Papers Seminar 1
Session 2: Climate Change and the Cost of Inaction
Session 3: Oil and Market Power – Coping with Addiction
Session 4: Linking up the World on Carbon Trading
Session 5: Securing Affordable Mobility
Session 6: Industrial Society and the Rising Price of Energy
Papers Session 2: Climate Change and the Cost of Inaction
Stern Review on the Economics of Climate Change
By: Sir Nicolas Stern
Oct 2006
The Stern Review on the Economics of Climate Change is a 700-page report released on October 30, 2006 by economist Nicholas Stern for the British government, which discusses the effect of climate change and global warming on the world economy. Although not the first economic report on global warming, it is significant as the largest and most widely known and discussed report of its kind.
Executive Summary [pdf, 307 KB]
Short Summary [pdf, 20 KB]
The U.S. Economic Impacts of Climate Change and the Costs of Inaction: Review and Assessment
By: Center for Integrative Environmental Research (CIER), University of Maryland
Oct 2007
Policies aimed at curbing greenhouse gases are misunderstood by many including Congress, often resulting in inaction. This inaction is frequently motivated by the perceived high cost of reducing greenhouse emissions while the cost of not taking action is often ignored or not calculated. This report reviews economic studies and predicts the cost impacts of climate change. The findings are arranged by region and key sectors likely to be effected by climate change are identified.
Download Paper [pdf, 5.33 MB]
Competitiveness Effects of Environmental Tax Reforms (COMETR)
Final report to the European Commission, DG Research and DG TAXUD
By: Andersen et al., National Environmental Research Institute, University of Aarhus
Dec 2007
Taxes on energy and CO2 emissions from fossil fuels can be an effective tool in addressing the climate problem, and without negative effects for a country’s competitiveness – that is so long as the taxes do not simply go into the public purse, but are used to reduce other distortionary taxes and charges. This is the conclusion of the largest to date international study of the effects of CO2 and energy taxation in European economies.
Some results were presented at the Commission's Tax Forum 2007
Summary in pdf-format (111 p.)[pdf, 1.02 MB]
Final report in pdf-format (543 p.)[pdf, ca. 5 MB]
Annex Report[pdf, ca. 5 MB]
EEA Technical Report No 13/2007: Climate Change: the Cost of Inaction and the Cost of Adaptation
By: European Environment Agency
2007
The future economic costs of climate change - known as the costs of inaction - will be significant in Europe, says this European Environment Agency (EEA) report.
The report looks at the economic costs of climate change (impacts) at a European level. These costs are increasingly shaping the climate policy debate but the report highlights the fact that methodological issues and uncertainties remain in cost estimation.
Download Paper [pdf, 3.97 MB]
The Cost of Keeping our Cool: Global Warming and the Economy
Standard and Poor's‘ Special Report: The Credit Impact of Climate Change
By: David Weiss
May 2007
The planet’s environment is going through an epochal upheaval in wheater patterns. So what might this mean for economic growth? Clearly, the costs of controlling carbon emission remain highly uncertain, primarily because of the technological variables. Still, as the technologies become better defined, the range of cost estimated is narrowing, and now at least some reasonable projections are becoming available.
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Page 12
Renewable Energies Already Providing 236,000 Jobs in Germany in 2006
By: BMU (Federal Ministry for the Environment, Nature Conservancy and Nuclear Safety)
2007
The continuing boom in the renewable energies' sector created more jobs in Germany last year than previously assumed. According to a BMU research report, in 2006 renewables already provided 235,600 people with jobs. This is an increase of nearly 50% compared to 2004 (around 160,000 jobs). This document offers an overview of the project's main findings as well as the BMU's further activities in the field of work and training in the renewable energies sector.
Download Paper [pdf, 70 KB]
Papers Session 3: Oil and Market Power – Coping with Addiction
IEA Response System for Oil Supply Emergencies
By: International Energy Agency
2007
Emergency response to oil supply disruptions has remained a core mission of the International Energy Agency since its founding in 1974. This information pamphlet explains the decisionmaking process leading to an IEA collective action, the measures available – focusing on stockdraw – and finally, the historical background of major oil supply disruptions and the IEA response to them. It also demonstrates the continuing need for emergency preparedness, including the growing importance of engaging key transition and emerging economies in dialogue about energy security.
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The Costs of US Oil Dependency - Risk of Oil Supply Disruptions
By: Resources for the Future (RFF)
Nov 2004
Energy security may broadly be described as a state of affairs characterised by conditions and policies that safeguard the health of the US economy against circumstances threatening significant short- or long-term increases in energy costs. As described in the paper, it is a concept with many dimensions, only one of which is the problem of dependence on a world oil market characterised by substantial price volatility and exercise of market power.
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Oil Shockwave – An Oil Crisis Executive Simulation
By: Securing America’s Future Energy (SAFE) and the National Commission on Energy Policy (NCEP)
Jun 2005
In June 23, 2005, a group of nine former White House cabinet and senior national security officials convened to participate in a simulated working group of a White House cabinet. Their task: to advise an American president as the nation grapples with an oil crisis over a seven-month period. As they enter the room, they are unaware of the circumstances or nature of the oil crisis.
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The Wescott Report
By: Securing America’s Future Energy (SAFE)
Apr 2006
This report gives an overview of the broad economic effects of a scenario in which oil prices surge to $120 a barrel due to coordinated terrorist attacks on global oil transportation infrastructure. It is not intended to be an exhaustive analysis. This scenario was the basis for a simulation exercise conducted by Securing America's Future Energy (SAFE) at the World Economic Forum Annual Meeting 2006 in Davos, Switzerland.
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Can the United States Shed its Oil Addiction?
By: Center for Strategic and International Studies
2007
In his 2006 State of the Union address, President George W. Bush highlighted what he called “a serious problem,” namely the United States’ addiction to oil, “which is often imported from unstable parts of the world.” Despite that statement, not much political capital has been spent on solving the problem. The pessimistic conventional wisdom in the United States is that the “prospects for serious energy security reform will remain weak, unless there is a serious shock of the international system.”
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Energy Markets & Global Politics
By: Aspen Institute
2006
Growing energy demand, competition for scarce oil and gas supplies, instability in some producing regions, and the increasing threat of the use of energy as a political weapon have focused the world’s attention on energy markets and geopolitics. In its second annual Global Forum on Energy, Economy and Security, the Program on Energy and Environment convened a group of energy industry leaders and policy experts who concluded that complacency and business-as-usual policies could lead to even higher prices and less secure markets.
Part 1:
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Part 2:
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PFC Energy 50
By: PFC Energy
Jan 2007
The PFC Energy 50 ranks the top 50 publicly traded companies in the oil and gas industry based on year-end market capitalization. The PFC Energy 50 includes companies from 18 countries, led by the US (14), EU (13), Canada (7) and Russia (5). Integrated (25) and E&P (12) companies account for 37 of the top 50. Joining the PFC 50 in 2006: Rosneft, Reliance, Cepsa, Novatek and Gas Natural. Departing this year's list (rank in 2005): Burlington (#21- acquired by ConocoPhillips), EOG Resources (#41), Formosa (#45), Transneft (#49) and Indian Oil (#50).
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The New Energy Security - 2005 Global Oil and Gas Forum
By: Aspen Institute
2005
The Program on Energy, the Environment, and the Economy has released “The New Energy Security”, the report of its first annual Global Oil and Gas Forum. Experts discussed recent increases in oil and gas prices, global competition for reserves, debates about whether oil production will peak soon, growth in demand in China and India, prospects for increased production in Saudi Arabia and Russia, US reliance on LNG imports to meet gas demand growth, and the links between globalized energy markets and perceptions of national security.
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Oil Market Challenges in the Decades to Come - A Consumer's Perspective
By: SWP (German Institute for International and Security Affairs), Enno Harks
Aug 2006
This paper gives an overview of the current situation of the oil market and explains its recent development. It provides an outlook on the future use of oil and the role it will play in coming decades. Beside a description, the text points out the problems the oil market possesses for economies nowadays. It gives recommendations on how the market structure should be changed to avoid these problems and on how secure energy supply can be realized to thereby prevent destabilization of economies.
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The Myth of the Iranian Oil Weapon
By: Oxford Institute for Energy Studies
Aug 2007
Although Iran has many tools for deterrence or retaliation at its disposal, contrary to what many analysts believe, the oil weapon is not one of them. There are serious costs and risks associated with the use of the oil weapon. It is not always effective; it is indiscriminate; and it cannot be sustained for a long period of time. It is certainly not one of Iran’s strongest tools with which to confront the US.
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How Secure are Middle East Oil Supplies?
By: Oxford Institute for Energy Studies
Sep 2007
In light of the Middle East's record as a reliable supplier, a simple return to the old theme that consuming countries should reduce dependency on Middle East oil may prove unrealistic, costly and counter productive. The authors argue that a more useful approach is to assess under which circumstances the region would cease to act (willing or unwillingly) as a reliable supplier, what are the chances of these events occurring, and in case of a disruption, how big the impact is likely to be on oil supplies and productive capacity. This approach would help refocus the debate regarding Middle East supplies by reconsidering certain concerns that seem to shape energy security policies. On the other hand, one can identify some factors that may have a long lasting impact on energy security but which do not receive the appropriate attention.
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Why Do Oil Shocks no Longer Shock?
By: Oxford Institute for Energy Studies
Oct 2007
This paper, by Paul Segal, surveys the literature on the relationship between oil prices and the macroeconomy in order to explain why high oil prices over the past three years do not appear to have led to a slow-down in the world economy. It makes three arguments. First, that oil prices have never been as important as is popularly thought. Second, that the most important route through which oil prices affect output is monetary policy. The third argument is that high oil prices have not reduced growth in the past three years because they no longer pass through to core inflation, so the monetary tightening previously seen in response to high oil prices is absent.
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Oil-based Technology and Economy Prospects for the Future
By: Teknologi-Radet (The Danish Board of Technology)
The aim of the review is to outline the characteristics of the cheap-oil economy and provide an overview of different scenarios for the future development in demand and supply presented by various experienced researchers and institutions who base their analyses on different methodologies.
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Papers Session 4: Linking up the World on Carbon Trading
Lower Emissions, Higher Costs?
Standard and Poor's‘ Special Report: The Credit Impact of Climate Change
By: David Bodek
May 2007
As the focus sharpens on the role that carbon emissions play in contributing to climate change, several U.S. states have opted to develop plans for curbing those emissions in advance of any federal legislation. This paper lists laws already implemented as well as plans and initiatives that are likely to be enacted soon.
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Page 32
Linking GHG Emission: Trading Schemes and Markets
By: OECD
2006
Current and planned ETS have different sizes, design characteristics and geographical/sectoral scopes. The EU ETS is by far the largest of current or proposed schemes. Some ETS are designed to be used for compliance with emission commitments under the Kyoto Protocol, while others are planned or in use in non-Kyoto Parties. Some emission trading systems are mandatory, while others are voluntary. Some cover direct emission sources only, while others include e.g. electricity retailers or users. This paper shows up current and future developments related to ETS.
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Emissions Trading: Trends and Prospects
By: OECD
2006
This paper provides the latest developments of announced, proposed and existing greenhouse gas emissions trading schemes (ETS) around the world since 2006. It also examines different potential design options for ETS (e.g. coverage, allocation mode, provision for offsets), and how these options are treated in the existing, announced or proposed schemes.
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Decentralization in the EU Emissions Trading Scheme and Lessons for Global Policy
By: Kruger, Oates, and Pizer
2007
The European Union has created not only the largest emissions trading scheme in the world, but also a system that has an innovative structure with some intriguing and problematic properties. Because the EU ETS links together emissions trading programs in so many separate countries, it also raises the broader issue of whether linking trading systems in different regions of the world in order to create a more global regime for trading carbon dioxide (CO2) is ultimately feasible and desirable.
Our purpose in this article is to examine the structure of the EU ETS, draw out its implications for the operation and particularly the efficiency of the EU ETS itself, and explore how the experience with the EU ETS might inform the design and functioning of any future global emissions trading system.
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Differentation and Dynamics of EU Industrial Competetiveness Impacts
By: Karsten Neuhoff et al. (Climate Strategies)
2008
Report of Climate Strategies analysing risk of leakage that might result if individual countries or regions pursue more ambitious climate policy with strong price signals.
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Carbon-Energy Taxes: Energy-intensive Industry Faces a Modest Bill
By: Mikael Skou Andersen
Jan 2008
Large energy-intensive companies in Europe benefit from far-reaching exemptions from the carbon-energy taxation introduced in member states. Competitiveness concerns as a rule underlie provision of special rebates to the biggest emitters. The size of the rebate and thereby the actual climate bill to companies are however difficult to unravel. With the final report from the large-scale EU project COMETR it has now been possible both to put figures on the real tax levels as well as evaluate their significance for competitiveness in industrial sectors.
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Where Can International Cooperation Support Domestic Climate Policy?
By: Karsten Neuhoff
2006
1. Background paper of Civil Society Process of Glean Eagles Dialogue, as most climate policies are implemented on a domestic and regional basis - this paper asks how international cooperation can support such domestic implementation of climate policy in the area of Carbon pricing, technology policy and regulatory and institutional changes.
Full Report[pdf, 226 KB]
Sectoral Crediting Mechanisms : An Initial Assessment of Electricity and Aluminium
By: Jane Ellis (OECD) and Richard Baron (IEA)
2005
This paper explores how a sectoral crediting mechanism (SCM) could work in the electricity and aluminium sectors and presents preliminary insights on the pros and cons of such designs. Aluminium brings in new interesting aspects, although its importance to global GHG emissions is much lower than that of power generation: it is internationally traded, and its production processes emit non-CO2 greenhouse gases. Further, primary aluminium production is highly electricity-intensive, leading to potentially high levels of indirect emissions. Establishing a SCM in this sector could help foster the adoption of cleaner aluminium smelting technologies in developing countries.
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Auction Design for Selling CO2 Emission Allowances under the Regional Greenhouse Gas Initiative – Final Report
Oct 2007
By: Resources for the Future (RFF), New York State Energy Research Development Authority (NYSERDA)
In 2009, the 10 northeastern states that comprise the Regional Greenhouse Gas Initiative (RGGI) will launch the first cap-and-trade program for greenhouse gas emissions within the United States.
The RGGI proposal represents a substantial break with the past. Rather than give the allowances away for free, as has been done in earlier cap-and-trade programs, the RGGI states agreed to allocate at least 25% of the emission allowances created by a cap-and-trade program to benefit consumers and to support strategic energy investments. An auction of allowances is the most straightforward way to implement this policy. More recently, several RGGI states have decided to auction 100% of their annual CO2 allowance budgets. As the first greenhouse gas cap-and-trade program to start with a substantial auction of allowances, this major regional initiative will have a global impact.
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The European Refinery Industry under the EU Emissions Trading Scheme : Competitiveness, Trade Flows and Investment Implications
By: International Energy Agency
Nov 2005
The EU emission trading system applies only to a subset of countries whose industry, in some cases, competes with producers without greenhouse gas constraints, a source of concern for industry and policy makers alike. This study seeks to analyse this issue in the specific case of the EU oil refinery sector.
This paper assesses short to medium term impacts of a carbon cost introduced by emissions trading, from the standpoint of international cost competitiveness and profitability, looking at a range of representative refinery configurations in three European regions. An important element is the industry’s ability to pass carbon cost increases to their product prices.
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Act Locally, Trade Globally
By: OECD, International Energy Agency
2005
Climate policy raises a number of challenges for the energy sector, the most significant being the transition from a high to a low-CO2 energy path in a few decades. Emissions trading has become the instrument of choice to help manage the cost of this transition, whether used at international or at domestic level. „Act Locally, Trade Globally“, offers an overview of existing trading systems, their mechanisms, and looks into the future of the instrument for limiting greenhouse gas emissions.
Executive Summary:
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Whole document available at:
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Linking Tradable Permit Systems for Greenhouse Gas Emissions: Opportunities, Implications, and Challenges
By: International Emissions Trading Association
Nov 2007
This report explores the opportunities, implications, and necessary foundations for linkages.
Download Paper[pdf, 476 KB]
The Fuel Choice and Technological Change Effects of the Tradable Sulphur Permit Scheme on the US Electricity Generating Industry
By: Oxford Institute for Energy Studies
2006
This paper uses monthly firm level data to characterise fuel choice and technical change in the US electricity generating industry in response to the tradable sulphur allowance program. Data covering the years 1990 2004 in a flexible translog cost function are used to determine the Allen Uzawa and Morishima elasticities of substitution for the three main fossil fuel inputs (coal, oil and natural gas) and the rate and direction of technical change.
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Which Power Generation Technologies will Take the Lead in Response to Carbon Controls?
Standard and Poor's‘ Special Report: The Credit Impact of Climate Change
By: Swami Venkataraman and Ralph DeCesare
May 2007
The U.S. utility sector is in the midst of a large capital spending cycle to add capacity. It’s unclear what type of plants will be built in the face of impending new climate change policies, plus growing base load capacity needs. This paper wants to point out the main factors that determine investment decisions.
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Page 65
External Costs of Electricity Generation from Renewable Energies Compared to Electricity Generation from Fossil Energy Sources
By: BMU (Federal Ministry for the Environment, Nature Conservancy and Nuclear Safety)
Mar 2006
Various energy and environmental policy instruments are geared towards an internalisation of external effects in the energy sector. Despite considerable research work over the past 15 years there are still uncertainties with regard to quantifying external costs. Moreover, new findings in recent years have in some cases led to a re-assessment of the external costs of electricity generation. The study summarises the latest current status of knowledge on the external costs of electricity generation and elaborating recommendations for using the available data in the context of energy policy.
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Papers Session 5: Securing Affordable Mobility
CO2 Emissions from Transport in the EU27
By: European Federation for Transport & Environment (T&E)
July 2007
T&E has published this short paper to clarify the climate performance of the transport sector, also including the developments of international ‘bunkers’ (international aviation and shipping) which are not covered by the Kyoto Protocol and hence not officially reported to the UNFCCC. The exclusion of international bunkers often leads to an underestimation of the contribution of the transport sector to climate change.
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Reconciling Environmental and Social Transport Policies
By: European Federation for Transport and Environment (T&E)
2004
The increase in transport has brought a range of associated problems with it. The environmental issues are well-publicised, and the economic arguments have been thoroughly discussed. However, the social aspects of transport’s phenomenal growth have undergone rather less scrutiny.
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Joint NGO Statement on Including Aviation in the EU Emissions Trading Scheme
By: T&E, WWF, Friends of the Earth, and more
http://www.transportenvironment.org/Downloads-req-getit-lid-477.html
Download Paper [pdf, 185 KB]
Papers Session 6: Industrial Society and the Rising Price of Energy
Thirteen Plus One: a Comparison of Global Climate Policy Architectures
Aldy, Barrett, and Stavins
2003
We critically review the Kyoto Protocol and thirteen alternative policy architectures for addressing the threat of global climate change. We employ six criteria to evaluate the policy proposals: environmental outcome, dynamic efficiency, cost- effectiveness, equity, flexibility in the presence of new information, and incentives for participation and compliance. Our investigation reveals tensions among several of the evaluative criteria, such as between environmental outcome and efficiency, and between cost-effectiveness and incentives for participation and compliance.
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Architectures for Agreement - Addressing Global Climate Change in the Post-Kyoto World
By: Aldy and Stavins
2007
Global climate change is the ultimate global-commons problem, with the relevant greenhouse gases mixing uniformly in the upper atmosphere, so that damages are independent of the location of emissions. Because of this, a multinational response is required. To combat the risks posed by climate change, efforts that draw in most if not all countries over the long term will need to be undertaken. The challenge lies in designing an international policy architecture that can guide such efforts. This paper summarizes past activities and institutional arrangements and gives recommendations on how climate change should be addressed in the future.
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Renewable Energies Already Providing 236,000 Jobs in Germany in 2006
By: BMU (Federal Ministry for the Environment, Nature Conservancy and Nuclear Safety)
2007
The continuing boom in the renewable energies' sector created more jobs in Germany last year than previously assumed. According to a BMU research report, in 2006 renewables already provided 235,600 people with jobs. This is an increase of nearly 50% compared to 2004 (around 160,000 jobs). This document offers an overview of the project's main findings as well as the BMU's further activities in the field of work and training in the renewable energies sector.
Download Paper [pdf, 70 KB]
Transforming Markets by Combining Federal Tax Credits with Complementary Incentives
By: Tax Incentives Assistance Project
Aug 2006
The (US) Energy Policy Act of 2005 contains a variety of tax incentives for energy-saving equipment and practices. Incentives are provided for efficient new homes; residential air conditioning, heating, and water heating equipment, residential appliances, and more.
The intent of the tax incentives was to spur increases in measure availability and sales so that ultimately these technologies and practices can thrive in the market without federal tax incentives. In other words, these tax incentives were designed to work in tandem with other initiatives in order to transform markets so that these products and practices become business as usual in the long term.
This report was prepared by the Tax Incentives Assistance Project (run by a consortium of non-profit organizations and government agencies) to provide a market transformation plan for each of the areas covered by the tax incentives. For each product and service covered, this report discusses short- and long-term objectives, market barriers, and actions needed to address barriers so that markets can be transformed.
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