Raimund Bleischwitz Projektseminar Europäische Umweltpolitik: ökonomische Aspekte der Klimapolitik BU Wuppertal 2008/09 Department of European Economic Studies
Raimund Bleischwitz
Projektseminar
Europäische Umweltpolitik:ökonomische Aspekte der Klimapolitik
BU Wuppertal 2008/09
Department of European Economic Studies
Heutige Agenda• Anreizinstrumente in der EU
– Legitimation
– Ökonomische Instrumente
– Erneuerbare Energien
• Hausarbeit Till Ruhkopf
• Diskussion
Scoping the problem
• Target orientation• Long term• Global• Basic options:
– Ignoring the issue– Adaptation or mitigation– Technology breakthrough (backstop)– Targets and timetables
Concentration - temperature increase - impacts - emissions
Drivers of Climate Change
• Energy: burning fossil fuels inpower, heat generation andtransport
• Land Use• Agriculture• The reference scenario of the
IEA’s World Energy Outlookprojects increase of over 50% inglobal energy related CO2emissions by 2030
• Agriculture accounts for 14%,Land use change for 18% andEnergy for 61 % of totalgreenhouse gases, energy use isdriven by private households,buildings, transportation, industry
14%
61%
7%
18%
Agriculture
Change in Land Use
Energy
other(industrial processes, waste)
Drivers for energy use in the EU
Final energy consumption inthe EU-25 increased byalmost 12 % over the period1990 to 2003. Transport hasbeen the fastest-growingsector since 1990 and isnow the largest consumer offinal energy.
European Union – Energy-EnvironmentOld Targets compared to new targets as of
2007 – 20 20 till 2020Reducing GHGEmissions by20% till 2020
Triple shareto target of
20% in EU till2020, 10 % for
biofuels
Objective to save 20% of EU’s Energyconsumption compared to projections for
2020
A short look back
• 2nd WCC, IPCC late eighties
• UNCED Rio Conference 1992 – signingthe UNFCCC
• Early action by some countries (e.g.Germany: unilateral reduction by 25 %CO2 by 2005 based on 1990 levels)
• First EU programmes prepared forUNCED conference 1992
=> Climate policy is not entirely new(theory on „policy cycles“)
Relevant EU Policies
• EU Emissions Trading Directive 2003/87/EC• Energy taxation: minimum taxation for oil, electricity,
coal and natural gas 2003/96/EC• Renewable Energy Directive 2001/77/EC: targets for
REN share in electricity consumption• Directive on the promotion of cogeneration 2004/8/EC• Directive on energy end-use efficiency
– Directive on the ecodesign of energy-usingproducts
– Action Plan for Energy Efficiency COM(2006)545final
EU past and projectedemissions (EEA 2008)
RIA on 20 20 2020 PlanSEC(2008) 85/3
• The cost efficient reference option reaches both the 20%GHG reduction target and the 20% renewable energy targetsimultaneously at a direct economic cost of 0.58% of EU GDPor € 91bn in 2020.
• These objectives are projected to be reached at a carbonprice of € 39 per tonne of CO2 and at a renewable energyincentive of €45 per MWh.
• Oil and gas imports are expected to go down by some € 50bnin 2020, air pollution control costs drop by around €10bn in2020 while electricity prices are likely to go up by 10-15% incomparison to today’s level.
• Overall, this leads to an energy intensity improvement ofapproximately 32% between 2005 and 2020
Why economic incentives
• Adjusting market prices to account for negativeexternalities - induce behavioral change
• Allocating financial and technical resources to mostefficient purposesMBIs create incentives that encourage people actingin their own interests, simultaneously, to treat theenvironment in a way that is in the best interests ofsociety.-> Lowest-possible MAC
„At the heart of good policy will be a price for GHGs“— Stern 2008
Figure 8. Gasoline Price versus Use in Industrial Countries, 2003
Note: Shaded area represents price/consumption range typical of West European countries.
Source: U.S. Department of Energy, 2004. Adapted from Roodman, 1997, with updated data.
Harris 2008
Merits of MBIs
Definition provided by the OECD (1997): "Those policyinstruments which may influence environmental outcomesby changing the cost and benefits of alternative actionsopen to economic agents. They aim to do so by making theenvironmentally preferred action financially more attractive."
• Cost-signal to users: MBIs assign a price to the 'unpaidfactor' of production, thus translating the polluter paysprinciple in practice.• Cost minimisation: equate MAC across individuals• Dynamic efficiency: incentive to innovate• Reduced bureaucracy (compared to CAC)• Generator (under certain conditions) of funds
EC Green Paper (2007)
• on advancing the use of MBIs across Member Statesto support environment and energy policies. Itconcluded that there should be an increased use ofmarket-based instruments to achieve environmentaland other policy objectives and recommendedestablishing an MBI forum to stimu-late exchanges ofexperience and best practice between MemberStates.
• ‚Brussels Tax Forum‘ (2007) also has promoted MBIs• World Ecotax Conference 2007 in Munich
Possible drawbacks
• Other existing incentives may encourage overuse of nature(e.g. via investment tax credits, subsidies on energy &transport) => need for consistency among MBIs
• If the price (or the target) is too ambitious, industries mightcollapse or relocate
• People might not respond to prices as assumed by economictheory (bounded rationality, managers might direct theirattention to other issues, low elasticity of demand, X-inefficiencies)
• Prices signals from MBIs might be overcompensated by otherfactors (price decrease due to technological progress, marketliberalisation etc.)
• Spatial variation might call for regionally differentiated MBIs –may contradict internal market and tax harmonisation
MBIs: Two main Approaches
• Tax / fee / charge(Pigou): higher prices forenvironmental pressure
• Types: input taxes,output or product taxes,export taxes, importtariffs, tax differentiation(VAT)
• Task: Define a quantity(tax base) & tax payers
• Tradable permits(Coase, Demsetz):bilateral bargainingamong polluters
• Types: emissionpermits, land usepermits, input permits
• Task: define an(emission) target, anallocation mechanism& legal framework
How do Taxes and Tradable Permits work?
Other market-basedincentives
• Deposit-refund systems (EU waste policy, e.g.beverage containers, batteries)
• Non-compliance fees (pollution & waste, e.g. inCzech Republic, Greece, Poland, Sweden)
• Performance bonds (mainly mining rehabilitation)
• Liability payments and compensation schemes(EU liability directive – MS will had comply by 2007)
• Subsidies (R&D, market introduction, ‘greenpurchasing’ e.g. Denmark, France, Greece,Netherlands)
Difficulties to select among policy options
• Information deficits...about scoping the problem,damage costs / externalities, setting targets, chosesolutions, changing preferences, etc.
• Government failures: self-interests of politicians andbureaucracy, weak administrations, limited steeringcapacities, short-term perspective...call for second-bestand market-based approaches (Fullerton, Carraro,Convery, Faure/Skogh)
• Industry has started to respond, tools are developed, best-practise can be identified -> need for dissemination andimprovements, industry needs to cope with ‘doubleburden’ of set up costs and cost for changing production
• Distributional effects and other unintended outcomes mayundermine credibility.
Five „Design Syndroms“(source: Andersen 2000)
• Tax base (design to respect big, influential polluters, puttingthe burden on the smaller ones, and to accommodateadministrative feasibility),
• Tax rate (design to pursue fiscal rather than environmentalpurposes),
• Revenue destination (hypothecation such as keeping therevenues under control of those liable to the tax),
• Tax agent (unfamiliarity with or marginality of green taxes),and
• Link with other policy instruments (lack of interplay with orentangling with other policy instruments).
EU Energy TaxationMinimum tax directive (entry into force 2004,
see Hasselklippe/Christiansen 2004)
• The minimum rates are set at a relatively low level• Some Member States benefit from tailor made implementation
agreements and long transitional periods• Some energy-intensive industries can benefit from exemptions;
the tax rates for business and industry are generally lower thanthose for other economic actors
• A return of revenue to companies/industries is possible if theyenter into energy
• Efficiency agreements (100% return to energy-intensive industrieswith agreement, 50% return to other industries)
• Discussions on whether some exemptions from the Directivewould qualify as illegal
• state aid were settled by the removal of these industrial sectorsfrom the Directive
• Ecological Tax Reform (ETR) in 1999. Aims:– environmental protection and in particular the reduction of
greenhouse gas emissions as a means of climate changemitigation
– the reduction of the statutory pension contributions in order toreduce labour cost and to increase employment
Case Study: GermanEcological Tax Reform
10016000181002004
10016100187002003
20013700143002002
20011200118002001
100840088002000
100450043001999
Supportingrenewables
Pension FundsIncome
(mill. Euro)
Year
In principle the German ETR isdesigned to be revenue neutralexcept for a small amount topromote renewable energies.Remaining share used forreduction of statutory pensioncontributions.1 Billion was used for budgetconsolidation as a temporarymeasure
German ET: some results,evaluation
• Proponents of the scheme argue that it has beensuccessful and cite the reductions in level of car use(less use of gasoline in absolute terms!).
• BUT– Some exemptions are hardly justified– Air traffic: even with high environmental impact exempted from
tax subsidy of air traffic.– Border areas: eco tax can be circumvented petrol tourism– A clear direction towards new technologies is not evident except
for the increased demand for fuel efficient vehicles– ‘Double Dividend’ not clearly visible (employment effects,
stability of social security systems)– In general: indirect taxes are regressive income distribution,
poor people are hurt
Secrets to successful MBIs I
1. Having an instrument champion
2. 'Picking winners‘: Focus on the issues for which there isagreement and pressure
3. Making optimal use of added value of MBIs in policymixes.
4. Keeping it simple and understandable.
5. Keeping it realistic.
6. Giving advanced notice of the introduction of a newinstrument.
7. Minimising changes.
Secrets to successful MBIs II
(Source: EEA 2005)
8. Understanding the potential of trade-offs
9. Keeping stakeholders on board.
10. Maintaining equity in implementation.
11. Making sure that people can respond.
12. Indexing of tax/charge rates to inflation to avoid theerosion of value over time as has happened withsome environmental taxes.
13. Consistency. Plan compatibility. Emissions tradingworks better the larger the market is. Schemes thatemerge nationally should aim for internationalcompatibility.
=> Combination of MBIs withother policy instruments
• Why? (1) Economic incentives tend to be second-best in reality, (2) pricemechanism imperfect - does not necessarily foster learning anddisseminate best-practice management
• New Types of regulation: dynamic standard setting, information-based &knowledge creating, flexible, closer to innovation & industrial economics Standards for Top Runners Information (e.g. Triple bottom line reporting, accounting requirements,
indicator & measurement harmonisation) Networks (e.g. technology platforms, ‘EnergyPlus’, ‘EcoProfit’) Agencies: qualification programmes, SME checks, dissemination of best
practices, support implementation of eco-efficiency potentials Transition management (Rotmans/Kemp): unlock systems, align
responsibilities among various actors
Challenges: international value chains, competition for low-costproduction, differing priorities (see e.g. Lisbon Agenda)
Combination of MBIs withlegal instruments ?!
• Can spur efficiency and innovation, too!See e.g. Californian clean car regulation.
• Do have an economic dimension, areprice-relevant. See e.g. liability law,permissions / property rights, safetyregulation.
=> Integrated assessment: law andeconomics
Towards a Policy mix
• Should the EU strive for a combination of all kinds of policymeasures? No, this might lead to inconsistencies andoverdeterrence. But: abatement has a price! Economists shouldidentify least-cost options, advocates of long-termimprovements“ (Avinash Dixit)
• Centralization (EU level) vs. Subsidiarity (MS or local level,Pelkmans-Test):– Efficiency of the law, economies of scale, costs of regulation,
public good character of the environment, risk of race to thebottom, common market requirements = in favour of EU level
– Non-transboundary character of many environmental problems,competition and specialisation, comparative advantages, need forvariety, early markets & niche markets = in favour of MS resp. locallevel.
Policy Mix at different levels
• Guarantee of common EU environmental qualitycan go along with differentiated emission limitationsor reduction, thus with different instruments. Thereare good reasons not to harmonise all instrumentsin the EU!
• Different emission standards might be achievedwith different instruments => while some MS mayhave to limit growth of emissions, others are obligedto reduce and to introduce new solutions (see e.g.climate policy)
Status and targets of GermanEnergy and Climate Policy
• Status quo: 18.5 % C02 reduction compared to 2000, though reduction rateshave drastically slowed down since the mid 90s
• Kyoto target: 21% C02 reduction up to 2008-12; additional activities in theresidential and transportation sector are needed
•• Increase of the share of renewables at least to 27% (2020)
• Increase of the share of cogeneration from 10% to 25% (2020)
• Double energy and resource productivity by 2020 compared to 2000
• 40% C02 reduction by 2020 provided all other EU member states achieve 30%
• 80% C02 reduction by 2050 in Germany; temperature rise not more than 2degrees Celsius (corresponds to 450ppm; 50% C02-reduction by 2050 globally)
Ecoprofit - A Local Public PrivatePartnership Programme forSustainable Development
• Offers SME‘s consultativesupport
• Strengthens companies bycost reduction throughminimisation of waste,emissions, etc.
• Creates social environmentof qualification, innovationand trust via stakeholderdialogues
=> High adaptation flexibility,high involvement of SME’s,horizontal diffusion
Addressing the Barriers to Eco-innovationInvolvement from civil society
Food and Drink
Housing
Mobility
Mainstreaming of Eco-innovation
Civil Societyinvolvement
The main barriers to the examplesof eco-innovations mentioned areinformational, or socio-economic
Lack of understanding of benefits
Lack of internal coordination
Resistance to change of internalsystems
Low awareness /education abouteco-innovation
Price of the eco-innovation beinghigher than the alternative
High transaction costs forinformation or advice
Active regions (e.g. HFC)
Policies in active regions
• Support to formulating a vision and strategic aim to helpthe direction of search – e.g. through foresight exercises
• “catalytic role”: promotion of networks• Stimulation of regional markets and brands for innovative
products• Facilitation of administrative procedures for pioneering
companies• Establishment of regional research and innovation centres
on sustainable energy• Support advocacy coalitions• Facilitation access to financing and give seed money
Policies in active regions II
• Congestion charges and zero emissionzones
• Parking lot management
• Policies for public buildings and streetlightening systems
• Alignment with waste policy, agricultureand biomass
What for? Policy instruments andmarket barriers
concept of negative externalities
information and adaptation deficits
user / investor dilemma
splitted incentives (tenant - landlord, value chain management, technicalnorms
Rebound effect and Jevons Paradox: Efficiency gains are thwarted at leastpartly by higher demand
distortions through depreciation rules
too short calculated payback periods
R&D risks for special facilities
path dependency at the replacement parts production of capital goods
misemployment of market power
Big billsleft on thesidewalk?
Management often is not aware of the full LCC impact of inefficiency. Cost accountingsystems are rarely suited to show these impacts fully.
Cause
costsunderestimated
"Nobody is perfect" is as valid for companies as forindividuals
Structural short comings
cost reduction= lay offs
Incentives notconveyed in …
… and betweencompanies
lack ofknow-how
obstacles tocontracting
Cost reduction is traditionally considered equivalent to reducing head count - in theextreme, head count is reduced at the “expense” of cost reduction.
Internal incentive systems tend to blend out cost impacts of inefficiency (e.g. Inpurchasing, production management, distribution).
2 billion €/a could be saved alone by using more cost effective motors and motorcontrols*. Product & real estate developers experience lack of client LCC-valuation.
University students typically graduate with inadequate command of the state of the art intheir field for improving energy efficiency.
Low degree of modularization of production systems (see logistics). Insufficientlyestablished measuring and contracting standards.
* Estimate of the German Association of the Electronics Industry
Reasons for policyintervention
...BUT: interest of businessregarding cost reduction forenergy, material and waterinput
positive externalities(Baumol/Oates, 1988)
=> Instruments can be designed to overcome specific
market barriers and to stimulate business and
market development
Directive on energyend-use efficiency
Directive on theecodesign of energy-using productsAction Plan forEnergy EfficiencyCOM(2006)545 final
Renewable Energy Consumption
• The share total energyconsumptionincreased over theperiod 1990-2003, butstill remains at a lowlevel.
• Significant furthergrowth will be neededto meet the EUindicative target of a20 % share by 2020.
Renewable Energies
• EU set in 2001 the target of a 21% renewableenergy share of total electricity consumptionby 2010 (Directive 2001/77/EC).
• Based on current predictions, it seems veryunlikely that the 12% target of primary energyconsumption or the target of a 21% share inelectricity consumption can be reached by2010
• New goal: to meet 20% of the overall energyneeds by the use of renewable energy by2020
Quantitative targets concerning renewableenergies in EU Member States by 2020
2,2
9,4
6,1
17,0
5,8
3,1
6,98,7
10,3
5,2
2,9
34,9
15,0
0,9
4,3
0,0
2,4
23,3
7,2
20,5
17,816,0
6,7
28,5
39,8
1,3
13
16
13
30
25
1618
20
23
17
13
42
23
1113
10
14
34
15
31
2425
14
38
49
15
1818
0
10
20
30
40
50
60
Be
lgiu
m
Bulg
aria
Czech R
epublic
Denm
ark
Ge
rma
ny
Est
onia
Irela
nd
Gre
ece
Spain
Fra
nce
Ita
ly
Cyp
rus
La
tvia
Lithunia
Luxem
bourg
Hungary
Ma
lta
Neth
erlands
Austr
ia
Pola
nd
Port
ugal
Rom
ania
Slo
ve
nia
Slo
va
kia
Fin
lan
d
Sw
eden
United K
ingdom
source: EU Commission, 2008.
Sh
are
in
fin
al e
ne
rgy in
%
share 2005 share 2020
Market barriers
• Technological readiness often needs to beimproved – market development beyonddemonstration projects
• Lack of financing – financial insecurity• Market power of dominant suppliers• Existing power stations can sell at low prices
(operating costs mainly)• Externalities of prevailing energy sources
insufficiently taken into account• Additional investments needed for
transmission
Feed-in Tariffs Systems
• As a response to market barriers and deficits– risk of sunk costs, market developmentafter successful demonstration, financial gaps
• Fixed renumeration fee for producers leads toinvestment certainty
• Creates incentive for financial markets too
• Usually at a degressive rate taking intoaccount learning curve effects
Internal market for energy• Two 2003 directives:
– For non-household customers the markets forelectricity and gas must be liberalised by 1 July2004.
– The respective markets for the remainingcustomers, above all private households, must beliberalised by 1 July 2007
• However a truly competitive, interconnected andsingle Europe-wide internal energy market […] hasnot yet been achieved
• New proposals on unbundling energy and onestablishing a European “Agency for the Cooperationof Energy Regulators”
• May have positive effect on mature alternativeenergies (such as cogeneration)
EU Energy Efficiency Policy
• Directive on energy end-use efficiency andenergy services of 2005 sets the target thatevery member state must on averageimprove by 1% its EE every year.
• Market barriers in form of information deficits,splitted incentives (user-investor dilemma andothers), rebound effects, too short calculatedpayback period / irrationally high discountingrates, misuse of market power
Directive on the ecodesign of energy-
using products (2005/32/EU)
• Establishing a framework for setting ecodesignrequirements that products must fulfil in order to receive the“CE” label
• focuses on energy-using products with annual sales ofindicatively more than 200,000 units (not incl. transport)
• the European Commission, in interaction with a consultationforum and a regulatory committee, defines product groupsto be worked on in preparatory studies,
• First mandatory requirements will probably become effectivein spring 2009 (e.g. on boilers)
• Expert assessment: concentrates on cutting off the worstproducts from the market and market transformation(dissemination) of existing products than stimulating eco-innovative “top runners”
Economics of labels:UK fridge freezer market and energy labels
49
Fridge Freezers Market Shares
0%
20%
40%
60%
80%
97 98 99 00 01 02 03 04 05 06
Financial Year Ending
Energy Label A
Energy Label B
Energy Label C
Energy Label D
Energy Label E
Energy Label F
Energy Label G
Achievements of settingstandards
Directive on the energy performance ofbuildings (EPBD, 2002/91/EC)
• Buildings sector is responsible for about 40% of the EU’sfinal energy consumption.
• Aims at minimising the energy consumption of residentialand tertiary buildings in the EU Member States through anumber of requirements (methodology of calculation of theintegrated energy performance, minimum requirements onthe energy performance of new buildings, minimumrequirements on the energy performance of large existingbuildings (>1000 m2), Energy performance certification ofbuildings
• Expert assessment: national implementation differs,roadmaps not well developed, needs overall strengthening
Housing – case
•Deep Renovation•Refurbishment of older buildings -leads to net zerogreenhouse gas emissions
Goals Include:
To significantly reduce greenhouse gas emissions from buildings To reduce energy input in building materials To implement high recycling quotas To improve indoor air quality
Project examples:
Sonnenschiff ‘Sunship’ Freiburg, office building constructed in 2005, floor covermade of natural rubber, PVC free mobility infrastructure suitable for bicycleswww.sonnenschiff.de
Housing Barriers and Drivers
Refurbishment ofold buildings
BarriersCultural-
institutional
BarriersSocio-
economic
DriversSocio-
Economic
DriversTechnical
DriversNatural
DriversCultural-
institutional
Willingness ofresidents toparticipate inshared housingconcepts
Lifecycle thinking isnot widespread
Climatic zonewhere building islocated
Lack ofinformation aboutexisiting supportmeasures fortenants andlandlords
Availability of low-impact technologiesand materials
Development ofinfrastructuresaffecting locationof residential andnon-residentialbuildings
Insufficient financialmeans for initialinvestment
Long paybackperiods of eco-innovations inhousing andconstruction
Limited incentives forlandlords or tenants to investin eco-innovations
Number ofhouseholds and firms
General economicdevelopment
Demand for housing/ building space
Development ofenergy andmaterials prices(incl. energy oremissionstaxes), andinterest rates
Readiness for public administrationsto develop green building andinfrastructure concepts on formerindustrial areas in city centres insteadof further following the strategy ofurban sprawl
Transactioncosts forreceivinginformation,advice andfinancialsupport oftenhigh
Insufficient motivation, trainingand qualification of plannersand installers
Insufficient information oftenants and building ownersabout eco-innovations
BarriersFinancial
Hours of use peryear
Transportation – Vehicles• proposal stipulates that by 2012 the average
emissions of new cars sold in the EU shall notexceed 120g
• Existing scheme on labelling for energy use(1999/94/EU)
• Excluded from ETS, no incentive for light-weight• Energy use part of eco-taxation – however
gasoline use has been increasing over the lastyears (with exceptions!)
• Various other regulation on air pollutants andend-of-life vehicles
• Given that this is the fastest growing sector,radical innovation is needed
Drivers and barriers - thegreen electric car
Climate Policy: Strategic STD,instruments ought to deliver innovation
Scenario „radicalchange“
Scenario„intelligent STD
policy“
time2010 2020 2030
costs
Standards
STD needs clear andlong-term targets,new instruments
(information-based&network type)for early majorities,economic incentives
for long-term diffusion
Source: Bleischwitz et al. 2009
An overall gap and opportunity analysis onEU capacities for eco-innovation
Stages
Businessdevelopment
Value Added
FP 7
CIP-EIPETAP
SCP-AP
EPBD
EuP
Massmarket
DiffusionProblems!
Earlystage
GAP!Start-upGAP!R&D/Pre-seed
CIP-IEE
Policies for System InnovationJacobsson / Bergek (2004)
1. Creation and diffusion of new knowledge;2. Orientation and credible commitments of policies;3. Provision of financial resources and required capacities;4. Mediation of division of benefits from positive externalities;5. Creation of new markets (e.g., as niche markets by dint of
trustworthy certification and signaling of quality, abatementof administrative restraints, public procurement, lead marketpolicy and other more)
6. Forming legitimacy among relevant actors and stakeholders(social acceptance),
7. Entrepreneurial experimentation to increase the sociallearning process.
Co-evolution: policies, corporate and civilaction as mutually reinforcing
Source: Bleischwitz 2004
Conclusions
• Policy Mix seems justified because of– the multitide of market barriers
– the challenge to combine dissemination of bestpractices and radical innovation
– the need to take into account the internationaldimension, competitiveness concerns and pioneeradvantages
• Policy analysis is able to assess strengths andweaknesses and to conclude on improvements
The case of Biofuels –a radical eco-innovation?
• In 2003, the EU set the indicative target to increase the share ofbiofuels in transport to at least 5,75% by 2010.
• At the EU summit of March 2007, the Council proclaimed that itaims to reach a 10% share of biofuels in transport by 2020.
• A progress report of 2007 shows that for 2010 a share of 4,2%seems more likely. In fact, the EU 25 reached a biofuels share ofonly 1% in 2005.
• 2003 Directive on energy taxation allows Member States to applyreduced excise duty rates to biofuels when those are used intransport or for heating.
• EU also supports its production through the CAP; EU premium forenergy crops of up to 45 Euros per hectare. The EU furthermoresupports investment and training in biofuels via its RegionalDevelopment Fund and its Rural Development policy
Biofuels – definition,characteristics
• Biofuels = liquid fuels from organic matter• not fossil fuels no resource scarcities
• Food , fodder crops
Classification1st generation, 2 types:
– Biodiesel : oils from rendered animal fat, rapeseed, palmoil
– Bioethanol : fermentation of products that contain sugars:sugarcane, maize, sugar beat, barley, wheat.
2nd generation = from the whole plant (not just the oily orsugar rich part; also from biomass); not yet technically (in 5 –10 years)
• Biomass = solid organic mass; used for heating or electricitybiofuel & biomass=bioenergy
RegulatoryImpactAssessment–IMPACTSOFBIOFUELS
• Not an effective way of using bioenergy resources (cuttinggreenhouse gas emission + value for money, ROI
• 1st generation = detrimental to the environment
• Neglect of biomass (more effective way to reduce GHG) by EU,UK – misguided; => change the policy to efficientize theproduction of energy with lowest possible GHG emissions
• Biofuels from local crops => no economic sense to receivesubventions from GOV; GOV focus should be on developingtechnologies
• Biofuels policies problems not foreseen by Com, StavrosDimas!
• Certification will be made for the negative impacts of biofuels
Are biofuels really sustainable?
Biofuels–CountryAttractivenessIndices
Biofuels–CountryAttractivenessIndices(II)
Conclusions on biomass andbiofuels
• Can be seen as a policy failure: too hastyregulation with unexpected internationalresults
• Cost effective solutions:– Preventing deforestation & reforestation –
compensation payments– Cascading use of biomass (materials first), heating
the residuals and biomass waste– integrated ecosystem management⇒Biomass and land use management rather than
biofuel production⇒ alternative fuels, new cars, new mobility patterns
...climate policy ought to takeinto account the international
dimension of consumptionand regional action
“Grey Energy”: Greenhouse gases associated withUK imports and exports, 1992–2006
Source: Helm et al. 2007, Figure 8, p.20
70
UK greenhouse gas emissions on a consumption basis,1990–2003
Source: Helm et al. 2007, Figure 11, p.24
71