actual abatement

• Development of institutions and

mechanisms

• Impact on technology development

• Impact on actors

Department of Physical Resource Theory

Department of Physical Resource Theory

Let 2000-2010 the decade of great experiments and failures – tentative list

Solar PV Solar thermal electric Solar heat (building integrated as standard)

Wind (continued 25%/growth, plus large scale testing of off-shoreCO2 sequestration (demonstration plants + storage)Zero energy for heating houses Gasification of biomass and coal for h2, MeOH & DMEEthanol from woody biomassPrepare for the hydrogen future:

NG pipelines should be H2 compatibleFuel cells in cars, buses and local CHPStorage technologies

    

Nuclear share of electricity production

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

EU

USA

JAPAN

0

1000

2000

3000

4000

5000

6000

1974 1979 1984 1989 1994 1999

Renewables

Coal

Oil and gas

Nuclear Fusion

Fission

US public R&D expenditures

Japanese public R&D expenditures

0

1000

2000

3000

4000

5000

1974 1979 1984 1989 1994 1999

0

2

4

6

8

10

12

14

16

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

Bill

ion

US

$

Other

Conservation

Nuclear

Fossil

Renewables

OECD public R&D expenditures on energy

Photovoltaics costs and sales