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A Rational Take on Decision Making- A Case Study of Sweden’s Budget for Energy, Climate and Environment

Emil GustafssonFredrik Nordström

Bachelor of Science ThesisKTH School of Industrial Engineering and Management Energy Technology EGI-2015

SE-100 44 STOCKHOLM

2015-05

Abstract

This project is written under the supervision of KTH andits energy department (dESA). The key inspiration to thisreport is the “rational decision making approach” employedby the Copenhagen Consensus Centre. Their research isoutstanding in the way that it rationalizes every invest-ment decision to its measurable and unmeasurable out-comes. The research is intuitive yet groundbreaking whenit comes to cost-benefit analysis.

The objective of this report is to apply the pillars of ratio-nality using a Multiple-Criteria Decision Analysis (MCDA)on the Swedish approach to making decisions regarding cli-mate and energy policy. The goal is to give an indica-tion of the effectiveness of the budget decision made by theSwedish government.

The first part of the report accounts for the establishment ofthe simplified comparison model (MCDA). The literaturereview accounts for previous work conducted within thisfield, both by the Copenhagen Consensus Center but alsoother parties, to lay groundwork for the model used in thesecond part. The method then generates a model to beused to evaluate the Swedish budget for climate and energypolicy. The second part applies the model established inthe first part on the Swedish budget to result in a referencepoint for evaluation.

The main outcome is the development of a modell thatcan be calibrated to that which gernerates the most effec-tive good. The model is to be seen as a prototype subjectto many iterations before official use. Early results of themodel indicate that investments in preservation of natureand similar have a low benefit compared to that of invest-ments in sustainable cities and research.

# MCDA, AHP, Rational Decision Making, Energy andEnvironmental politics, Climate Threats

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Sammanfattning

En rationel synvinkel på beslutsfattande

Denna rapport är skriven åt skolan för Energisystemanalys(dESA) på KTH, i syfte att ta fram underlag åt besluts-fattare för att användas för investeringsbeslut inom energ-,klimat- och miljöpolitik. Huvudinspirationen till projektethärstammar från den rationella forskning som bedrivs vidCopenhagen Consensus Center. Forskningen är unik i detavseende att den lyckas konkretisera och samla alla formerav utfall från ett investeringsbeslut. Forskningen är intuitivmen ändå revolutionerande när det kommer till kostnad-nytta-analyser.

Rapporten syftar till att använda rationaliteten bakom enMultiple Criteria Decision Analysis (MCDA) på Sverigesinvesteringsbeslut för energi-, klimat- och miljöpolitik. Må-let med rapporten är dels att skapa en modell som kan av-vändas för att utvärdera investerinsbeslut, samt att ge enindikation på effektiviteten av de budgetbeslut som fattatsav den svenska regerigen inom dessa områden.

Första delen av rapporten redogör för upprättandet av enjämförelsemodell (MCDA) där litteraturstudien behandlardels tidigare arbeten gjorda av Copenhagen Consensus Cen-ter samt andra studier som använder sig av MCDA. Dettaför att ge en grund att stå på vid användandet av model-len. I metoddelen skapas sedan den modell som i del tvåappliceras på Sveriges budget för energi, klimat och miljöför att generera ett resultat som används som referens vidutvärdering av budgeten.

Det primära resultatet är utvecklandet av modellen somkan avändas för att bestämma vilka investeringar som ge-nererar mest total nytta. Modellen bör ses som en första avflera iterationer som vid framtida studier kan förfinas, delsinom detta område men även för generelt beslutsfattande.Tidiga resultat från studien i denna rapport visar på att in-vesteringar med avsikt att skydda och bevara natur, miljöoch liknande genererar en låg total nytta medan investe-ringar inom forskning och hållbara städer skapar mer totalnytta.

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Acknowledgment

Initially we were at a crossroad with our thesis. We hadour own idea for a project and were unsure weather or notto pursue it. We proposed the idea to our supervisor, MarkHowells who thought it sounded interesting. Mark is firstout on our list to thank for taking us under his wing and al-lowing us to continue with the project. Along with Mark wewould like to thank his team, especially Francesco Nerini,who have helped provide us with guidance and advice.

We would also like to thank KTH for all underlying frame-work allowing us to conduct this project. Lastly we wouldlike to thank those who agreed to answer the survey thatwas sent out during the course of this project.

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Contents

0 Introduction 1

1 Problem formulation and goal description 21.1 Problem formulation . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.2 Goal Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2 Literature review 42.1 Climate change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

2.1.1 IPCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.1.2 Sweden’s potential threats . . . . . . . . . . . . . . . . . . . . 5

2.2 Sweden’s energy policies & budgets . . . . . . . . . . . . . . . . . . . 62.2.1 Historically . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.2.2 Sweden’s current budget . . . . . . . . . . . . . . . . . . . . . 72.2.3 Goals and Purpose . . . . . . . . . . . . . . . . . . . . . . . . 10

2.3 Rational decision making . . . . . . . . . . . . . . . . . . . . . . . . 132.3.1 The Copenhagen Consensus Center . . . . . . . . . . . . . . . 132.3.2 Paradigm Shift . . . . . . . . . . . . . . . . . . . . . . . . . . 14

2.4 MCDA & and other tools . . . . . . . . . . . . . . . . . . . . . . . . 152.4.1 Origin and meaning . . . . . . . . . . . . . . . . . . . . . . . 162.4.2 Solving MCDA problems . . . . . . . . . . . . . . . . . . . . 162.4.3 Other MCDA studies . . . . . . . . . . . . . . . . . . . . . . 17

3 Method 193.1 Choice of tool: AHP . . . . . . . . . . . . . . . . . . . . . . . . . . . 203.2 Demarcations and simplifications . . . . . . . . . . . . . . . . . . . . 213.3 Choosing and ranking of parameters . . . . . . . . . . . . . . . . . . 22

3.3.1 Parameters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223.3.2 Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233.3.3 MatLab Optimization . . . . . . . . . . . . . . . . . . . . . . 23

3.4 Evaluation of cost centers . . . . . . . . . . . . . . . . . . . . . . . . 243.5 Indicator generation . . . . . . . . . . . . . . . . . . . . . . . . . . . 253.6 Sensitivity analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

4 Results and discussion 27

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4.1 Results & analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . 274.1.1 Weightages . . . . . . . . . . . . . . . . . . . . . . . . . . . . 274.1.2 Evaluation of cost centers . . . . . . . . . . . . . . . . . . . . 284.1.3 Indicator of Investment . . . . . . . . . . . . . . . . . . . . . 294.1.4 Sensitivity analysis . . . . . . . . . . . . . . . . . . . . . . . . 31

4.2 Sweden’s politics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 334.2.1 Investments and policies . . . . . . . . . . . . . . . . . . . . . 344.2.2 2015 year’s budget . . . . . . . . . . . . . . . . . . . . . . . . 35

4.3 Rational thinking, right or wrong . . . . . . . . . . . . . . . . . . . . 364.3.1 A rational take on Climate Change . . . . . . . . . . . . . . . 364.3.2 Loop holes of rationality . . . . . . . . . . . . . . . . . . . . . 384.3.3 Paradigm shift . . . . . . . . . . . . . . . . . . . . . . . . . . 39

4.4 Criticisms & Suggested improvements . . . . . . . . . . . . . . . . . 404.4.1 Criticisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 404.4.2 Suggested improvements . . . . . . . . . . . . . . . . . . . . . 41

5 Conclusion & Future Work 425.1 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425.2 Future Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

References 44

Appendix 47

A Survey 48

B MatLab code 50

C Evaluation of expenditure areas: Results 51

D Evaluation of expenditure areas: Motivation 53

List of Figures

1 Historical investments in energy and environment by the Swedish gov-ernment in percent of total expenditures . . . . . . . . . . . . . . . . . . 7

2 Difference in final total energy use 2005 and planned total energy use2020, according to national action plans (TWh) [9] . . . . . . . . . . . . 12

3 Energy intensity in some EU countries 2010 (kWh/GDP) [9] . . . . . . . 13

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4 The Kuhn cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

5 An illustrative example of what the desired result will look like . . . . . 196 Demonstration of the importance of certain qualities [37] . . . . . . . . 207 Demonstration of the candidate’s qualifications [37] . . . . . . . . . . . . 218 An example of the questions asked in the survey . . . . . . . . . . . . . 24

9 Pie chart showing the weightages for the main parameters . . . . . . . . 2810 Pie charts displaying the weightages of each sub parameter . . . . . . . 2911 A diagram showing the composition of each indicator per budget post.

Sorted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3012 A diagram showing the composition of the indicators per budget post

when the weightages are set to equal weight. Sorting remains. . . . . . . 3113 A diagram showing the composition of the indicators per budget post

when a parameter “X” has been added. Sorting remains. . . . . . . . . . 3214 A diagram showing the composition of the indicators per budget post

when the weightages have been reversed. Sorting remains. . . . . . . . . 33

List of Tables

1 Complete figures of the expenditure areas 20 and 21 together with thedeviation between the current budget and the proposed budget by thecurrent government [10] . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

2 Expenditure area 20: General Environmental Protection and NatureConservation [11] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

3 Expenditure area 21: Energy [12] . . . . . . . . . . . . . . . . . . . . . . 10

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Chapter 0

Introduction

Todays decision making is influenced by an infinite number of factors. Religion,politics, fear, love, experience, corruption, the list goes on and on. Which of theseparameters are the most important? How do you decide which are important andwhich aren’t? Perhaps the most common answer to this would be something alongthe lines “It depends on which area the decision is regarding and what purpose ithas”. The purpose behind each decision varies as much as the factors that affectsit but, without getting too philosophical, isn’t there a universal purpose behindeach decision? Ideally it all boils down to making decisions that improve life itself.Which factors improve life? Is this an impossible task to rationalize and pinpoint?

Policy making is influenced by ideological principles and by the issues and solutionsthat “make the most noise”. However a more logical and objective approach wouldgenerate far more efficient and beneficial results. An Inconvenient Truth definitelyput global warming and climate issues on the agenda, but no one really stopped toconsider if this really was a problem to prioritize in terms of cost versus benefits.Is global warming worth avoiding at the price of our economy? Is it perhaps abetter approach spending money preparing and adapting to global warming whilecontinuing living the way we do? Recognizing the problem and the smart solutionto that problem is key to spending our money wisely.

If every country in the world implemented Kyoto all the way through, it wouldprobably save about 1 polar bear every year. Yet we shoot 300-500 polar bearsevery year. There is something fundamentally wrong with saying ‘If we want to

help the polar bears, the right way to go about it is to stop global warming.’ - BjørnLomborg, director of the Copenhagen Consensus Center

[1]

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Chapter 1

Problem formulation and goaldescription

This chapter takes the underlying problem touched upon in the introduction, andformulates a simplified illustration of the problem at hand (1.1). This chapter thengoes on to describe which goals that are expected to be fulfilled (1.2).

1.1 Problem formulation

• Decision making is influenced by factors that often do not matter, thus theend result is not the most efficient and does not do the most overall good.

• Energy, climate and environment budgets, and budgets in general align wellwith the purpose and goals for said budget, but the purpose itself is seldomlyquestioned.

• Investments are often well thought through in a narrow perspective but whentaking into account a broader picture, investments towards combating climatechange are often not very beneficial.

1.2 Goal Description

This report is written on behalf of the energy department at the Royal Institute ofTechnology and is therefore focused and limited to a case study of decision makingwithin energy and environment policy. The goals with this report is:

• To establish a set of parameters that reflect a broad perspective to be able tomap the overall "good" that can be achieved through a budget decision.

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1.2. GOAL DESCRIPTION

• To map the outcomes of the Swedish budget for energy and environmentpolicies.

• Develop a Multiple Criteria Decision model and apply it on the Swedish budgetfor energy and environment to give an indication of its impact.

• To enlighten a broader perspective of how to apply rationality to investmentdecisions. The goal is to give an indication and illustration of how this can bedone, not to give a definitive answer or result.

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Chapter 2

Literature review

In this chapter the report aims to give a deeper understanding of the decision makingin energy and environment politics. More specifically, this section aims to bringto light Sweden’s current climate threats (2.1), the investments made in energy,climate and environment by the Swedish government (2.2), how decision makingis conducted today (2.3) and how Multiple Criteria Decision Analysis (henceforthMCDA) can been used to help decision making (2.4).

The information is gathered from published books and articles, government reports,and interviews with experts on the subject.

2.1 Climate change

This section introduces the International Panel on Climate Change (henceforthIPCC) as the most objective source of climate data and analysis. The section reviewsthe most recent publication by the IPCC and summarizes the climatic impacts thatlie ahead (2.1.1). The above is also focused and isolated to the perspective of Swedento give a comprehensive overview of Sweden’s most relevant threats (2.1.2).

2.1.1 IPCC

The IPCC was established in 1988 by the United Nations Environment Programmeand the World Meteorological Organization. The goal was to provide the world withan objective scientific overview of climate change and its potential environmentaland socio-economic impacts. It is today arguably the most well regarded and trust-worthy source of climate data and analysis, on which a majority of policy makersand world leaders rely and make their decisions based on [2].

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2.1. CLIMATE CHANGE

The IPCC publish regular reports known as Assessment Reports (henceforth AR)to give a comprehensive overview of the current climate change status as well asprojections for the future. The most recent report, AR 5, was published in 2014and is the most powerful document yet to summarize climate change.

AR 5 summary - With each statement there is an indicator of the level of confidencethe IPCC can support it with. These are denoted with parenthesis or italic.

The underlying cause to global warming, as well known, is the increase in submis-sions of greenhouse gases. Greenhouse gases submitted by mankind have constantlyincreased since the pre-industrial era, driven largely by economic and populationgrowth. The levels of carbon dioxide, methane and nitrous oxide are unprecedentedin at least the last 800,000 years. Their effects are extremely likely to have been thedominant cause of the observed warming since mid-20th century. The impacts areas follows [3]:

• In many regions, hydrological alterations, such as changes in precipitation ormelting snow and ice, are having an effect on water resources when it comes toquantity and quality. The IPCC have a medium confidence in this statement.

• Many ecological systems have shifted their geographic locations and behavioursin response to ongoing climate change (high confidence).

• Negative impacts of climate change on crop yields have been more commonthan positive impacts (high confidence)

• Vulnerability to climate change is directly related to non-climatic factors andfrom multidimensional inequalities such as differences in development pro-cesses (very high confidence). I.e. you are much more likely to be susceptibleto climate change if you are poor.

2.1.2 Sweden’s potential threats

This subsection briefly summarizes the main threats to Sweden due to climatechange. The information is mainly based on reports by the Swedish Meteorolog-ical and Hydrological Institute, Swedish Energy Agency and the EnvironmentalProtection Agency

Current: As in the rest of the world, the temperature in Sweden has gone up sincethe industrialization, and since 1800 the temperature change in Sweden hasbeen roughly twice as high as the global mean temperature change. Alongwith the increased temperature the precipitation has increased in Sweden,and will most certainly increase further even if the two degrees target1 is

1The two degrees target refers to a maximum increase of two degrees in the global meantemperature, with the time before industrialization as a reference point.

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CHAPTER 2. LITERATURE REVIEW

met. When the precipitation increases the risk for flooding and landslidefollow, and even though it is expected to be a higher number of heat wavesduring the summer, it is during wintertime that Sweden will notice the biggesttemperature difference (warmer). There is no evidence that there will be morestorms in the future due to climate change [4].

Biggest threats: Sweden’s biggest threats due to climate change are mostly re-lated to the increased precipitation. Higher temperature will affect such thingsas a higher tree-line in the mountains and changing conditions for agriculturaland fishing industries (both positive and negative effects) but the biggestthreats are due to more rain. They are:

• Heavy rain and downpour leads to flooding of roads and lowland, con-stituting a hazard both for humans and farmland and other property.

• Destruction of infrastructure due to landslides and erosion, such as trainsand roads, together with a higher risk for power failure due to stormdamage.

2.2 Sweden’s energy policies & budgets

Since this report is focusing on the Swedish policies for energy and environment, thissection aims to review Sweden’s investments in these areas, both past (2.2.1) andpresent (2.2.2), as well as the goals and purpose behind these investments (2.2.3) .

2.2.1 Historically

Sweden has, for a long time, been viewed as one of the leading countries in envi-ronmental engineering and energy technology. Politicians, especially Swedish politi-cians, often like to speak of Sweden as a pioneer in energy politics, and that Swedenwill continue to be a pioneer in the future.

”Sweden is, and will continue to be a pioneer within energy and environmentalchallenges. A responsible direction of politics entails a focus on sustainable

development”2

- Fredrik Rienfeldt, former Prime Minister [5]

However the budget figures seem to indicate differently, at least in terms of money.Between the years 2000 to 2013 Sweden spent approximately 87 000 million SEKon investments in environment, nature and energy. That is roughly 0.8% of to-

2Original quote given in Swedish. Translation made with reservation for incorrect translation

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2.2. SWEDEN’S ENERGY POLICIES & BUDGETS

tal expenditure invested. The corresponding figure year 2014 was 0.9% of totalexpenditures [6].

Figure 1: Historical investments in energy and environment by the Swedish government inpercent of total expenditures

For comparison to Sweden’s 0.9%, the U.S. spent approximately 1% the same year[7], and Germany roughly 1.4% [8]. In 2009 Sweden invested the least amount ofmoney per capita, on R&D out of the Nordic countries, and since then the fundinghas gone down rather than up [9]. See Figure 1 for evidence.

2.2.2 Sweden’s current budget

The present budget of 2015 was voted thru by parliament in December, 2014. Thebudget comprises of 27 expenditure areas and this report focuses on area number20 General environmental protection and nature conservation and area number 21Energy. Table 1 shows the expenditure areas number 20 and 21 in their entirety3.In total 5 341 million SEK is going to be invested in these two expenditure areas.Together they make up 0.898% of Sweden’s total budget for 2015 [10].

In this report focus will be on the investments that directly aim to work towardsthe goals within energy and environment set by the Swedish government. Thus

3Original budget is in Swedish[10]. Translation made with reservation for incorrect translation.

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Area of expenditure: 20 - General environmen-tal protection and nature conservation

Deviationfrom

government

Voted byparliament

1:1 Environmental Protection Agency - 35 300 378 2591:2 Monitoring of the environment - 75 000 281 2141:3 Measures for valuable nature - 350 000 649 5351:4 Sanitation and recovery of contaminated areas - 183 000 420 0181:5 Environmental research - 75 9901:6 The National Chemicals Agency - 209 0521:7 Fees to international organisations - 183 1311:8 Subsidies for "super green cars" 115 000 215 0001:9 Swedish Meteorological and Hydrological Institute - 219 1041:10 Climate adaptation - 50 000 115 0001:11 Inspire - 20 0001:12 Measures for sea and water environment - 75 000 6665651:13 Measures for international climate investments - 183 0001:14 International environment cooperation - 33 9001:15 Sustainable cities - 80 0001:16 Protection of valuable nature - 660 000 715 0001:17 Swedish Agency for Marine and Water Manage-ment

- 20 000 207 974

1:18 Climate investments in municipalities and regions - 200 000 -2:1 Swedish Research Council for Environment Agri-cultural Sciences and Spatial Planning: Administra-tion

- 55 513

2:2 Swedish Research Council for Environment Agri-cultural Sciences and Spatial Planning: Research

- 7 000 632 863

Area of expenditure: 21 - Energy1:1 Swedish Energy Agency 24 000 274 0281:2 Measures for energy efficiency - 5 000 243 0001:3 Subsidies for market introduction of wind power - 10 0001:4 Energy research - 20 000 1 192 5361:5 Compensation for costs for the phaseout of Barse-bäck nuclear power plant

- 138 600

1:6 Planning support for wind power - 15 0001:7 Swedish Energy Markets Inspectorate - 105 1171:8 Energy technology - 100 000 140 0001:9 Electrical readiness - 255 0001:10 Fees to international organisations - 21 3281:11 EV Charging infrastructure 75 000 75 000

Table 1: Complete figures of the expenditure areas 20 and 21 together with the deviationbetween the current budget and the proposed budget by the current government [10]

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Cost center Description1.2 Monitoring of theenvironment

Allocations for environmental monitoring, to achieve environmen-tal goals, and contribution to nonprofit environment organisations.

1.3 Measures for valu-able nature

Maintenance of protected areas, property and otherwise valuablenature.

1.4 Sanitation and re-covery of contaminatedareas

The allocation is to be used to examine and restore polluted areasthat need sanitation and restoration. It is also to be used fordisposal of radioactive waste.

1.5 Environmental re-search

Primarily to be used for work towards the environmental “quality”goals. It is also to be used for the research being done by IVLSwedish environmental institute.

1.8 Subsidies for “supergreen cars”

To be used to pay for subsidies for those who have bought a newelectrical vehicles with certain requirements.

1.10 Climate adaptation Allocation is to be used to limit the vulnerability of climate changeand to raise awareness of it.

1.12 Measures for seaand water environment

To be used for actions in improving, preventing, planning, restor-ing and protecting of sea and water environment.

1.13 Measures for inter-national climate invest-ments

To be used to reach the Swedish international climate commit-ments (e.g. Kyoto and EU 202020 goals) by investing in, partici-pating in and implementing projects that aims to do this.

1.15 Sustainable cities To support the development of sustainable cities. The alloca-tion supports new construction and reconstruction of cities, areasand/or blocks that contributes to sustainable city development.

1.16 Protection of valu-able nature

To protect biodiversity and outdoor life.

2.2 Swedish ResearchCouncil for Environ-ment, Agricultural Sci-ences and Spatial Plan-ning: Research.

To be used to support the research within environment and com-munity building with the goal to help Sweden be a prominentresearch nation.

Table 2: Expenditure area 20: General Environmental Protection and Nature Conservation[11]

administrative costs (such as the Environmental Protection Agency and the SwedishEnergy Agency) have been excluded. Table 2 and 3 list the budget posts that willbe evaluated in this report, together with a brief summary of the allocation of saidbudget post4.

The budgets being analysed and used in this report are, as mentioned earlier, theones for 2015 that were presented by the Alliance. There is however an uncertainty

4Original budget is in Swedish [11, 12]. Translation made with reservation for incorrect trans-lation

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Cost center Description1.2 Measures for energyefficiency

To be used for subsidising energy and climate advisory and ed-ucation. Also to be used to develop and introduce new energyefficient technology.

1.3 Subsidies for mar-ket introduction of windpower

Government fundings in technical development and market intro-duction of large-scale wind power applications. Also to be usedfor studies of environmental effects due to wind power implemen-tations.

1.4 Energy research Allocation for expenditures and subsidies for R&D, demonstra-tions and commercialization within the energy sector. Also to beused to promote development of technology in renewable energysources and effective energy usage in the industrial sector.

1.6 Planning supportfor wind power

To be used as economical support for municipalities and provincialoffice with the aim to facilitate the development of wind power.

1.8 Energy technology Aims to increase the spread of energy techniques that have a pos-itive effect on the climate.

1.9 Electricity readiness To be used to ensure electrical readiness and dam security forSweden’s hydropower.

1.11 Charging infras-tructure

Allocation to be used to expand the infrastructure regarding elec-trical cars.

Table 3: Expenditure area 21: Energy [12]

of the budget due to the fact that the Alliance did not form government. In Table 1it is shown where the budgets deviate from each other, and in total the Allianceaim to spend 1 566 million SEK less than what was suggested by the governmentfor 2015 year’s budget.

2.2.3 Goals and Purpose

The goals for climate, environment and energy in Sweden are committed to twolevels, towards international measures and domestic measures.

Kyoto: The Kyoto protocol was the first big commitment on an international levelregarding energy and climate policy [13]. Sweden ratified the protocol in 2002,committing not to increase GHG emissions with more than 4% comparedwith the emissions in 1990, for the period 2008 till 2012 [14]. With 1990 as areference year, Sweden is allowed to increase its emissions from 72,2 Mton/yearto 75,1 Mton/year on average between 2008 till 2012.The latest figures show average emission of 61,1 Mton/year for that period,meaning that Sweden meet the Kyoto goals [15].

EU 202020 package: Is a package set up by the European Union to ensure the

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countries in the EU achieve the targets for energy and environment by 2020.The targets for the European Union are [16]:

• Reducing GHG emissions by 20%, from 1990 levels• At least 20% of total energy produced should be from renewable sources.

– At least 10% of energy sources in the transport section should berenewable.

• Energy efficiency improvement with 20% in EU (reduction in energy usedper GPD)

As with the Kyoto goals the 202020 goal for reducing GHG emissions aredistributed differently among the countries according to development level.Sweden is to reduce GHG emissions by 17% by 2020, compared with 2005years levels while for example Romania is allowed to increase GHG emissionsby 19% until 2020 [17].Sweden has already achieved two of the 202020-goals. In december 2013 Swe-den presented figures from 2012 proving that both the share of renewableenergy sources of the total production of energy, and the share used in thetransport section, was higher than the 202020-goals (51% and 12.5% respec-tively) [18].

Domestic goals: Even though Sweden is primarily controlled by internationallydefined energy and climate goals, domestic goals exist to complement thosegoals.2008-2012: During the time of the first section of the Kyoto protocol Swe-den had a domestic goal to reduce the emissions by at least 4% (instead ofa maximum increase of 4%, as mentioned above). This goal was completedsince Sweden reduced emissions from 72,2 to 61,1 Mton/year (reduction withapproximately 15%, see above) [14].2020: Above the EU’s goals for 2020, Sweden aims to reduce emissions by 40%(compared with 1990 levels), and have at least 50% renewable energy sourcesin energy production (the latter goal has already been achieved) [19].

Goals in a longer perspective are now being discussed, both on an interna-tional level as well as domestic. The EU leaders have in October 2014 agreedon new framework for enhanced goals for the EU countries by 2030 [20]. Thesenew goals have received criticism in Sweden, especially from environmental or-ganisations and the green parties of the government, since the goals are notambitious enough [21]. There is therefore an opposition that insist on clearerand even more aspirational goals for climate and energy, both for 2030, 2040and 2050. Domestic goals for 2050 are discussed with plans of Sweden withno GHG emissions at all [22].

Non finished goals: The area where Sweden still needs improvement (when onlyconsidering non finished goals) are regarding energy efficiency, where Swedenhas yet to complete the EU 2020 goal (20% energy efficiency improvement).The fact is that Sweden has had about the same energy usage since 1990,

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roughly 560 TWh [23]. Plans for 2020 is rather to increase the usage ofenergy, than reducing it, see figure 2.

Figure 2: Difference in final total energy use 2005 and planned total energy use 2020,according to national action plans (TWh) [9]

Sweden is in the top of the EU countries regarding energy usage per capita andplaces in the middle regarding energy usage per GPD (as to which the goal for202020 is measured by). An explanation to these figures are the electricity-intensive industry that exist in Sweden, and that the price on electricity hasbeen low.

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2.3. RATIONAL DECISION MAKING

Figure 3: Energy intensity in some EU countries 2010 (kWh/GDP) [9]

2.3 Rational decision making

As remarked in the introduction, decision making is today flawed and widely in-fluenced by the wrong factors. This section reviews what organisations and peoplewho work with rational decision making (2.3.1). This section also introduces theconcept of paradigm shift to be used as an analytical tool when considering rationaldecision making (2.3.2).

2.3.1 The Copenhagen Consensus Center

The Copenhagen Consensus Center (henceforth CCC) is a non-profit think tank,founded and directed by professor Bjørn Lomborg. The CCC has existed for nearly10 years and has been as a project a little longer than that. The organizationhas grown out of the Danish Environmental Assessment Institute and is now anindependant body both with regards to funding and influence.

The CCC takes its most distinct shape as a conference of prominent economistswhere potential solutions to global issues are examined and prioritized using cost-benefit analysis. These economist evaluate the overall benefit that can be achievedthrough a solution and compares it to its cost to be able to compare and prioritize.The idea is that in a world with limited budgets and attention spans, there is anabsolute need to find effective ways to prioritize and to do the most good for themost people [24].

Professor Lomborg initially took leap at the ongoing debates on climate change.

13


He started to, just as many others at the time, question the documentary “AnInconvenient Truth” to conclude that there were many fallacies in the film. He thenwent on to evaluate the suggested solutions to global warming to point out: “it wasgoing to be very expensive and do very little good”. From there on out the researchhas grown and Lomborg, at the head of the CCC, now include the entirety of theworld’s biggest problems in his scope of research. The quote below by Lomborghimself summarizes the CCC’s spirit.

We all wish there was enough money to solve every problem. But there is a limitto how much money we have. Therefore politicians prioritise every day, but not

always on the best basis. Copenhagen Consensus will provide a framework to allowus to prioritise sensibly - President and Founder of the CCC, Bjørn Lomborg [1]

What distinguishes the CCC is the backbone mentality to compare costs and ben-efits black on white to able to be 100% rational in decision making to ensure thatyou are doing the most possible good. Though it is to be noted that the CCC farfrom denies global warming.

As will be discussed further down in the discussion part of the report (see sec-tion 4.3), there are potential ethical problems with evaluating everything in com-parable numbers.

In practice the CCC has produced several reports ranging from fictional scenariossuch as the book “How to spend 75 billion to make the world a better place”, tooptimizing how the UN should set their new millenium goals, that will be set inSeptember. The later is the current focus of the CCC, and was published in TheEconomist, where CCC have prioritized the proposed 169 goals [25]. According tothe CCC choosing to focus the efforts on 19 goals, instead of the proposed 169,would give “more bang for your buck”[26].

2.3.2 Paradigm Shift

Thomas Kuhn defines a paradigm shift as “a change in the basic assumptions, orparadigms, within the ruling theory of science.” Kuhn saw that a paradigm shiftis the ultimate evolution from one paradigm to another. The evolution of saidparadigm would go through the following steps before reaching its new state [27].

1. Pre-normal science: The state in which there is no consensus on which theory,model or concept best describes or solves a particular problem. During thisphase most suggestions are incomplete and incompatible.

2. Normal science: Normal science is the phase where there is one dominant(consensus within the discipline) theory that explains or resolves the problemat hand. This is the current paradigm until you reach step 5.

14

2.4. MCDA & AND OTHER TOOLS

3. Anomaly: A particular incident that challenges the paradigm under normalscience. It either leads to a crisis or the anomaly is resolved/discarded.

4. Crisis: If several anomalies start to build up it can lead to a crisis to cause aparadigm shift

5. Paradigm shift: When a new paradigm replaces an old. Naturally this phaseis normally characterized by the later being superior to the prior paradigm.

The Kuhn Cycle

2. Normal science

3. Anomaly4. Crisis

5. Paradigm shift

1. Pre-normal science

Figure 4: The Kuhn cycle

When it comes to rational decision making there are some examples that will bebrought up in section 2.4 but there is no real consensus nor for evidence based noremotional decisions. More on this under section 4.3

2.4 MCDA & and other tools

As mentioned, this report aims to take into account several parameters that areimportant when making an investment decision. The goal is then to create a modelwhere the importance of the parameters is taken into account, to be able to makea decision as effective as possible.

To be able to weigh several parameters at the same time this report will be using aMultiple Criteria Decision Analysis (henceforth MCDA).

15


2.4.1 Origin and meaning

MCDA (or sometimes MCDM, Multiple Criteria Decision Making) is somethingthat people use on a daily basis when facing a decision that includes more than onefactor. MCDA basically just means considering multiple factors at the same timewith regard to each factor’s importance, when making a decision. Often peoplechoose intuitively without realizing that several parameters have been involved inthe decision. MCDA aims at structuring and solving problems involving multiplecriteria. The aim is to give decision makers groundwork to make a decision thatgenerates the best possible total outcome across all criteria.

Since the 1960’s MCDA has been frequently used when making important decisions,and several different approaches have grown to be used in different areas such aspolitics, business and energy [28]. Some of the earliest proponents were AbrahamCharnes and William W. Cooper followed by Bruno Contini and Stan Zionts, thelatter who developed one of the first multiple-criteria negotiating models in 1968[29]. Since the 1970s, extensive research has been done in the field of MCDA todevelop specific tools and software used to facilitate decision making, and today sev-eral organizations (such as the International Society on Multiple Criteria DecisionMaking, the Euro Working Group on MCDA and INFORMS Section on MCDM)exists to spread the knowledge of MCDA.

2.4.2 Solving MCDA problems

When it comes to solving problems with multiple criterias, different techniques hasbeen developed, both in design of the model and evaluation of the results. Sometechniques are:

- Goal programming school: Works to set a prioritize values, targets and tominimize the weighted deviations from these value targets to the goals. Wasfirst used by Charnes and Cooper in 1961 [30].

- Fuzzy-sets theorists: Introduced by Zadeh in 1965 and used in many MCDAalgorithms to solve particularly fuzzy problems.

- Analytic hierarchy process (AHP): Breaks down the problem into a hierarchyof sub problems/sub criterias. After that the relative importance of the criteriais evaluated by pairwise comparisons. The AHP model then converts theseevaluations to weights or priorities, which then are used to get an overall scoreof each alternative [31].

To solve the problems, specific decision making software is often used, example ofsuch are:

16

2.4. MCDA & AND OTHER TOOLS

- Analytic hierarchy process (AHP)- Best worst method (BWM)- ELECTRE (Outranking)- Multi-attribute value theory (MAVT)- New Approach to Appraisal (NATA)- Superiority and inferiority ranking method (SIR method)- Technique for the Order of Prioritisation by Similarity to Ideal Solution (TOP-SIS)

- Value analysis (VA)- Weighted sum model (WSM)- And many more

In this report an AHP model will be used to help determine which investments fromthe Swedish budget for energy and environment that are efficient. The methodwill not be used to find one single best alternative/investment, but to rate theinvestments and be able to see which are most and least effective.

2.4.3 Other MCDA studies

MCDA is today a recognized method for solving problems with multiple crite-rias/alternative, both in the fields of energy and environment [32] as well as otherfields like the medical industry. In the field of energy studies, when it comes to deter-mine the best alternative for different types of energy production, MCDA methodsis used in reports on the countries of Pakistan [33] and Cyprus [34]. In the Pakistanreport an AHP method is used to determine which renewable energy source is mostsuitable. This is done by gathering information on, and weighing, several subcate-gories and ranking the alternatives after how well they achieve in these categories.In the Cyprus report multicriteria decision, and the method PROMETHEE is usedto select what energy crops is most appropriate to use for achieve the goals forreduction of carbon emissions.

In the medical industry, MCDA is being used increasingly when choosing/evaluatingdifferent medical techniques [35]. Those in favor of using MCDA methods believethat in this way you will find the most profitable options, while those against arguethat one can not assess people and people’s lives in this way.

When using MCDA methods it is often common to translate all parameters/criteriasand outcomes in one universal unit. Often GPD or some other economical unit isused, but this is not always the case.

Since 1971 the country of Bhutan has used other measurements than GDP to mea-sure progress and development, and introduced what they call GNH (gross nationalhappiness) index [36]. GNH values the physical, environmental and social health

17


of the citizens and the natural environment of the country. The measurement isbeing considered by the UN to be used on an international scale. GNH (much likeMCDA) takes several parameters into account to be able drive the development inthe direction that makes most good.

"People always ask how can you possibly have a nation of happy people? But thisis missing the point. GNH is an aspiration, a set of guiding principles through

which we are navigating our path towards a sustainable and equitable society. Webelieve the world needs to do the same before it is too late."- Thakur Singh Powdyel, Bhutan’s minister of education

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Chapter 3

Method

This chapter describes the entire methodology to accomplish the set of goals listedin chapter 1. It entails which tools that has been chosen (3.1), and why and whichdemarcations and simplifications had to be made to the tool itself (3.2). This sectionthen goes through the required steps of the model (3.3, 3.4) to be able to generatethe desired result: an indicator of the total generated good of a each specific budgetpost (3.5). At the end of this section a sensitivity analysis is conducted to illustratechanging/different scenarios (3.6).

This section is a specific account of how the results have been achieved.

An illustration of the desired result is shown in figure 5. This illustration showshow an investment, investment “A”, scored in the developed model in this follow-ing methodology. The “max” bar shows the maximum good that can be achievedaccording to this model.

Figure 5: An illustrative example of what the desired result will look like

19

CHAPTER 3. METHOD

3.1 Choice of tool: AHP

What this report attempts at doing is to develop a model that can be reiterated andrefined to become a useful decision making tool. For this iteration the model willgive an indication of whether the proposed budgets are on par with the goals set upby the Swedish government. Especially this report looks at whether the proposedbudget is the best way of achieving what needs to be achieved. Naturally, to tacklethis, there is a need to take several different factors into account at the same time.

There are endless of different ways to compare multiple factors at the same time.The CCC, that was mentioned in the literature review, fundament on translatingeverything to economic terms. This means that they have chosen to translate forexample improved nutrition, to what economic impact it will have. Their “transla-tion” is often (always) based on studies and statistics.

As mentioned in the literature review, this report uses a specific Multiple CriteriaDecision Analysis tool to combine several factors into one universal indicator. AMCDA tool is per definition really any tool that combines several parameters, andin this report an Analytic Hierarchy Process (AHP henceforth) is used. In the AHPthe importance of a certain factor is weighted so that one can evaluate an outcomenot just in its absolute terms, but with regard to a system of weights (importance).The model is easiest described through an example as demonstrated in figure 6 andfigure 7 below.

Figure 6: Demonstration of the importance of certain qualities [37]

20

3.2. DEMARCATIONS AND SIMPLIFICATIONS

Figure 7: Demonstration of the candidate’s qualifications [37]

For example this shows that experience is the most important criteria (weight 0.547),and that Dick is the best choice (score 0.493). As more applicable for this report,instead of qualifications, a rating of the outcomes of each expenditure will be applied(see section 3.4).

3.2 Demarcations and simplifications

Several demarcations and simplifications have been made to allow this illustration.These are listed below.

Demarcations

• Only the budget for energy and environmental policies has been taken intoconsideration

• Only outcomes that generate a positive impact have been included. If negativethe outcome is neglected (set to zero).

• No consideration is taken to “feeling good” and “increasing happiness” whenevaluating the budget.

Simplifications

• The AHP itself is a simplification and has some flaws, see chapter 4.• Not all existing parameters have been included, but the ones included are

considered as most important.• A small number of data has been used in order to rank the parameters.• Investments regarding research has been considered assuming a “best case”

scenario.

21

CHAPTER 3. METHOD

3.3 Choosing and ranking of parameters

The section entails a methodology of which parameters have been chosen and howtheir respective importance was determined.

3.3.1 Parameters

Naturally when considering investments in energy, climate and environment policyit would seem fitting to consider, for example, both emissions of CO2 and an increasein use of renewables. However this model is going to be broader than to just considerthe factors of climate change and effects on environment and energy. This model willconsider a broader set of parameters such as economic impacts and the possibilityfor job creation.

The parameters that have been chosen are summarized in the list below. The mainparameters are shown in bold whereas the sub parameters are underlined.

Environmental: The total envi-ronmental outcomes of the invest-ment decision. For example the de-cision’s effects on GHG emissionsor its stress on the ecosystem.- GHG-reduction: Overall effect onthe GHG emissions in Sweden indifferent sectors (industry, trans-portation etc.).- Energy efficiency improvement:Using energy more efficiently,achieving the same results usingless energy. Meeting the EU 2020goal.- Increasing energy supply fromrenewable energy: Increasing theamount of energy produced fromusing renewable sources. Meetingthe goal of 100% renewable energysources.- Preservation of nature/ecologicalsystems: Preserving Sweden’s na-ture i.e. lakes, forests, open fields,clean air etc.

Economical: The total economicoutcomes/requirements of the in-vestment decision. For example ifthe investment is profitable fromday one, or have low operations &maintenance (O&M) cost.- Capital cost: How much is neededto invest in the beginning of theproject regarding personal, equip-ment etc.- Positive NPV: That the project iseconomically profitable.- O&M costs: Costs to maintain theproject throughout time.- Incentivizing for small and newbusiness: Self explanatory

Social: The total social co-benefitsof the investment decision. For ex-ample a large job creation as a re-sult of the investment, or reducedclimate and environmental relatedhealth problems.- Jobs: The potential of creating

22

3.3. CHOOSING AND RANKING OF PARAMETERS

new jobs as a result of the invest-ment decision.- Health: The increased health sta-tus as an outcome of the environ-mental impacts. For example re-duction in air pollution.- Education: The potential co-benefits on the educational systemin Sweden. For example motivat-ing and inspiring more studentstowards a certain profession, andraising the level of knowledge.- Innovation: The international sta-tus as result of the investment. Forexample Germany’s current statuswithin renewable energies. This

would potentially result in an in-crease in innovation in Sweden.

Technical: The total technicalsuitability of the investment de-cision.- Scalability: However it is possibleto extend the technology, both interms of quality and quantity.- Technical Readiness: The technol-ogy creates value already andsolves a current problem.- Operation & Maintenance needs:O&M needs associated with the in-vestments. How much attention itneeds in the long run.

These parameters have been chosen after reviewing several other reports, and thennarrowed down to the most important ones for this study [33, 34, 38].

3.3.2 Survey

To gather information regarding the importance of each parameter and each subparameter a survey was sent out to politicians, researchers within energy, climateand environmental policy, economists and several institutions and organisations.The survey gathered intel by asking to prioritize between two parameters at a time.See ?? for an illustrated example from the survey.

These types of questions were asked both regarding main and sub parameters, withdifferent parts of the survey being answered by people from different fields. Forexample politicians were asked to prioritize regarding main and social parameters,and researchers were asked to prioritize regarding environmental and technical pa-rameters.

See Appendix A for a more thorough account of the survey.

3.3.3 MatLab Optimization

With the results collected from the survey (see section 3.3.2) an average was com-prised of each individual question. To assign the weightings of the main and sub

23

CHAPTER 3. METHOD

Figure 8: An example of the questions asked in the survey

parameters a MatLab optimization was run (see Appendix B for complete code).The code measures the size of the inconsistency with different constellations ofweights. Each offset from the collected results in the survey can be found throughthe following equation:

r2 =n−1∑i=1

n∑j=i+1

(Variable Parameteri

Variable Parameterj− Constant Parameteri

Constant Parameterj

)2(1)

Where n is the number of parameters. Variable ParameteriVariable Parameterj

refers to the varying ratioof importance between two parameters and Constant Parameteri

Constant Parameterjis the constant ratio

value the survey gave. The difference between the variable ratio and constant valueis an offset to the optimum value. By varying the weightages and minimizing theoffset (r2) an optimal constellation was found.

See Appendix B for complete code

3.4 Evaluation of cost centers

As a second part of an AHP model one needs to quantify the outcomes or char-acteristics (depending on use). In this report this means evaluating the outcomesof the budget costs that are being considered according to the parameters and subparameters selected.

24

3.5. INDICATOR GENERATION

This was done by ranking each relevant cost center from expenditure area’s 20 and 21on a scale from 0-5 in how large effect the investment presumably will have on eachsub parameter. To make as good assumptions as possible the budget was studiedthoroughly by looking at purpose and allocation of each interesting investment (seetable 2 and 3), together with research on the outcome on investments made towardsenergy and environmental improvements.

For example the European Commission estimates that working to achieve the 202020goals will lead to an increase in jobs. Roughly 417 000 jobs is estimated to becreated from achieving the 20% renewable energy target and about 400 000 jobsfrom achieving 20% energy efficiency improvement [16]. Thus, investments thatwork to achieve these goals will receive a high score regarding Energy efficiencyimprovement/Increasing energy from renewables, and Jobs.

Other sources used to evaluate the cost centers includes reports from the NationalInstitute of Economic Research (NIER) [39, 40] and the Swedish Energy Agency. Forcomplete motivation of the evaluation of the different cost centers, see Appendix D

3.5 Indicator generation

Once the weights of importance have been established and the outcomes of thebudgets have been quantified, an indicator of the generated good from each invest-ment decision can be determined. Each indicator is a unitless number calculatedaccording to the example equation below.

Main Parameter indicator, MI =n∑

i=1Wi ∗ SOi (2)

Investment indicator =m∑

j=1Wj ∗ MIj (3)

Where SO is the outcome for each sub parameter, W is the weightage for that subparameter and n and m is the number of sub and main parameters respectively.MI is an sub indicator of the main parameter score that, when all are summedtogether, gives a total indicator.

25

CHAPTER 3. METHOD

3.6 Sensitivity analysis

To show for the flexibility of the method, and to take into consideration chang-ing/different scenarios that originally has not been included, a sensitivity analysishas been made with 3 different scenarios. These are:

• Inclusion of a parameter X• Equating the weighting system• Reversing the order of the weighting system

In this analysis a so called parameter “X” that considers e.g. happiness and security,is introduced. This is to bring to light how an evaluation according GNH couldlook like (see section 2.4.3 on Bhutan and GNH). This is done by reviewing the costcenters and including the effects of increasing e.g. happiness and security.

This section also examines the effects of setting all the parameters to equally im-portant, to show the flexibility of the model. This is done by setting all the weightsequal, both for the main parameters and the sub parameters, and generate newindicators.

Lastly a reversal of the weights has been made where the, according to the survey,most important main parameters switch weightages with the least important. Theoutcome of the cost centers remain and an new set of results are then generated.

26

Chapter 4

Results and discussion

This chapter presents the results and then discusses the results and the area ofthesis in general.

4.1 Results & analysis

This section presents the data derived from the methods in the previous chapter.Presented is a full account of in-the-process-results necessary to reach the end result:the investment indicator (4.1.1, 4.1.2, 4.1.3). Also included in this section is theresult from the sensitivity analysis and discussion of said analysis (4.1.4).

4.1.1 Weightages

Below are the weightages derived using the Matlab optimization (see section 3.3.3)combined with the results from the survey sent out. The social sub parameters arehowever based on the proportions in the total Swedish budget [10] due to untrust-worthy answers. Figure 9 shows the weightages of the main parameters where asfigure 10 shows the weightages of the sub parameters.

Main parameters: The results show that environmental outcomes are the mostimportant (58%) and that the social aspects are the least important (10%).

Sub parameters: The results are fairly evenly distributed with the exception of,under the social parameter’s, innovation (7%) and health (48%).

The results are overall realistic as the survey asked to prioritize in the aspect ofinvestment made in energy and environmental purpose, why environmental aspectshave generated a significant importance. The weights are merely an indication of

27

CHAPTER 4. RESULTS AND DISCUSSION

Figure 9: Pie chart showing the weightages for the main parameters

the parameters importance but are in practice subject to calibration. The weightsshould be regarded as a first iteration of an otherwise useful and correct weightingsystem that is easy to recalibrate when gathering more/new information.

4.1.2 Evaluation of cost centers

As mentioned in section 3.2 this report makes some demarcations and simplifica-tions. This is to make the model usable without having to make too many inaccurateassumptions.

When evaluating the budget posts it is not taken into consideration how an invest-ment contributes to things such as “feeling good” and increasing happiness. These,more “fuzzy” qualities are different for every individual making it very hard to rankand put a number on this matter. Interesting in this respect is the GNH index usedin Bhutan (as mentioned in the literature review, section 2.4.3). If this index wereto be used, these type of factors would be accounted for in a completely differentway. However in this report focus is mainly on measurable effects, why these factorshave been discarded.

When looking at investments regarding research, this report views the investmentsin a “best case” scenario, meaning the research is assumed to achieve the goals andobjectives that are set in the budget. This may give the impression that investmentsin research score too good, but to be able to make as good assumptions as possiblethis report chooses to have a positive view on research.

The evaluation of the cost centers are, just as the weightages, a throw in the rightdirection but subject to calibration for a more accurate model. The evaluation of

28

4.1. RESULTS & ANALYSIS

(1) Environmental (2) Economic

(3) Social (4) Technical

Figure 10: Pie charts displaying the weightages of each sub parameter

each expenditure area can be found in Appendix C and Appendix D.

4.1.3 Indicator of Investment

After the weightages and the outcomes have been combined, indicators could begenerated using equation 3. These are shown in figure 11.

The results from figure 11 show the following:

29


Figure 11: A diagram showing the composition of each indicator per budget post. Sorted

• The budgets posts for research and sustainable cities give a relatively goodindicator overall.

• Measures for protecting nature and such, have a relatively bad outcome over-all.

• The environmental parameters weigh up for the biggest part in almost all ofthe budget posts.

• The biggest difference between the indicator is the size of the environmentalcomponent.

• The technical component varies very little between the budgets posts.

With the chosen model it is important to note that the maximum indicator of gen-erated good that can be achieved is 5, with a contributing factor from each mainparameter corresponding to its percentual importance. These are 0.52, 2.91, 1.13and 0.63 for the social, environmental, technical and economical parameter respec-tively. As figure 9 clearly illustrates as well as these numbers, the environmentalfactors are the most contributory.

With the weightages used in this report and by using this report’s evaluation ofthe cost centers, the results indicate that the Swedish government should focuson investments in R&D, measures for energy efficiency and sustainable cities andstop/reduce investments in measures for preserving/protecting nature and environ-ment. In the budget it is notable that quite large amount of money is already being

30

4.1. RESULTS & ANALYSIS

invested in R&D with Energy research being the biggest cost center evaluated inthis report. At the same time all cost centers that aim to preserve/protect natureand environment also rank at the top of the list of investment size (see table 1).

4.1.4 Sensitivity analysis

The three variations chosen in section 3.6 are presented below.

Figure 12: A diagram showing the composition of the indicators per budget post when theweightages are set to equal weight. Sorting remains.


• The order of best indicators remain relatively close to figure 11.• Almost all budget posts reach a good result within their respective technical

component.• The social component plays a bigger and bigger role as the investment gets

better and better.• The environmental component is low compared to that indicated in figure 11.• 1:11 Charging infrastructure benefited most from the rearrangement of weights.

It is illustrated that while the order of worst to best investments remains roughlythe same, the outcomes from the investment moves closer to each other, when givingthe weights of the parameters equal value. This makes it harder to determine whichinvestments that are better than others. Setting the weights equal also shows how

31


well each main parameter’s indicator was met.

Figure 13: A diagram showing the composition of the indicators per budget post when aparameter “X” has been added. Sorting remains.


• Investments in preservation and protection of nature and such, got a highnumber of the parameter X thus benefitting its total indicator.

• This is an illustrative example of how to incorporate a more unmeasurableparameter into the model

Compared with the original outcome, cost centers that aim to preserve and protectnature and environment (such as Measures for valuable nature and Sea and waterenvironment) now receives a much higher total score when introducing the param-eter “X”. This implicates that decision makers in Sweden values the parameter “X”highly, since the cost centers benefitting from this parameter is among the largerinvestments in the budget areas 20 and 21.


• Many of the cost centers that received a high score in figure 11, is still amongthe best investments when inverting the weights, due to a relatively high socialgood factor.

32

4.2. SWEDEN’S POLITICS

Figure 14: A diagram showing the composition of the indicators per budget post when theweightages have been reversed. Sorting remains.

• Those investments with almost only environmental contribution experience abig setback when theses factors become less important (e.g. 1.13 Measures forinternational climate investment and 1.2 Monitoring of the environment).

The previously best investments remain as they have a relatively big contribution inall aspects, and not only in environmental aspects. It also indicates that a successfulinvestment is one with benefits in all four main parameters. This further provesthat investments in R%D and sustainable cities has the most overall good.

4.2 Sweden’s politics

In the literature review, actions and investments in environment, nature and energyin Sweden is presented. In this section an analysis of these combined with the resultsfrom section 4.1 is made.

33


4.2.1 Investments and policies

In the literature study, Sweden is mentioned as a pioneer in energy and environ-mental politics. However looking at investments made by the Swedish government,both in research and total investment (see section 2.2.1), it becomes clear that Swe-den has not invested more money than other countries in the recent years. Since2006, when the Alliance won the election, the allocations for Measures for energyefficiency and Energy research (primarily on renewable energy sources) has almostbeen cut in half by 2014 [41, 6]. This makes it inaccurate to call Sweden a pioneerin this respect, which also is the conclusion of a report from the Swedish Societyfor Nature Conservation (SSNC) from 2013 regarding Sweden as leading country inenergy politics. In the report, Sweden is seen as a pioneer only in 3 out of 18 areasregarding energy politics and in 13 of 18 areas Sweden is behind other countries,such as Denmark and Germany, who leads the way in these areas [9].

If one takes a look at the results presented and compare the best investments withthe size of the investments it is noteworthy that investments like sustainable citiesand measures for international climate investments are among the smallest invest-ments. Still these cost centers are in top regarding total generated good, and theresults in this report suggest on larger investments in order to strengthen Sweden’sposition in this aspect.

If Sweden wants to be a pioneer in energy and environmental politics it is not enoughto just increase the size of the investments, it also requires to have ambitious andcorrectly prioritized goals, proving you want to make a big change, and to set anexample for the rest of the world. In the report from SSNC, Sweden is listed as “nota pioneer” in all areas regarding goals (4 out of 4). This can be linked to the factthat Sweden already have achieved several of the goals for 2020, as proof that thegoals set up are too easy to accomplish. If Sweden is to strive to be a pioneer withinthis field and enhance the goals, it is critical that investments are reprioritized tomeet that goal most effectively. An example of this, following the results obtained,is reducing the investments in preservation of nature and increasing investments inR&D.

“What is a little scary today is that what the EU does in terms of reducingemissions have fairly little impact. Our total emissions in the EU is around ten

percent of the world’s total. So you could say that when the EU reduces emissions,it is not where we really have our greatest impact. It is in the objectives we set.

We set the goals to become an example for the rest of the world”1

- Johan Kuylenstierna, vp at SEI, Stockholm Environment Institute [21].

1Original quote given in Swedish. Translation made with reservation for errors

34

4.2. SWEDEN’S POLITICS

4.2.2 2015 year’s budget

As mentioned in the literature review, the Alliance looks to spend approximately1 566 million SEK less than what the government suggested for 2015. That is 26million SEK less on the expenditure area Energy and 1 540 million SEK on Generalenvironmental protection and nature conservation. The only cost centers where theAlliance invests more than the government is on the Swedish Energy Agency, onSubsidies for “super green cars” and Charging infrastructure, where the two laterare interesting. The cost center Charging infrastructure is new for 2015 and iswas not at all included in the budget by the government. This is something thegovernment have been criticized regarding, since charging stations for electric carsis seen as a must have with the new subsidy for “super green cars” [42].

If one takes a look at the results in this report, both Subsidies for “super green cars”and Charging Infrastructure places in the middle regarding the investments totalgood (according the model’s indicator). Both investments have good social effects(see figures 11 and 14), making investments in these areas seem justified.

At the same time, overall investments in energy and environment are lower in theAlliance’s budget in comparison with the governments, an indication perhaps thatareas other than energy and environment are more important. The later is some-thing that the parties in the government are quick to acknowledge. The green partyclaims that smaller contribution in energy and environmental investments affectSweden negatively as companies and industries moves abroad [41]. Also the IEA(International Energy Agency) strongly recommends focusing on smarter energyusage to achieve the energy goals, why the criticism has grown with lowered in-vestments in theses areas (the Alliance wants to spend 5 million SEK less than thegovernment in Measures for energy efficiency). However this means change between243 million SEK and 248 million SEK, thus a relatively small deviation.

What is more interesting is, if you compare the results in this report and withthe size of the cost centers for 2015 year’s budget, it is mainly in investmentsregarding preserving/protecting the environment that the Alliance makes the mostcutbacks (600 million SEK in Protection of valuable nature and 350 million SEKin Measures for valuable nature, see table 1). These two investments places in thebottom in providing most total good, as seen in figure 11, why these cutbacks mightbe reasonable. Although since the Alliance seem to place these cutbacks on otherparts of the budget rather than energy, climate and environment, the criticism maybe justified. However the area in which that funding has been spent has not beenevaluated thus a complete analysis is not in place.

35


4.3 Rational thinking, right or wrong

This section reconnects to section 2.3 and reconsiders climate change under theframework of rationality and the results generated in this report (4.3.1). This sectionalso examines the ethical challenges with comparing decisions black on white (4.3.2).

4.3.1 A rational take on Climate Change

Consensus on the effects of climate change have, since An Inconvenient Truth [43]been very devastating, catastrophic and world ending. The world has gone intoa tailspin of panic and pessimistic attitudes towards the problem. This chaotictrance has left decision makers confused and blindfolded. Climate change has beenawarded an (absurd) amount of attention without people questioning its severityand whether or not it actually should be solved. Throughout all literature thathas been reviewed for this literature review, there is no doubt that climate changeis happening and is man made (see section 2.1). However it is rarely questionedto what extent it is going to affect us and if the proposed solutions are worth themoney. Following are some perspectives of climate change that are often twerkedin favor of the point to be made. Be it investments or politics.

1. Bell curve of outcomes: There are two extremes of what outcomes are to beexpected from climate change. On one end you have that the outcome willbe world ending and on the other that climate change will have very littleeffect on the world. The IPCC (see section 2.1.1) stands in the center of theexpected outcomes. Today’s the actions are based on the IPCC’s predictionshowever they are often hand picked depending on what argument is to bemade (see following points)

2. Economic fallacies: The one thing that is discussed more that the climatewhen it comes to climate policy, is the economy. When the extreme economi-cal measures, that need to be taken to combat climate change, are questioned,the most common argument is ”Yes it will be expensive to avert global warm-ing, but the consequences will be far more expensive if we do nothing". Thisis true, but there is a side to this that often isn’t told.

In a paper, authored by Richard S. J. Tol, it was shown that from 1900 to 2025climate change has had/will have a net benefit amounting to an increased GDPper year around 1.5% [44]. Why? In the span of moderate warming and withan increased concentration of CO2 the benefits actually prevail. The increasedlevels of CO2 and the slight increase in temperature has boosted agriculture.This accounts for a 0.8% increase in GDP, the biggest part of the total 1.5%increase. The other benefits amount from reduced number of heat deaths

36

4.3. RATIONAL THINKING, RIGHT OR WRONG

(in comparison to number cold deaths), and other smaller contributors. Thisalso takes into account negative impact in terms of cooling and heating costs.Tol chooses not to withhold the entire analyses, as which is often done whenit comes to this type of information, but summarizes the paper by declaringthat as temperatures rise, the costs will rise and the benefits will decline. Thiswill lead to a dramatic reduction in net benefits and after year 2070, globalwarming will become a net cost to the world, justifying cost-effective climateaction [45].This paper by Tol was taken much further when ten top economist at the CCC,investigated how all the world’s problems have affected our well being. Theresult of the study showed (1) that the world is in fact doing a lot better thanbefore and that (2) in the grand scheme of things global warming hasn’t justhad a positive net benefit so far, but is a relatively small problem comparedto other issues we face. Thus not suspending the need to act to against/withconsideration to global warming, but enhancing the need to prioritize smartsolutions knowing how the world’s problems have affected our state of wellbeing [46].

3. Data interpreted correctly without relevant action: Even though you canoften surpass the economic fallacies and be realistic about the expected cli-mate change, there is yet a trend of actions being too narrow minded and notin accordance with the a broad perspective of the problem. Below are someexamples of arising issues due to global warming but where the proposedsolution is very ineffective to solve the problem at hand.

• Polar bears - Polar bears have become the icon for global warming be-cause their natural habitat, ice shelves, are melting which affects theirentire existence. According to Lomborg if the Kyoto protocol was imple-mented all the way through every year, it would save about 1 polar bearevery year. At the same time, we shoot 300-500 polar bears every year.So how do you save polar bears? By stop shooting them.

• Greatest victims of climate change are the poor people - Ac-cording to an article published by the Economist, the effects of climatechange are both more likely to occur in poor countries (due to theirgeographical location) and they are more vulnerable to its effects [47].In November Åsa Romson, current spokesperson for the Swedish Greenparty and deputy Prime Minister, suggested that Sweden should spend 4billion SEK on reducing carbon emission in poor countries. As rebutteda far more effective way of reducing the risk of climate change have a bigeffect of people in countries, is to tackle their most concerning problems:health (medicine), nutrition and clean drinking water [48].

• Malaria - One of the most graphic and comprehensive issues with globalwarming that was included in the documentary An Inconvenient Truthwas expected increase in malaria cases [43]. According to the CCC theexpected increase is about 3% [1]. What is left out here is that Malaria

37


is a very treatable disease that is subject to poor populations and peoplewith lacking health care. So how do you reduce the number of deathscaused by Malaria? By tackling poverty and improving health care inless developed countries. Focus should not be on the 3% but on the 97%that can already be helped today.

These misconceptions are on a wide and global scale, but can also be supportedby the logic behind the results in this report. According to what was brought upin section 2.1 Sweden’s perhaps most prominent threat as far as climate changegoes, is the increase in precipitation. The potential floods could cost millions worthof damages, but are easily avoided through proper irrigation systems [49]. Theinconsistency here is that there are plenty of fundings aimed at reducing GHGemissions, using energy more efficiently and using more renewable energy, which allhave the universal purpose of averting climate change to in turn avert its conse-quences. However a much more effective way of averting the consequence, floodingsin this example, would be investing (more) money in climate adaptation, betterirrigation systems in this example. Focus needs to be redirected to reconsideringthe end goal. Likewise Sweden’s blatant efforts to preserve nature could be, accord-ing to the results, inconsistent with the most effective way of achieving the desiredgoals.

It is to be noted that this analysis and discussion is has no regard to internationalcollaborations which need to be taken into consideration.

4.3.2 Loop holes of rationality

Translating everything to facts and figures, putting everything black on white andvaluing everything in economic terms is very contradictory. There is opposition tothis almost everywhere you look.

Firstly there is the simple fact that being objective and rational to the core, requiresa considerable amount of knowledge and work, more than shallow evidence andintuition.

Secondly, often being objective is in most cases contradicting your field or agenda.For example a company developing electric cars will want to ignore the fact that,today, manufacturing a car battery is not just very expensive, but the actual man-ufacturing emits more CO2 than than a gas driven car would have emitted [50].Politicians would also want to ignore this when this is part of their green image.

The two points mentioned above cause opposition but don’t really poke hole at theidea of being rational. What however does make a reasonable claim is when youstart questioning the ground pillars of which all rational decisions should stand on;

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4.3. RATIONAL THINKING, RIGHT OR WRONG

doing the most “good” for people in relation to the cost. The costs are easy tomap but what does “good” mean? The ability to measure “good” is something thatmost view as too complicated and therefore replace with personal judgement. Theability to compare CO2 reductions with vaccinations is either considered irrelevantor impossible. You can argue the economic advantages of each but you always endup asking the question “what is a life worth?”. There are absolutely methods ofvaluing a human life in economic terms. Both in terms of the binary alive/deadand in terms of life quality. The key conclusion in this report is not to concludeone definitive method of ultimate comparison, but establishing a model that can beadjusted so that it meets the requirements that fulfill all the parameters that aredeemed important.

An example of this type of adjustment is to evaluate preservation of valuable natureby a standard of a unmeasurable positive force. Thus justifying spending largesums of money on something that, according to the results (see figure 11) is notcost beneficial. This idea is somewhat illustrated in figure 13, where an extraparameter has been added to quantify the value of preserving valuable nature.However quantifying something that has a sentimental value, such as nature, varieswith every individual thus an adjustment is in theory doable but in practice anentire science before a usable model is in place.

The last loop hole relevant to this discussion, is the definition of boundaries withinwhich the decision are made. Should Sweden invest in an effective (according tosome) climate adaptation on a national level whilst investing in ineffective (accord-ing to some) GHG reducing measure? The collaboration and prioritization betweeninvestments on different national and international levels poses a threat to the ideaof obtaining truly objective decisions.

4.3.3 Paradigm shift

As mentioned in the litterature review under subsection 2.3.2, Kuhn suggests thatthere is no state of “normal science” until there is there is one dominant (consensuswithin the discipline) theory that explains or resolves the problem at hand [27].

Decision making, as a science, is still in its “pre-normal science” state. There isno consensus on which tool or method is the one to make decisions as effective aspossible. When it comes to investments in the business world there are much moreestablished tool because things are much easier to evaluate. Business investmentsconsist of one thing: money. Decisions and investments on a national policy levelare, just as this report has focused on, far more complex. Thus meaning that thereis no well established way of making decisions rationally.

Is the science of decision making, reaching a consensus on how it should be done to

39


benefit the most and the best, is it crucial to reach a more effective development?From the evidence gathered in this literature study there are indications of a crisisarising. The CCC are making strides yet being immensely criticized. This reportwould suggest that a crisis will arise and that there will be a shift to “normal science”where all decisions are based on the good they do versus their cost. Only time willtell.

4.4 Criticisms & Suggested improvements

This section points out the main flaws with the model being used in this report(4.4.1) and suggests overall improvements to this specific model (4.4.2).

4.4.1 Criticisms

The AHP model itself has some flaws, both in what is often referred to as “rankreversal”, as well as the possibility of inconsistency in prioritizing of the crite-ria/parameters. Rank reversal refers to the situation where an alternative (in thecase for this report a new cost center) is added or removed, and if the old alter-natives ranking should remain or change. In this report the model would be runagain and a new ranking would be established, but maybe this is not the ideal case.Regarding inconsistency in prioritizing the model does not handle the possibilityof one prioritizing A over B, B over C but then C over A, which is illogical. Inthis case the model will generate a mean weight with an error as small as possibleinstead of asking the person prioritizing to rethink the answers.

The model is one dimensional in almost all aspects. There is no regard to time orfuture need. The survey that was sent out took in the opinion of what the needsare in Sweden today. This means that the model could indicate extreme measuresthat does not complement one another well. The model takes no regard to theco-existence of investments. For example this could mean that if the politicians ofSweden consider jobs to be the most important thing for Sweden, the model wouldsuggest spending all funding on job-creating investments. However there is a non-linear relationship of the marginal increase or decrease in jobs. If the unemploymentrate in Sweden is 1% it is less important that if the unemployment rate is 50%.

As mentioned as one of the demarcations in section 3.2, this model does not considernegative outcomes. This generates a severe flaw in terms of evaluating according tocost and benefits. It allows comparisons, but gives a less informative indication ofthe actual netbenefit.

40

4.4. CRITICISMS & SUGGESTED IMPROVEMENTS

4.4.2 Suggested improvements

The main improvements in this report is the gathering of data and informationregarding weights of the parameters and the outcome of the cost centers. Thus themodel itself is not subject to extensive change but the supporting evidence is.

In this case study the information gathering is done by sending out a survey to peo-ple and organisations that have expertise in these areas, and compile their knowledgeinto useful data. Even though the survey was sent out to several organisations, re-searchers, economics and other people with specific knowledge, a significant numberof people failed to answer the survey, why there is a knowledge gap in the weightingsystem. Step one would be to gather a lot more answers and information to increasethe accuracy of the weightages. Step two would be to completely base the weightson facts and statistics and not on opinions and policies.

When evaluating the budget in terms of what good each cost center does on eachparameter, high trust is put on the description in the budget of each cost centerand the allocation for it. This together with research and logical thinking mightnot always be enough to assign a perfect evaluation to some of the cost centers.In this regard more information needs to be collected, tentatively by collaborationwith organisations like NIER (National Institute of Economic Research) to betterbe able to make as good evaluations as possible.

These improvements will contribute to more accurate and better indicator on thebudget areas 20 and 21, the model presented in this report easily allows for bothchanges in parameter weights as, well as outcomes for the cost centers. By changingthe weights/outcomes and running the model until the results match the mosteffective outcomes, it is believed that a useful and accurate model can be retrievedfrom this work.

41

Chapter 5

Conclusion & Future Work

In this chapter a summary of the most important results and conclusions from thisreport is made 5.1, as well as recommendations for future work within this field ofstudy 5.2.

5.1 Conclusion

The most important result in this study is the generated model that allows decisionmakers to evaluate and rank investments according to a broad set of parameters.The model is versatile and can include more parameters and to evaluate a broaderset of expenditure areas. With more data on the importance of the parametersand the outcome of the cost centers, the model will provide relevant indicators ofinvestments for decision makers.

In this case study of the budgets on energy, climate and environment, the model in-dicates that investments regarding protection, preservation and sanitation of nature,environment, sea, and similar investments, has a rather low total generated good.Investments in R%D, sustainable cities and energy efficiency on the other hand hasa higher total generated good, thus investments in these areas should be prioritized.Looking at investments made by the Swedish parliament, the biggest investment inenergy, climate and environment is both in R&D as well as in protecting/preservingnature. Following the results in this report, cutbacks should be made on large costcenters that has low total generated good (such as Protection of valuable nature),and instead be invested in smaller but more beneficial cost centers (such as Sustain-able cities). To be noted however is that theses are recommendations as a result ofa first iteration of a model thus they are borderline fictional.

The most important takeaway from this report is that the world’s decision makersare in need of a more logical and objective approach to making their decisions in

42

5.2. FUTURE WORK

order to spent their money wisely. This report is an illustration of how that can bedone.

5.2 Future Work

In this report the analysis is made in a specific spectra (energy, climate and envi-ronment), and it can/should be expanded to consider the entire budget for Swedenor equal areas representing all parts of a government budget.

Also a more thorough study regarding, what in this report is called, parameter “X”,is recommended. That is how to quantify, prioritize and evaluate criterias in thisaspect. Since this factor is proven important when looking at investments in thebudget, a better way to include it in the model is needed. Together with this amore thorough study of the weightages of the parameter and the outcome of thecost centers is needed to present more accurate indicators. Preferably this shouldbe done strictly based on statistics and research, and not by asking for people’sopinion (even if they are experts), as done in this report.

When evaluating the benefit of an investment, the proposed model considers thebenefits and costs with an undefined constraint of a limit both below and above.Meaning that setting a certain ranking to an investment when comparing it toothers can easily restrain the ranking to a preset minimum and maximum, in thisreport’s case 0 and 5. A suggested future work, continuing this, would be to extendthe model to be able to evaluate parameters on a limitless scale.

43

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Appendix A

SurveyKTH Bachelors thesis SurveyThank you for taking your time to answer this survey. Please read the text below carefully, the survey itself is very short and unexplanatory.

This survey will serve as the groundwork for a simpliAed analysis of the Swedish investments towards energy and climate policy, as part of a B.sc. thesis written by Emil Gustafsson and Fredrik Nordström, KTH. The analysis will not only take into consideration the environmental effects of the budget, but rationally and systematically take consider a broader set of parameters. To do so, we aim to evaluate the importance of different aspects of investments and budget decisions. That is where this survey comes into the picture. We need you to rank and prioritize the following parameters according to what you believe/know is the most important aspect of a decision (see below), when it comes to investments in climate and energy. The aspects we wish you to consider are the following:

Environmental: The environmental outcomes of the investment decision. For example the decision’s effects on GHG emissions or its stress on the ecosystem.Economic: The economic outcomes/requirements of the investment decision. For example if the investment has low capital cost or low operations & maintenance cost (O&M).Social: The social co-beneAts of the investment decision. For example a large job creation as a result of the investment or reduced climate related health problems.Technical: The technical suitability of the investment decision. For example, if the prototype is successful, will it be applicable in a larger scale.

Which of these are the most important? Now of course that is a very difAcult question because it varies with an inAnite number of parameters ranging from ideological to religious beliefs and the picture is obviously much much bigger than that. However for the sake of this exercise and its limitations, we would be very grateful to take you opinions into account. This survey takes two parameters at a time for comparisons, and the result will serve as groundwork for our Multi Criteria Decision Analysis (MCDA).

*Required

1. Prioritize, regarding an investment in energy and climate, between Economic andEnvironmental aspects *

Economic 90-10

80-20

70-30

60-40

Equallyimportant

40-60

30-70

20-80

10-90 Environmental

Edit this form

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Powered by

2. Prioritize, regarding an investment in energy and climate, between Economic and Socialaspects *

Economic 90-10

80-20

70-30

60-40

Equallyimportant

40-60

30-70

20-80

10-90 Social

3. Prioritize, regarding an investment in energy and climate, between Economic and Technicalaspects *

Economic 90-10

80-20

70-30

60-40

Equallyimportant

40-60

30-70

20-80

10-90 Technical

4. Prioritize, regarding an investment in energy and climate, between Social and Environmentalaspects *

Social 90-10

80-20

70-30

60-40

Equallyimportant

40-60

30-70

20-80

10-90 Environmental

5. Prioritize, regarding an investment in energy and climate, between Social and Technicalaspects *

Social 90-10

80-20

70-30

60-40

Equallyimportant

40-60

30-70

20-80

10-90 Technical

6. Prioritize, regarding an investment in energy and climate, between Technical andEnvironmental aspects *

Technical 90-10

80-20

70-30

60-40

Equallyimportant

40-60

30-70

20-80

10-90 Environmental

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49

Appendix B

MatLab code

1

format long

eco = 0.01;env = 0.01;soc = 0.01;tec = 0.01;start = 0;r = 1000;kecoenv = 0.5385;kecosoc = 1;kecotec = 0.8182;kenvsoc = 5.6667;kenvtec = 3;ksoctec = 0.8182;counter = 1;n = 50;stepsize = 50;

for j = 1:n for k = 1:n for l = 1:n for m = 1:n

r1 = ((eco/env - kecoenv)^2 + (eco/soc - kecosoc)^2 + ... (eco/tec - kecotec)^2 + (env/soc - kenvsoc)^2 + ... (env/tec - kenvtec)^2 + (soc/tec - ksoctec)^2)^.5;

R(counter) = r1; if r1 < r r = r1; X = [eco env soc tec]; end

eco = start + m/stepsize; counter = counter + 1; end env = start + l/stepsize; end soc = start + k/stepsize; end tec = start + j/stepsize;end

tot = sum(X);

Y = X/tot

Y =

Columns 1 through 3

50

Appendix C

Evaluation of expenditure areas: ResultsInvestment cost (TSEK)

GHG reduction

Energy efficiency

Improvement

Increasing energy from renewables

Preservation of Nature/Ecological

systems

Area of expenditure: 20 - General environmental protection and nature conservation

1:2 Monitoring of the environment 281,214 2 2 2 3

1:3 Measures for valuable nature 649,535 0 0 0 5

1:4 Sanitation and recovery of contaminated areas 420,018 0 0 0 5

1:5 Environmental research 75,990 5 0 5 5

1:8 Subsidies for "green cars" 215,000 1 2 3 3

1:10 Climate adaptation 115,000 0 0 0 4

1:12 Measures for sea and water environment 666,565 0 0 0 5

1:13 Measures for international climate investments 183,000 5 5 5 0

1:15 Sustainable cities 80,000 3 5 4 3

1:16 Protection of valuable nature 715,000 0 0 0 5

2:2 Swedish Research Council for Environment, Agricultural Sciences and Spatial Planning 632,863 4 0 2 5

Area of expenditure: 21 - Energy

1:2 Measures for energy efficiency 243,000 3 5 3 1

1:3 Subsidies for market introduction of wind power 10,000 2 0 5 0

1:4 Energy research 1,192,536 2 5 5 1

1:6 Planning support for wind power 15,000 2 0 3 0

1:8 Energy technology 140,000 1 5 3 01:9 Electrical readiness 255,000 0 0 3 01:11 EV Charging infrastructure 75,000 2 0 4 0

Environmental factors

51

APPENDIX C. EVALUATION OF EXPENDITURE AREAS: RESULTS

Capital cost

Positive N

PVO

&M

cost

Incentivizing for sm

all and new

businesses

Job creation

Health (e.g.

reduction of pollution)

Education/ know

ledge base

InnovationScalability

Technical readiness

O&

M

needs

Area of expenditure: 20 -

General environm

ental protection and nature conservation1:2 M

onitoring of the environm

ent5

04

01

01

05

51

1:3 Measures for valuable

nature3

01

00

00

05

51

1:4 Sanitation and recovery

of contaminated areas

50

30

03

00

55

1

1:5 Environm

ental research5

05

33

25

35

52

1:8 Subsidies for "green cars"

40

54

32

03

42

2

1:10 Clim

ate adaptation5

05

32

03

32

24

1:12 Measures for sea and

water environm

ent3

01

00

20

05

51

1:13 Measures for

international climate

investments

41

40

22

00

54

1

1:15 Sustainable cities

51

55

52

05

33

41:16 P

rotection of valuable nature

20

00

01

00

55

1

2:2 Sw

edish Research

Council for E

nvironment,

Agricultural S

ciences and S

patial Planning

00

23

42

53

55

2

Area of expenditure: 21 -

Energy1:2 M

easures for energy efficiency

42

53

31

15

54

1

1:3 Subsidies for m

arket introduction of w

ind power

50

52

20

22

53

3

1:4 Energy research

01

05

50

55

55

21:6 P

lanning support for wind

power

50

52

20

00

53

3

1:8 Energy technology

50

53

30

35

33

31:9 E

lectrical readiness4

34

00

30

05

51

1:11 EV

Charging

50

55

52

13

44

3

Economic

SocialTechnical

52

Appendix D

Evaluation of expenditure areas:Motivation

Investment cost

(TSEK)

GH

G reduction

Energy efficiency Im

provement

Increasing energy from

renewables

Preservation of Nature/

Ecological systems

Area of expenditure: 20 - G

eneral environmental

protection and nature conservation

1:2 Monitoring of the environm

ent281,214

some referenced effects.

[12],[13],[52]

some referenced

effects. [12],[13],[52]som

e referenced effects. [12],[13],[52]

proactive effects

1:3 Measures for valuable nature

649,535-

--

direct effects

1:4 Sanitation and recovery of contam

inated areas420,018

--

-direct effects

1:5 Environm

ental research75,990

will lead to high

effects. A,[52]

-w

ill lead to high effects. A

,[52]w

ill lead to high effects. A,[52]

1:8 Subsidies for "super green cars"

215,000low

effects despite direct effect. [50]

development of E

Vs

encourage more

efficient engines. [50]

depends on where the

electricity comes from

, encourages use of renew

ables. [54]

less pollution "on the open road", restrains the pollution to the

production. [54]

1:10 Clim

ate adaptation115,000

--

-direct effects but m

easures taken are not prim

arily purposed for preservation of nature

1:12 Measures for sea and w

ater environment

666,565-

--

direct effects

1:13 Measures for international clim

ate investments

183,000direct effects.

[12],[13]direct effects.

[12],[13]direct effects. [12],[13]

-


80,000direct effects but

not primary target.

[51]direct effects

direct effectshighly encouraging but no direct

effects

1:16 Protection of valuable nature

715,000-

--

direct effects

2:2 Sw

edish Research C

ouncil for Environm

ent, A

gricultural Sciences and S

patial Planning

632,863direct effects

-indirect effects

direct effects


53

APPENDIX D. EVALUATION OF EXPENDITURE AREAS: MOTIVATION

Capital cost. B

Positive NPV

O&

M cost. B

Incentivizing for small

and new businesses





entlarge part of costs are

O&

M-

see Capital cost

-


large part of costs are O

&M

-see C

apital cost-

1:4 Sanitation and recovery of contam

inated areaslarge part of costs are

O&

M-

see Capital cost

-

1:5 Environm

ental researchboth capital and O

&M

costs

-see C

apital costpositive effects

1:8 Subsidies for "super green cars"

large part of costs are capital costs

strictly a cost see C

apital costneed for business to enable E

V m

arket

1:10 Clim

ate adaptationlarge capital investm

ents are needed as w

ell as O

&M

-see C

apital costneeds for business to

innovate new solutions


ater environment


&M

-see C

apital cost-

1:13 Measures for international clim

ate investments

large capital investments

are needed as well as

O&

M-

see Capital cost

-



investment costs are very

high so no chance for return. [53]

see Capital cost

needs for business to innovate new

solutions



&M

-see C

apital cost-

2:2 Sw

edish Research C

ouncil for Environm

ent, A

gricultural Sciences and S

patial Planning

both capital and O&

M

costs-

see Capital cost

should lead to direct effect

Economic

54

Job creationH

ealth (e.g. reduction of

pollution)

Education/ know

ledge baseInnovation

ScalabilityTechnical readiness

O&

M needs





entsom

e effects. [40]no m

easurable effects. C

--

existing framew

orkexisting fram

ework

existing framew

ork, regular needs for

administration


no indications that it w

ould generate NE

W

jobs

no measurable

effects. C-

-existing fram

ework

existing framew

orkexisting fram

ework,

regular needs for adm

inistration

1:4 Sanitation and recovery of

contaminated areas


ould generate NE

W

jobs

direct effects but outcom

e impact

is not 100 %

--

existing framew

orkexisting fram

ework

existing framew

ork, regular needs for

administration

1:5 Environm

ental research

correlates with


and new businesses. [40]

very indirect effect

increased know

ledge base

positive effects, discovering new

ideas for innovation

plenty of universities and researchers to continue developing

Sw

eden attracts plenty of w

orld leading researchers

ratio between

personnel costs and results relatively low

1:8 Subsidies for "super green

cars"

correlates with


and new businesses

positive effects on air pollution.

[57]-

positive effects

companies are w

aiting for the batteries to get cheaper (w

hich they are), easy to scale

when profitable. [56]

questions regarding batteries. A

lso needs better infrastructure regarding charging

poles. [54]

as for a normal car

1:10 Clim

ate adaptationcorrelates w

ith Incentivizing for sm

all and new

businesses -

increased know

ledge base

positive effects, correlates w

ith Incentivizing for sm

all and new

businesses

mostly strategic at this

point. [55]m

ostly strategic at this point. [55]

little need when

implem

ented. [55]


ater environm

ent


ould generate NE

W

jobspositive effects

--

easy to scale, know

ledge existknow

ledge existhigh adm

inistrative needs

1:13 Measures for international

climate investm

entssom

e effects. Epositive effects

--

existing framew

orkhigh but there are alw

ays room for

further improvem

ent

high administrative

needs


direct effects, more

engaged parties thus m

ore new jobs

compared w

hen just one actor. I

positive effects-

direct effects, the developm

ent of sustainable cities are highly innovative. [53]

plenty of research and prototypes, yet not a

standard. [53]

plenty of research and prototypes, yet not a standard. [53]

the whole idea is for it

to be sustainable and in little need of

maintenance. [53]



ould generate NE

W

jobs

little positive effects. C

--

easy to scale, know

ledge existknow

ledge existhigh adm

inistrative needs

2:2 Sw

edish Research C

ouncil for E

nvironment, A

gricultural Sciences

and Spatial P

lanning

indirectly leads to more

jobsvery indirect

effect increased

knowledge base

positive effects, discovering new

ideas for innovation

plenty of universities and researchers to continue developing

Sw



ratio between


SocialTechnical

55


Investment cost

(TSEK)

GH

G reduction

Energy efficiency Im

provement

Increasing energy from

renewables

Preservation of Nature/

Ecological systems


1:2 Measures for energy efficiency

243,000positive effects

direct effectslikely to have indirect

positive effectssm

all but positive effects

1:3 Subsidies for m

arket introduction of wind pow

er10,000

positive indirect effects

-direct effects

can co-exist but no effects

1:4 Energy research

1,192,536indirect effects

will lead to high

effects. Aw

ill lead to high effects. Alittle indirect effects

1:6 Planning support for w

ind power

15,000positive indirect

effects, more long-

term-

direct effects, more long-

termcan co-exist but no positiv effects


140,000little effects

(indirect and long-term

)direct effects

positive effects-

1:9 Electrical readiness

255,000-

-indirect effects (prom

otes hydro pow

er)-

1:11 Charging infrastructure

75,000indirect effects

-positive effects

-


56

Capital cost. B

Positive NPV

O&

M cost. B


and new businesses




likely to be low but

chances to be positive (less use of energy m

eans low

er costs but return may

not be big)

see Capital cost

positive effects

1:3 Subsidies for m

arket introduction of wind pow

erlarge part of costs are

capital costsno return

see Capital cost

positive effects

1:4 Energy research

both capital and O&

M

costs

likely to be very long time

till return but chances to be positive

see Capital cost

will lead to direct effect


ind power


&M

-see C

apital costsom

e effects. B



-see C

apital costsom

e effects. B


large capital investments

are needed as well as

O&

M

indirect effects, alternative cost (dam

age on dams)

are highsee C

apital costonly refers to big com

panies and governm

ent



-see C

apital costdirect effects

Economic

57


Job creationH

ealth (e.g. reduction of

pollution)

Education/ know

ledge baseInnovation

ScalabilityTechnical readiness

O&

M needs



correlates with


and new businesses.

small indirect effects

little positive effects

direct effecteasy to im

plement

high but there are alw

ays room for

further improvem

ent (especially w

ithin households)

large and com

prehensive changes

1:3 Subsidies for m

arket introduction of w

ind power

correlates with


and new businesses.

-som

e effects. Bsom

e effects. Bdirect effect, m

ain purpose

still not efficient enough

medium

administrative

needs

1:4 Energy research

correlates with


and new businesses. [40]

no measurable

effects

increased know

ledge base, lead to m

ore general

knowledge in the

area, leads to m

ore know

ledgeable people

direct effectplenty of universities and researchers to continue developing

Sw



ratio between



ind pow

er

correlates with


and new businesses.

--

-direct effects

still not efficient enough

medium

administrative

needs


correlates with


and new businesses.

-increased

knowledge base

direct effectsresearch is ongoing, difficult to pinpoint

when ready to scale

research is ongoing, difficult to pinpoint

when ready

medium

administrative

needs



ould generate NE

W

jobs

medium

due to safety aspect

--

easy to implem

entknow

ledge base is big

high administrative

needs


correlates with


and new businesses.

positive effects. [57]

slight increased know

ledge basedirect effects

not yet a standard but certainly developed enough for upscale

can be improved but

the technology is there for the first im

plementations

medium

administrative

needs

SocialTechnical

58

If no reference number it present the motivation is strictly from the budget andlogical reasoning

- No reference in budget or logical reason why it should be affectedA Reference in budget to invest in this in particular. See discussion on investments

regarding research (section ??)B After reviewing the budget post and making a reasonable estimate. Which part,

Capital or O&M cost, is the largest determines which is considered with regardto the other budget posts. The other is then adjusted according to the first

C See section 3.6 on parameter "X"

59

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