Greenhouse (CO 2, other) emission. Energy saving. Output of policy (Causal relation with target quantities) Measures (focus on effective output)

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1 Strategy and Policy ECN-facts Climate strategy The goal of a climate strategy is to combat global warming. It may also incorporate other objectives to an additional or lesser extent, such as improving the air quality and strengthening the competitive position. As such, in its coalition agreement of early 2007, the Balkenende IV cabinet established three major climate goals for the year 2020: 30 percent less greenhouse gases from all the energy used and produced in the Netherlands, a 20 percent share of sustainable energy, and an annual energy savings rate of 2 percent. This is one of the primary targets of this cabinet in the coalition agreement. Photo Stefan Bakker 1. What do strategy and policy comprise? Strategy A strategy contains the general choices for the longer term for countries, companies, organisations or individuals. These parties determine their objectives and then map out a general route that will allow them to achieve these goals. A good strategy is based on a particular vision and mission, the values of an organisation and a clear understanding of the organisation s own strengths and weaknesses, and where the best opportunities lie. Coalition agreement Aims of the coalition agreement Working Together, Living Together (Samen Werken Samen Leven): To achieve an active international and European role, in order to ensure that the Netherlands continues to be a relevant and constructive partner in the world and in Europe. To have an innovative, competitive and enterprising economy, in order to guarantee prosperity also in the face of increasing international competition. To create a sustainable living environment, in order to leave the world better than we found it. Greenhouse (CO 2, other) emission Energy saving Share of renewable energy IMPACT Output of policy (Causal relation with target quantities) External effects OUTCOME Measures (focus on medium term/innovation) Measures (focus on effective output) Measures (focus on support) ACTIVITIES Clean and Efficient Programme 1

2 Economic strategy In addition to achieving climate goals, countries and companies can also establish a strategy to obtain economic advantages from the rising demand for sustainable energy. As such, the Netherlands is supporting offshore wind energy along the coast and also wants to become a hub for the transport and reprocessing of biomass. The Netherlands is utilising its geographic position (its relatively long and windy coastline and expertise in the fi eld of offshore activities) and its existing infrastructure (the harbour in Rotterdam) for this purpose. 2. How do strategy and policy contribute to combating climate change? Energy management in the future If you immerse yourself in the current trends in energy use and the emissions of greenhouse gases, you will quickly become pessimistic. The use of fossil fuels continues to rise, resulting in higher greenhouse gas emissions. If these trends continue, a massive change in the climate will occur. And this will have farreaching consequences. There are several large regions (India, China and South America) that are currently seeing rapid development, and these areas demand for energy is rising quickly. The issue here is whether the increase in production can keep pace with this higher demand. Furthermore, many countries access to energy is not guaranteed, given that most areas of the world are becoming more and more dependent on increasingly scarce fossil fuels from politically unstable regions. It is possible to achieve economic benefits from the growing demand for sustainable energy, such as by producing cars that run on [clean] fuel. Policy Once the strategy is in place, the policy ensures its implementation. Policy involves providing the direction and resources that the management will use to realise the goals established by the organisation. There are various models for what is known as the policy cycle. The policy cycle described by Pieter Winsemius in 1986 is one of the more well-known examples. This model distinguishes between four phases: Recognising the problems and issues Formulating policy and selecting tools, such as standards, regulations, taxes, subsidies, covenants or systems for emission trade Implementing policy Checks and evaluation Only a system-wide change will still be able to counteract drastic global warming. System change Major changes, or transitions, in the energy supply are necessary to bring CO 2 emissions to a sustainable level and to ensure the delivery of energy. Making our energy supply sustainable is vital and urgent, but also a very diffi cult challenge. Small steps are not enough. A fundamental change in the entire system is needed: large investments for the long term, a different design for our 2

3 physical environment and modifi ed behaviour on the part of companies and citizens. There are, however, many stakeholders who often have confl icting interests, there is political manoeuvring, and there are also complex technologies that are often only at a very early stage of development. Uncertainties There are also many uncertainties in the road to a sustainable future. Will we be able to drastically reduce the cost of solar cells and wind turbines? Can large amounts of renewable energy actually be utilised? How much biomass will actually be available for energy purposes in 40 years? To what extent is it possible to change the behaviour of citizens and companies with respect to decisions relating to energy use? 3. What role does public perception play in strategy and policy? Experience The government can formulate effective policy only once the climate issue has been widely acknowledged and after suffi cient support has been created among citizens and companies. The interest in climate change and the depletion of energy resources is gradually increasing. In practice, the public s perception still fl uctuates. This varies per country, and it is also related to specifi c experiences with regard to changes in the local climate. In Spain, people have already faced periods of drought on a regular basis. This has contributed to the population being conscious of climate change. To date, people in the Netherlands have been confronted with the climate problem less directly than in other countries. This is refl ected in the public perception: in our country, people have relatively little experience with the climate problem as a prominent issue that must be taken account of in our day-to-day decisions. Filling your tank with fossil fuels should become a thing of the past. Role of the government History has shown that system change is impossible without an active, infl uential role on the part of the government. The government must guide the way, provide support, defi ne limits and give a positive incentive for the desired behaviour. It must therefore create a strategy and develop a policy to face climate change. Within the framework drawn up by the government, companies can innovate and try to reinforce their competitive position, and citizens will have to weigh up their interests and responsibilities. The more the government looks toward the future, the fewer things will be etched in stone at present, and the more possibilities the government will have to successfully play its guiding role. New technologies often provide the solutions in such situations. 21 minutes The web-based 21 minutes survey is representative of the Dutch population. In 2009, the climate was one of the themes addressed in this survey. Several fi ndings were as follows: The climate and the environment are not among the top ten topics that people in the Netherlands are concerned about. Half of the respondents believe that humans have an infl uence on climate change, while one third do not think this is the case. Citizens have given themselves and the government the most important roles in taking measures for the environment and climate, and they also think that they personally make suffi cient efforts in this regard. People primarily take measures that return their investment in the form of lower energy bills. There is limited support for measures that cost the citizens money. Dutch people fi nd that formulating and implementing climate policy should be one of the major roles of the European Union. 3

4 Incidents The amount of attention paid to the climate problem fl uctuates. If major incidents occur, such as the fl ooding in the Dutch river region in 1995, the Wilnis dyke failure in 2004 or Hurricane Katrina that fl ooded New Orleans, people are more conscious of the problem temporarily. In addition, new insights or communications such as the Stern report and Al Gore s fi lm An Inconvenient Truth have contributed to an increased focus on climate change. However, if there is a threat of an economic crisis or a health epidemic, then the climate ends up retreating to the background. Economic strategy Some European countries have made a clear choice to obtain for themselves a segment of the energy market that does not involve CO 2 emissions. Starting in the 1970s, France made a considerable investment in nuclear energy. Sweden has invested in biomass and Germany is working towards a new wirtschaftswunder in terms of sun and wind. In comparison to this, to date, the Netherlands s choices in this regard have not been as clear. The country is less specialised, and has made less of an investment in a combination of industry policy and climate policy. 4. What does the current strategy and policy entail? Government policy In the spring of 2009, on behalf of the Ministry of Housing, Spatial Planning and the Environment, ECN carried out an exploratory study as requested by the Netherlands Environmental Assessment Agency into the current status of the Dutch government s climate policy. This study revealed that the Clean and Effi cient (Schoon en Zuinig) policy plan did in fact have substantial results, but that the goals established for 2020 would not be reached using the current tools, even if they were applied in a more intensive manner. 5. What is the perspective for strategy and policy? Globalisation To an increasing extent, the climate policy is determined in international forums. In the Netherlands, for example, ten years ago 95 percent of the policy-based emission reductions arose from the Dutch energy and climate policy, and 5 percent came from EU policy in Brussels. Nowadays, half of the emission reduction for the Netherlands is determined by EU policy. This trend will only increase in the future. Kyoto The Netherlands and Europe are on track with achieving the Kyoto targets. This concerns reducing greenhouse gas emissions by an average of 6 percent between 2008 and 2012, compared to the 1990 emissions. If the Netherlands wants to achieve its climate goals, big polluters such as power plants must start operating in a more sustainable manner. An increasing amount of climate policy is determined by international negotiations. 4

5 Low-hanging fruit Another trend when reducing emissions is that the quick wins and the low-hanging fruit will be increasingly used up. To take further steps, measures that we actually feel are necessary: an impact on the landscape, a different lifestyle, measures that cost net amounts of money. It is therefore becoming more diffi cult and more important to create and retain support for climate policy. 6. What are the challenges for strategy and policy? Voluntary The main challenge for the Dutch government is to arrive at a clear strategy and a fi rm and solid climate policy that is widely supported by society. It seems that the deep-rooted polder culture in The Netherlands has elements that get in the way of such a powerful climate policy. Many measures are voluntary and therefore have little effect. Citizens and companies prefer to stay in their comfort zone: the attitude seems to be we ve always done it like this, so why should we change? The Netherlands does not have legislation similar to the UK s Climate Change Act, which sets out the policy for the future. Prerequisites A climate policy that actually works must meet several prerequisites: - The policy must stimulate the leaders, as well as the middle group and those bringing up the rear. Some of the parties will have to be rewarded for their efforts, while others will have to be forced to comply. Policy implementation will only be effective when it is to the benefi t of everyone. - The principles of the policy must be clearly established, but the policy itself should quickly and continuously adapt to changing circumstances. Energy-saving measures such as insulating your home should not be voluntary, but compulsory. 5

6 7. What does ECN do? Basic principles Policy with the goal of making the energy system more sustainable is one of ECN s areas of expertise. To this end, the institute employs academics and scientists with a wide range of experience: management consultants, economists, social scientists and mathematicians. By cooperating with other, more technologically oriented parts of ECN, we are highly qualifi ed to make strategic analyses for energy and climate policy. We are in the forefront when it comes to providing advice on policy tools. This applies, for example, to policy that promotes renewable energy, energy-saving policy in various areas such as in buildings and the transportation industry, policy for capturing and storing CO 2 and issues concerning the acceptance of technology. ECN does not just perform research on behalf of other parties, it also puts subjects on the agenda: for example, the 2009 symposium on the role of technology policy in climate negotiations. Shares in renewable energy. ECN has in-house expertise in a wide variety of areas. Quantitative analyses ECN is a trendsetter in quantitative analyses. We draw up estimates of energy use and greenhouse gas emissions for the Dutch government. These estimates are used as a reference when creating all the government s plans and evaluations. We usually work with simulation models for each sector, in which the energy use of the past and future is simulated. We use economic behaviour models for this purpose. We also include other factors to align the estimates with the actual expected developments in the best possible way. Clients Our main clients are the Dutch government and the European Commission. We also provide advice to companies and social organisations. We stand for independent advice, always based on facts and scientifi c methods. ECN develops and manages its own tools, models and information systems, sometimes in cooperation with other institutes at home or abroad. We often operate in the forefront: what obstacles do we encounter there and how can these be resolved? What steps should be taken next? Sometimes we work on behalf of another party, and sometimes we place a subject on the political agenda ourselves. Research groups The Policy Studies Unit at ECN comprises the following research groups: - National Energy and Emissions Strategy - Renewable Energy - Energy Production, Networks and Markets - Energy in Transport and Buildings - Energy Innovation and Society - International Energy and Climate Policy Of course, we also use our models to calculate what contribution new policy measures can make to reducing emissions, the costs involved, etc. You can fi nd more information about ECN Policy Studies here. 6