November 19, 2007Budapest

Recent IPCC findings: Working Group III -

Mitigation.Focus on the FSU&CEE +

Aleksandra NovikovaDr. Diana Ürge-Vorsatz

Outline

Emission trends Adapt or mitigate? Co-benefits of mitigation Potentials for mitigation Policies: are they really expensive? Conclusions

Emission trends

GHG emissions grew with an increase of 70% in 1970 – 2004 The effect of declining energy intensity has been smaller than the

combined effect of per capita income growth and population growth

Where are we going to?

The SRES (non-mitigation) scenarios project an increase of baseline global GHG emissions by 25 - 90% between 2000 and 2030

Time-sensitive issue: Adapt or mitigate?

Can be complementary, substitutable or independent of each other Adaptation measures are required anyway Over the next 20 years or so, aggressive climate policy can do little to

avoid warming already ‘loaded’ into the climate system Over longer time frames, mitigation investments have a greater

potential to avoid climate change damage This potential is larger than the adaptation options that can currently

be envisaged Two-pronged strategy: avoid the unmanageable (mitigation) and

manage the unavoidable (adaptation) (Source: Urge-Vorsatz. 2007. Presentation of the UN SEG Report)

The costs of GHG mitigation

In 2030 macro-economic costs for multi-gas mitigation, consistent with emissions trajectories towards stabilization between 445 and 710 ppm CO2-eq, are estimated at between a 3% decrease of global GDP and a small increase, compared to the baseline

Why climate mitigation policies? Health co-benefits from reduced air pollution as a result of actions to

reduce GHG emissions may offset a substantial fraction of mitigation costs

Other numerical co-benefits co-benefits Improved energy security Employment creation and new business opportunities Growing real estate values Reduced urban congestion Increased access to energy services for the poor Improvements in industrial productivity and competitiveness The environmental issues

Case study of Hungary Reduced energy poverty Reduced bankruptcy among households Relieved social tensions related to energy pricing

The value of these co-benefits often outweigh the direct financial benefits of energy savings

Sectoral economic potential for global mitigation for different regions as a function of carbon price, 2030

Estimated potential for GHG mitigation at a sectoral level in 2030 in different cost categories , transition economies

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

Buidlings Industry Agriculture Energy supply Forestry Waste Transport

Gton CO2eq.

<20 <0 0-20 20-100

Cost categories* (US$/tCO2eq)

* For the buildings, forestry, waste and transport sectors, the potential is split into three cost categories: at net negative costs, at 0-20US$/tCO2, and 20-100 US$/tCO2. For the industrial, forestry, and energy suppy sectors, the potential is split into two categories: at costsbelow 20 US$/tCO2 and at 20-100 US$/tCO2. Source: constructed based on the IPCC (2007)

Three key pillars of mitigation strategies

1. Lowering the energy intensity of economic activity through increases in the efficiency of vehicles, buildings, appliances, and industrial processes

2. Lowering the carbon-emissions intensity of energy supply through additions of renewable and nuclear energy supply and through modifications to fossil fuel technologies that enable the capture and sequestration of CO2

3. Reducing the carbon emissions from land-use change by means of reforestation, afforestation, avoided deforestation, and improved soil-management practices in agriculture

Source: Urge-Vorsatz. 2007. Presentation of the UN SEG Report

Introduction of policy tools to improve efficiency: expensive?

Policy instrument

Countries

Effectiven

Energy or emission reductions

Cost-effect

Cost of GHG reduction

Conditions for success, co-benefits, strengths, limits

Appliance standards

EU, US, JP, AU, BR, CN

High

JP: 31 M tCO2 in 2010; CN: 240 MtCO2 in 10 yrs;US: 2.5% of electricity use in 2000 = 65 MtCO2, 6.5% = 224 MtCO2 in 2010.

High

AU: –15 $/tCO2 in 2012; US: –65 $/tCO2 in 2020; EU: –194 $/tCO2 in 2020.

Factors for success: periodical update of standards, independent control, information, communication and education.

Tax exemptions / reductions

US, FR, NL, KO

High US: 88 MtCO2 in 2006. High

Overall B/C ratio – Commercial buildings: 5.4 – New homes: 1.6.

If properly structured, stimulate introduction of highly efficient equipment and new buildings.

Utility demand-side management

US, CH, DK, NL, DE, AT

High US: 36.7 MtCO2 in 2000. HighUS: Average costs approx. –35 $/tCO2.

DSM programmes for commerce > cost-effective than those for residences

Examples of policy tools in the buildings sector

Is there a silver bullet?

No one policy can capture the large share of the potential Policy packages needed! Effective combinations of policy instruments

Ex: Standards, labeling and financial incentives

Source: CLASP, 2004

Typical lifetime of capital stock Structures with influence > 100 years

less than 30 years 30-60 years 60-100 years

Domestic appliancesWater heating and HVAC systemsLightingVehicles

AgricultureMiningConstructionFoodPaperBulk chemicalsPrimary aluminiumOther manufacturing

Glass manufacturingCement manufacturingSteel manufacturingMetals-based durables

RoadsUrban infrastructureSome buildings

Early investment are important!

Table 11.17: Observed and estimated lifetimes of major GHG-related capital stock

Conclusion

GHG are expected to continue growing dramatically Mitigation and adaptation policies should be integrated The macro-economic costs of mitigation to stay under 4 °C of the T-

increase above the pre-industrial level is between a 3% decrease of global GDP and a small increase, compared to the baseline

Co-benefits of efficiency improvement and mitigation pay back these costs with additional revenues on the top

Mitigation opportunities are available in each sector, the largest cost-effective potential (29% of the baseline in 2020) is in buildings

There are many good examples of energy-efficiency and mitigation policies designed worldwide

The number of these policies is cost-effective! No single instrument can capture the large share of the low-cost mitigation

potential A portfolio of instruments is necessary Early actions are important!

Novikova AleksandaEmail: novikovaa@ceu.hu

Dr. Diana Ürge-Vorsatz

http://www.ceu.hu/envsci/staffDV.htmEmail: vorsatzd@ceu.hu

Thank you for your attention!

Note: all graphics and figures are from the IPCC WG III, 2007 if not stated otherwise.

Supplementary slides

Stabilization scenarios

Sectors Policy measures and instruments shown to be environmentally effective

Energy supply

Reduction of fossil fuel subsidies Taxes or carbon charges on fossil fuels Feed-in tariffs for renewable energy technologies Renewable energy obligations Producer subsidies

Transport

Mandatory fuel economy, biofuel blending and CO2 standards for road transportTaxes on vehicle purchase, registration, use and motor fuels, road and parking pricingInfluence mobility needs through land use regulations, and infrastructure planningInvestment in attractive public transport facilities and nonmotorised forms of transport

Buildings

Appliance standards and labelingBuilding codes and certificationDemand-side management programmesPublic sector leadership programmes, including procurementIncentives for energy service companies (ESCOs)

Industry

Provision of benchmark informationPerformance standardsSubsidies, tax creditsTradable permitsVoluntary agreements

Selected sectoral policies that have shown to be environmentally effective in at least a number of national cases

Source: SPM

Overview of the global emissions for the year 2004, the baseline emissions for all GHGs adopted for the year 2030 (in GtCO2-eq).

Global emissions

2004 (allocated to the end-use

sector)

Global emissions

2004 (point of

emissions)

Type of baseline

used

Global emissions

2030 (allocated to the end-use

sector)

Global emissions 2030 Point of (point of emissions)

Energy Supply - 12.7 WEO - 15.8

Transport 6.4 6.4 WEO 10.6 10.6

Buildings 9.2 3.9 Own 14.3 5.9

Industry 12.0 9.5 B2/USEPA 14.6 8.5

Agriculture 6.6 6.6 B2/FAO 8.3 8.3

LULUCF/Forestry 5.8 5.8 Own 5.8 5.8

Waste 1.4 1.4 A1B 2.1 2.1

Source: chapter 11, AR 4 IPCC

Emission Reduction by Technology AreaACT Map Scenario in the ETP by IEA

Improved energy efficiency most important contributor to reduced emissions

Other renewables 6%

Biomass 2%

Fossil fuel gen eff 1%

Nuclear 6%

Coal to gas 5%

Hydro 2%

CCS 12%

Fuel mix in building 5% and industry 2%

Power Gen34%

End-use efficiency

45%

Biofuels in transport 6%

CCS in fuel transformation 3%

CCS in industry 5%

MAP Scenario – 205032 Gt CO2 Reduction

Materials & products efficiency 1% Energy & feedstock efficiency 6%

Cogeneration & steam 2% Pocess innovation 1%

Industry 10%

Appliances 7.5%

Water heat. cooking 1%

Space heating 3%

Lighting, misc. 3.5%Air conditioning 3%

Buildings 18%

Fuel economy in transport 17%

Transport 17%

INTERNATIONAL ENERGY AGENCY AGENCE INTERNATIONALE DE L’ENERGIE

Cumulative emission reductions for alternative mitigation measures for 2000–2030 and for 2000–2100

Source: WG III Technical Summary, Figure TS.10

Illustrative scenarios from AIM, IMAGE, IPAC and MESSAGE aiming at the stabilization at 490–540 ppm CO2-eq (light bars) and at 650 ppm CO2-eq (dark bars)

Different stabilization scenarios reflect different contribution of mitigation measuresScenarios concur that 60-80% of reductions should come from energy and industry

Policy instrumentEffective-

nessCosteffec-tiveness

Policy instrumentEffective-

nessCost

effectiveness

Appliance standards High High Tax exemptions/ reductions

High High

Building codes High Medium Public benefit charges Medium/Low High

Procurement regulations

High High/Medium Capital subsidies, grants

Medium/ High Low

Energy efficiency obligations and quotas

High High Mandatory labelling and certification

High High

DSM programs High High Voluntary labelling and certification

Medium /High High

Energy performance contracting/ ESCO support

High Medium Voluntary and negotiated agreements

Medium Medium

Cooperative procurement

High High Public leadership programs

High High

Energy efficiency certificate schemes

High High Education and information programs

Medium/High High

Kyoto Protocol flexible mechanisms

Medium Medium Mandatory audit and energy management

High, but variable Medium

Taxation (on CO2/ fuels) Low Low Detailed billing and disclosure programs

Medium Medium

Conclusion: The impact and effectiveness of various policy instruments

The impact and effectiveness of various policy instruments Part 1: Control and regulatory mechanisms Policy instrument

CountriesEffectiven

Energy or emission reductions

Cost-effect

Cost of GHG reduction

Conditions for success, co-benefits, strengths, limits

Appliance standards

EU, US, JP, AU, BR, CN

High

JP: 31 M tCO2 in 2010; CN: 240 MtCO2 in 10 yrs;US: 2.5% of electricity use in 2000 = 65 MtCO2, 6.5% = 224 MtCO2 in 2010.

High

AU: –15 $/tCO2 in 2012; US: –65 $/tCO2 in 2020; EU: –194 $/tCO2 in 2020.

Factors for success: periodical update of standards, independent control, information, communication and education.

Building codes

SG, PH, DZ, EG, US, GB, CN, EU

High

HK: 1% of electricity saved; US: 79.6 MtCO2 in 2000; EU: 35–45 MtCO2, max 60% energy savings in new bldgs

Medi-um

NL: –189 $/tCO2 - –5 $/tCO2 for end-users, 46–109 $/tCO2 for society.

No incentive to improve beyond target. Only effective if enforced.

Procurement regulations

US, EU, CN, MX, KR, JP

High

MX: 4 cities saved 3.3 ktCO2-eq in one year;CN: 3.6 MtCO2 expected;EU: 20–44 MtCO2 potential.

Medi-um

MX: $1Million in purchases saves $726,000/yr; EU: <21 $/tCO2.

Success factors: enabling legislation, energy efficiency labelling & testing, ambitious en-ef specifications.

Mandatory labelling & certification

US, CA, AU, JP, MX, CN, CR, EU

HighAU: 5 M tCO2 savings 1992–2000;DK: 3.568 MtCO2.

HighAU: –30 $/tCO2 abated.

Effectiveness can be boosted by combination with other instrument and regular updates.

Energy efficiency obligations & quotas

GB, BE, FR, IT, DK, IE

High GB: 1.4 MtCO2/yr. High

Flanders: –216 $/tCO2 for households, –60 $/tCO2 for other sector in 2003;GB: –139 $/tCO2.

Continuous improvements : new en-ef measures, short-term incentives to transform markets etc.

Utility demand-side management

US, CH, DK, NL, DE, AT

High US: 36.7 MtCO2 in 2000. HighUS: Average costs approx. –35 $/tCO2.

DSM programmes for commerce > cost-effective than those for residences

The impact and effectiveness of various policy instruments Part 2: Economic and market-bases instruments

Notes: Country name abbreviations (according to the ISO codes except California, Ontario, Central and Eastern Europe and European Union): DZ – Algeria, AR – Argentina, AU – Australia, AT – Austria, BE – Belgium, BR – Brazil, CL – California, CA – Canada, CEE – Central and Eastern Europe, CN – China, CR – Costa Rica, CZ – Czech Republic, DE – Germany, Denmark – DK, EC – Ecuador, EG – Egypt, EU – European Union, FI – Finland, FR – France, GB – United Kingdom, HK – Hong Kong, HU – Hungary, IN – India, IE – Ireland, IT – Italy, JP – Japan, KR – Korea (South), MX – Mexico, NL – Netherlands, NO – Norway, ON – Ontario, NZ – New Zealand, NG – Nigeria, PH – Philippines, PO – Poland, SG – Singapore, SK – Slovakia, SI – Slovenia, CH – Switzerland, SE – Sweden, TH – Thailand, US – United States.

Policy instrument

Coun-triesEffectiv-eness

Energy or emission reductions

Cost-effectiv

Cost of GHG reduction

Conditions for success, co-benefits, strengths, limitations

Energy performance contracting

DE, AT, FR, SE, FI, US, JP, HU

High

FR, SE, US, FI: 20–40% of buildings energy saved; EU:40–55MtCO2 by 2010;US: 3.2 MtCO2/yr.

Medium

EU: mostly at no cost, rest at <22 $/tCO2; US: Public sector: B/C ratio 1.6, Priv. sector: 2.1

Strength: no need for public spending or market intervention, co-benefit of improved competitiveness.

Co-operative procurement

DE, IT, GB, SE, AT, IE, JP, PO, SK, CH

High

Varies, German telecom company: up to 60% energy savings for specific units.

High

0: Energy-efficient purchasing relies on funds that would have been spent anyway.

Success condition: energy efficiency needs to be prioritized in purchasing decisions.

Energy efficiency certificate schemes

IT, FR Medium IT: 3.64 Mt CO2 eq by 2009 expected. Medium n.a.

No long-term experience yet. Transaction costs can be high. Monitoring and verification crucial. Benefits for employment.

Kyoto Protocol flexible mechanisms

CN, TH, CEE (JI & AIJ)

Low CEE: 220 K tCO2 in 2000. Low 63 $/tCO2.So far limited number of CDM & JI projects in buildings.

The impact and effectiveness of various policy instruments Part 3: Financial instruments and incentives

Notes: please see the references for assessment of each policy tool in Chapter 6 of the IPCC AR4

Policy instrument

CountriesEffectiv-eness

Energy or emission reductions

Cost-effectiv

Cost of GHG reduction

Conditions for success, co-benefits, strengths, limitations

Taxation (on CO2 or household fuels)

NO, DE, GB, NL, DK, CH

LowDE: household consumption reduced by 0.9%. Low

Effect depends on price elasticity. Revenues can be earmarked for further efficiency. More effective when combined with other tools.

Tax exemptions / reductions

US, FR, NL, KO High US: 88 MtCO2 in 2006. High

Overall B/C ratio – Commercial buildings: 5.4 – New homes: 1.6.

If properly structured, stimulate introduction of highly efficient equipment and new buildings.

Public benefit charges

BE, DK, FR, NL, US states

Medium/low

US: 0.1–0.8% of total electricity sales saved /yr, average of 0.4%.

High in reported cases

From –53 US$/tCO2 to–17 $/tCO2.

Capital subsidies, grants, subsidized loans

JP, SI, NL, DE, CH, US, HK, GB

High

SI: up to 24% energy savings for buildings, GB: 3.3 MtCO2;US:29.1 Mio BTU/yr gas savings.

Low

NL: 41–105 US$/tCO2 for soc; GB:29 US$/tCO2 for soc, –66 $/tCO2 for end-user.

Positive for low-income households, risk of free-riders, may induce pioneering investments.

The impact and effectiveness of various policy instruments Part 4: Support, information and voluntary action

Policy instrument

Coun-tries

Effectiv-eness

Energy or emission reductions

Cost-effectiv

Cost of GHG reduction

Conditions for success, co-benefits, strengths, limitations

Voluntary certification and labelling

DE, CH, US, TH, BR, FR

Medium/ High

BR: 170 ktCO2 in 98, US: 13.2 MtCO2 in 2004, 2.1 bio tCO2-eq in total by 2010; TH: 192 tCO2.

HighBR: US$ 20 million saved.

Effective with financial incentives, voluntary agreements and regulations.

Voluntary & negotiated agreements

Western Europe, JP, US

Medium/High

US: 88 MtCO2-eq/yr UK: 15.8 MtCO2. Medium

GB: 54.5–104 US$/tCO2 (Cl Ch Agreements).

Can be effective when regulations are difficult to enforce. Effective if combined with financial incentives and threat of regulation.

Public leadership programmes

NZ, MX, PH, AR, BR, EC

High De: 25% public sector CO2 reduction over 15 years.

High

US DOE/FEMP: 4 US$ savings for every 1 US$ invested

Can be used to demonstrate new technologies and practices. Mandatory programmes have higher potential than voluntary ones.

Awareness, education / information

DK, US, GB, CA, BR, JP

Low/Medium

GB: En- Ef Advice Centres: 10.4 K tCO2 annually.

HighBR: –66 US$/tCO2; GB: 8 US$/tCO2 (for Energy Trust).

More applicable in residential sector than commercial.

Mandatory audit & en mngmnt requirement

US, FR, NZ, EG, AU, CZ

High, but variable

US: Weatherization Program: 22% saved in weatherized households.

MediumUS Weatherization Program: BC-ratio: 2.4.

Most effective if combined with other measures such as financial incentives

Detailed billing & disclosure programmes

ON, IT, SE, FI, JP, NO, CL

MediumUp to 20% energy savings. Medium n.a.

Success conditions: combination with other measures and periodic evaluation. Comparability with other households is positive.