DEALING WITH DOOM THE TRIPLE CHALLENGE OF ENERGY SCARCITY, CLIMATE CHANGE AND GLOBAL INEQUITY JOS...
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Transcript of DEALING WITH DOOM THE TRIPLE CHALLENGE OF ENERGY SCARCITY, CLIMATE CHANGE AND GLOBAL INEQUITY JOS...
DEALING WITH DOOMTHE TRIPLE CHALLENGE OF ENERGY SCARCITY, CLIMATE
CHANGE AND GLOBAL INEQUITY
JOS BRUGGINK
EU Conference Sustainable Development, Brussels, 26-28 May 20092
MAIN FOCUS OF PRESENTATION
DEALING WITH DOOMTHE TRIPLE CHALLENGE OF ENERGY SCARCITY, CLIMATE
CHANGE AND GLOBAL INEQUITY
Guarding against unfortunate consequences
of unsustainability first
Action-oriented approach: what can be done now rather than
what should be done later
Issue linkages central: dynamically connecting solutions
for faces of doom
Three faces of doom correspond to three
dimensions of unsustainability
FIRST STEP IN ANALYSIS:
TWO PRINCIPLES FOR EFFECTIVE POLICY DESIGN
EU Conference Sustainable Development, Brussels, 26-28 May 20093
WORLD VIEWS AND POLICY STRATEGIES
We are living in a manageable world where European public
policies can make a lasting impact
We must shape the world in a sustainable mold according to
European visions of sustainability
SHAPING STRATEGIES
We are living in an unmanageable world where European public policies have marginal effects
We must hedge against the unfortunate consequences of an
increasingly unsustainable world
HEDGING STRATEGIES
• Based on “nothing ventured, nothing gained” attitude
•Need to keep many technological options open
• Emphasis on R&D policies and long term targets
• Based on “better be safe than sorry” attitude
• Need to choose winning technologies at an early stage
• Emphasis on implementation policies and short term targets
EU Conference Sustainable Development, Brussels, 26-28 May 20094
FIRST PRINCIPLE FOR POLICY DESIGN
A balanced and interconnected combination of shaping and hedging strategies will make European policies for sustainability much more effective
EU Conference Sustainable Development, Brussels, 26-28 May 20095
DIMENSIONS OF SUSTAINABILITY
Political reality: hierarchical pyramid
PeopleSocial objectives
Global equity
Planet Environmental objectives
Climate change
ProfitEconomic objectives
Energy security
ProfitEconomic objectives
Energy security
PeopleSocial objectives
Global equity
Academic perception: equivalent triangle
Planet Environmental objectives
Climate change
EU Conference Sustainable Development, Brussels, 26-28 May 20096
TWO PRINCIPLES FOR POLICY DESIGN
A balanced and interconnected combination of shaping and hedging strategies will make European policies for sustainability much more effective
Approaching the three faces of energy doom in hierarchical order over time will make European policies for sustainability much more effective
NEXT STEP IN ANALYSIS:
STORYLINE FOR EUROPEAN ENERGY POLICIES FOR SUSTAINABILITY BASED ON THESE PRINCIPLES
EU Conference Sustainable Development, Brussels, 26-28 May 20097
STORYLINE FOR POLICY STRATEGY
PHASE 1
PHASE 2
PHASE 3
2010
2020
2030
2040
2050
HEDGING STRATEGIES
SHAPING STRATEGIES
R,D&D policies for climate change
R,D&D policies for global equity
Implementation policies for energy security
Implementation policies for climate change
Implementation policies for global equity
EU Conference Sustainable Development, Brussels, 26-28 May 20098
THE SUNNY SIDE OF DOOM
Sustainable ambitions in the sky should reflect political realities on the ground
Dealing with doom makes it politically acceptable to invoke the visible fist of government in addition to the invisible hand of market
Therefore Europe should guard against consecutive instances of doom first
But the results of the required hedging policies may help to solve the next instance of doom
If secondary shaping policies are well orchestrated with primary hedging policies
NEXT STEP IN ANALYSIS:
ILLUSTRATION OF STORYLINE FOR SUSTAINABLE MOBILITY
EU Conference Sustainable Development, Brussels, 26-28 May 20099
STORYLINE FOR SUSTAINABLE MOBILITY
PHASE 1
PHASE 2
PHASE 3
2010
2020
2030
HEDGING STRATEGIES
SHAPING STRATEGIES
Improve sustainable fuel options
Improve sustainable mobility options
Choose electric car as winning technology
Choose winning sustainable fuel option
Reduce mobility volumes and import sustainable fuels
EU Conference Sustainable Development, Brussels, 26-28 May 200910
OIL PRICES AND MOBILITY
0
50
100
150
200
250
Crude oil price (€/litre) Gasoline price (€/litre) Expenditure (% of income)
June 2008 June 2020
Index number
First assumption: the price of oil increases to
300$/barrelSecond assumption: tax
regime and margins remain the same
Third assumption: income grows 2%/year, cars become 20% more
efficient
EU Conference Sustainable Development, Brussels, 26-28 May 200911
OIL PRICES AND THE IMPACT OF CO2-PRICES
1,74 €/litre
1,61 €/litre
1,49 €/litre
1,36 €/litre
1.24 €/litre
Equivalent consumer price
150 $
125 $
100 $
75 $
50 $
Fuel price per barrel
Conventional oil
First generation biomass Gas through GTL or CNG Enhanced oil recovery
Coal-to-liquids Second generation biomass
Tar sands and oil shales
Consumers perspective
Producers perspectiveCO price of 60€/ton
has no influence on consumer decisions
CO2 price of 60€/ton makes a difference in
future fuel source battles
EU Conference Sustainable Development, Brussels, 26-28 May 200912
SYNCHRONISING OIL AND CARBON MARKETS
World oil price
Bottom price of
80$/barrel
Price corridor for
unrestrained oil markets
80$/barrel
20 € /ton
100 € /ton80 € /ton60 € /ton40 € /ton
Price tempered
above 120$/barrel
Flexible CO2-tax
120$/barrel40$/barrel
Trajectory for CO2–tax (10 € /ton = 6.3 $/barrel)
EU Conference Sustainable Development, Brussels, 26-28 May 200913
DRIVING FORCES FOR SUSTAINABLE MOBILITY
The initial tandem of oil prices and carbon prices– Synchronising oil and carbon prices smoothes transitions– Gradually rising carbon prices must make sustainable fuels
(including electricity) competitive
The ultimate tandem of fuel prices and road charges– Growing global mobility volumes will replace a peak oil
problem with a peak soil problem– Ultimately mobility growth must be constrained by road
charges in addition to high fuel prices
FINAL STEP IN ANALYSIS:
WHAT ARE THE IMPLICATIONS FOR EU R&D STRATEGIES?
EU Conference Sustainable Development, Brussels, 26-28 May 200914
012345
Innovation guidance
Market formation
Knowledgedistribution
Knowledgedevelopment
Financial resourcemobilization
Human resourcemobilization
Entrepreneurialinvolvement
Relative global performance of EU energy innovation system
EU GOVERNANCE OF ENERGY R&D
EU Conference Sustainable Development, Brussels, 26-28 May 200915
IMPROVING EU ENERGY INNOVATION
Promising new instruments are being developed– Strategic Energy Technology Plan (SET-Plan)– European Institute of Innovation and Technology (EIT)
But additional sources of funding are lacking– Without additional funds these institutions are likely to
cannibalise existing EU and national R&D funds
Need for revenue generating policy strategies– Earmarking revenues from hedging-oriented implementation
policies for shaping-oriented R,D&D policies forms potential escape route
– In case of sustainable mobility part of a CO2-tax working in tandem with oil prices may provide funds for sustainable electricity and biofuels