ESPON applied research project ReRisk 2013/1/5

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1 ESPON applied research project ReRisk 2013/1/5

2 Project Overview - Regions at Risk of Energy Poverty Global view of the risk of energy poverty of the European regions To assess which are the policy options available to regions in order to cope with this challenge Long-term options for improving demand-side elasticities to rising energy pricing (scenario exercise) Web tool which will permit: At regional level o to introduce your own region s data o to evaluate weaknesses o to define policies to reduce the risk of energy poverty At European level o To obtain a global view of the real risks of the different regions o To establish adequate European policies

3 Energy prices a major political concern in Europe European Commission, June 2008 These high price levels are squeezing the purchasing power of all EU citizens, with the most severe impact on the lowest income families, and putting a strain on business. Energy intensive sectors, as well as transport and agriculture, and in particular fisheries, are most affected and face a difficult adjustment process. European Economic and Social Committee on the Proposal for a Directive of the European Parliament and of the Council on the energy performance of buildings, November 2009 In accordance with the policy goals of the EU, the Member States must ensure that renovation of buildings in order to enhance their energy efficiency reduces not just energy demand but also energy costs.

4 The most vulnerable regions Economic vulnerability: regions in which a high share of wealth creation or employment depends on industries with high energy spending Region Employment in industries with high energy purchases / total t employment (%) Moravskoslezsko 14.23% Emilia-Romagna 13.91% Strední Morava 12.75% Severovýchod 12.52% Friuli-Venezia Giulia 12.50% Lombardia 12.37% Norra Mellansverige 12.14% Veneto 12.09% Severozápad 11.49% Jihovýchod 11.33% Piemonte 10.95% Marche 10.41% GVA of industries with high energy spending / total Region regional GVA (%) Moravskoslezsko 25.13% Groningen 22.36% Principado de Asturias 21.02% Severozápad 20.37% Pais Vasco 18.40% Comunidad Foral de Navarra 17.82% Niederbayern 16.84% Castilla-la Mancha 16.76% Prov. Brabant Wallon 16.44% Emilia-Romagna 16.25% Strední Morava 16.04% Sterea Ellada 15.79% Zeeland 15.71% Severovýchod 15.64%

5 The most vulnerable regions Transport dependence can be measured by the % of employment in the transport sector, commuting, the cost of freight transport and the extent of air travel Region Fuel costs as % of GDP 2005 Severen tsentralen % Yugoiztochen 8.18 % Swietokrzyskie 7.99 % Severoiztochen 7.16 % Yuzhen tsentralen 6.72 % Lubuskie 6.67 % Podlaskie 6.59 % Severozapaden 6.39 % Strední Cechy 6.27 % Región de Murcia 6.13 %

6 The most vulnerable regions Social vulnerability is strongly related to the levels of poverty in the regions. Long-term unemployment and low rates of economic activity it are two of the most important reasons why people slide into poverty. Regions with the lowest activity rates Region Economic Activity Rate, 2005 (%) Calabria 41.7 Puglia 42.1 Sicilia 42.1 Severozapaden 42.9 Campania 42.9 Molise 43.0 Basilicata 43.8 Észak-Magyarország 45.0 Észak-Alföld 45.6

7 Energy demand d derived d from climate conditions i Source: JRC - IPSC -MARS Unit

8 Regions with potential Source: ETC/ACC - EEA Source: JRC, Renewable Energies Unit

9 k-means clustering (4 clusters) Normalised and weighted variables Climate conditions mean max temperature July mean min temperature January) Economic structure % employment in industries with high energy purchases (x2) Transport dependency fuel costs of freight transport % workers commuting Social vulnerability long-term unemployment rate disposable income in households) Production potential of renewables wind power potential PV potential)

10 Caracteristics of the four regional clusters

11 Scenario making process The scenario building activity is based on explorative prospective - General Morphological l Analysis (MA)- Workshop I Identification of key drivers Online survey Actors and policy developments Case studies Approaches on managing energy vulnerability and impacts on regional competitiveness Literature studies EU trends and policies Workshop II & Workshop III Formulation of hypotheses Configuration and selection of the scenarios

12 A look into the future Basic assumptions for the ReRisk scenarios An oil price of 200$ or more, and increasing difficulties to access the remaining fossil fuel resources due to international competition, will change the rules in the energy sector and will alter priorities in many other policy areas. Regional energy policy is embedded in a national, European and international framework, which determines to a large extent the options available for coping with higher energy prices at regional level. The ReRisk scenarios have the objective of making the possible future frameworks transparent and to identify both threats and opportunities for winning and loosing regions Important processes of long-term structural change will have to be initiated now in order to reduce the vulnerability of the most affected regions and to prevent the loss of competitiveness Objective: to define sound responses on regional level

13 Some elements of scenario building 1. Green high tech Emphasis on renewable energy High innovation capacity High presence of the service and knowledge economy -Urban and rural growth 2. Energy- efficient i Europe Emphasis on fossil energy (gas) Moderate innovation capacity Balanced presence of all sectors in the economy -Urban and rural growth 3. The big 4. Long - nuclear lasting crisis Emphasis on nuclear Moderate innovation capacity High presence of the primary and manufactory industry -Urban and rural growth Emphasis on fossil energy (coal) Low innovation capacity Negative economic growth -Increasing I i settlement centralization

14 1. Green high tech 2. Energyefficient Europe Some challenges 3. The big nuclear 4. Long - lasting crisis -Time demanding process -Increasing dependency on renewables -Need for economic resources -Increased competition for land (conflicts of interest) -Limited CO 2 reduction -Increasing dependence on natural gas -Exposure to volatile energy prices -Structural changes in the economies towards less energy intensive i industries -Dependence on imported uranium -Increased exposure to large scale black outs -Risk of wasting electricity -Energy sector dominated d by monopoles -Opportunities for growth only for few privileged (urban) regions -Increases in CO 2 emissions -Limited economic resources -Displacement of part of Europe s industries -Increase of social problems, especially in urban areas -Low competitiveness

15 Some opportunities i 1. Green high tech 2. Energyefficient Europe 3. The big nuclear 4. Long - lasting crisis - Major CO 2 reductions - Diversification of energy supply mix - Activation of the rural economies - Opportunities i for innovation - Urban-rural integration - Less traffic congestion in urban areas - Pesence Presence of a lage large number of energy producers -Less resource demanding adaptation towards high energy prices -Major energy savings -Diversification of industry -Expansion of the knowledge and service industry -Less competition for land -Low and stable electricity prices in the short term -Minor structural changes in the economy -Good conditions for energy intensive industries (with electricity demand) -Low tech, low cost solutions -Behavioural changes in energy consumption -Opportunitie s for near-by tourist regions -Opportunitie s for regions with own energy resources

16 Guidelines on Policy Recommendations Higher energy prices will put forward higher demands of innovation, economic diversity, accessibility and good governance. While rising energy prices will result in structural changes in regions new business opportunities may appear in all scenarios. Transport, especially for freight appears as one of the most challenged sectors by high prices on fuels. The availability of renewable energy (for instance wind and solar exposed areas) will represent a clear competitive factor for regions rich in these resources. However, several barriers have to be overcome while a high degree of innovation will be required. In the short term, energy efficiency and saving appear as suitable solutions for all scenarios in order to mitigate the negative effects of rising energy prices.

17 Strategy for Policy Recommendations Why? Where? How? Policy Framework Identification of Policy Priority Areas Configuration of Policy Recommendations Implementation and available instruments Context Analysis Vulnerability Assessment Structured around and Future Scenarios Clustering of Regions Set criteria for policies selection and guidelines for implementation Policy surveillance, Experts consultation ti Indicators Scenarios Case Studies By regional typologies By level of implementation By kind of action Feedback Revision of Revision of Efficacy the basis vulnerability and Efficiency

18 Towards policy recommendations Targeted energy policy recommendations to regional vulnerability profiles Spatial Planning Strategies and Instruments: At regional and local level Integrated Spatial Planning Instruments: land use, energy and water management towards sustainable development Implementation of Industrial Ecology approach in Urban Master Plans: adoption of the concept of Urban Metabolism. Requires integration of sector policies. Industrial Symbiosis for deployment processes (new industrial sites) Public-private partnerships to encourage investment on alternative/ renewable energy production and increasing involvement of private companies and society * All previous initiatives require Good Governance Human and Social behaviour Attractive socio-technical and ethnographic approach to design focused on supporting the user in optimal use of products Inclusion of energy issues in educational plans At national level

19 Towards policy recommendations Energy planning in the context of Climate Change At regional and local level Generation of downscaled scenarios at regional level and beyond, and accurate regional studies in order to define appropriate adaptation measures, such as Vulnerability Assessment of Energy Production and Distribution Infrastructures Hydropower and nuclear plants facing extreme events, particularly floods in continental Europe and Eastern European regions (Romania and Hungary) / and droughts in Southern and Mediterranean regions Transboundary and coastal flood risk management Evaluating possible climate change impacts on renewable production (wind speeds, energy crops, ocean technologies ) Implementation of emergency plans at regional and local level to prevent premature deaths during heat waves in Southern regions based on climate scenarios Boosting the innovative capacity and knowledge base At regional and local level Generation of maps of untapped regional energy reserves Regional research driven by Clusters to accelerate technology deployment, innovation capacity and diffusion.