The Role of Burden Sharing Regimes for Reaching a 2 C Climate Target

Transcription

1 The Role of Burden Sharing Regimes for Reaching a 2 C Climate Target Tom Kober, Bob van der Zwaan, Hilke Rösler Paris June 2 th, 213

2 Key messages Burden sharing mechanisms are appropriate to compensate for climate policy costs for selected regions, esp. until 25 Emerging economies are different with respect to their socioeconomic characteristics, and the design of the burden sharing scheme determines which regions are compensated Adequate carbon certificate trade is essential, otherwise negative financial impacts for reaching the 2 C climate target may occur

3 Agenda Introduction and approach TIAM-ECN energy system model Reference GHG mitigation scenario Burden sharing schemes Resource sharing scheme Effort sharing scheme Impact of limited certificate trade Conclusions

4 TIAM-ECN model approach Global energy system model 15 world regions (reporting in this study refers to a set of 1 super-regions) Time horizon: (1-year intervalls) 6 time slices per year (day/night and seasonal) Supply and demand sectors, representing various energy conversion pathways and climate change mitigation measures Endogenous trade of energy, emission certificates and captured CO Study conducted within LIMITS EU-FP 7 project

5 Greenhouse gas emissions [Gt CO 2 e] Greenhouse gas emission [Gt CO 2 e] Cost optimal GHG mitigation to reach 2 C climate stabilisation N2O Total CO2 Land-use CO2 Households + commercial CO2 Electricity production CO2 Total net CH4 Total CO2 Transport CO2 Industry CO2 Upstream Europe Africa Pacific OECD China Latin America Reforming Economies India Middle East Other Asia North America

6 Two burden sharing schemes Resource Sharing: Population related regime: key parameter = GHG emissions per capita equalisation of per capita emissions with contraction and convergence until 25 Effort Sharing: GHG mitigation cost related regime: key parameter = policy costs as percentage of GDP GHG mitigation efforts to be harmonised

7 Agenda Introduction and approach TIAM-ECN energy system model Reference GHG mitigation scenario Burden sharing schemes Resource sharing scheme Effort sharing scheme Impact of limited certificate trade Conclusions

8 Population [bln] Population development Africa China Europe India Latin America Middle East North America Other Asia Pacific OECD Reforming Economies Source: UN 211, own calculations

9 GHG emissions per capita [Mt CO 2 e/capita] Allocation of GHG emissions allowances [Gt CO 2 e] Certificate allocation under Resource Sharing Africa Pacific OECD China Latin America Reforming Economies India Middle East Other Asia North America Europe World

10 Carbon certificate net sellings [Mt CO 2 e] Carbon market net revenues [bln USD(25)] Certificate trade and GHG market capital flow under Resource Sharing 3, 2, 1, -1, -2, -3, Europe Africa Pacific OECD China Latin America Reforming Economies India Middle East Other Asia North America 2, 15, 1, 5, 4-6 bln$ p.a. -5, -1, -15, -2, Europe Africa Pacific OECD China Latin America Reforming Economies India Middle East Other Asia North America

11 Agenda Introduction and approach TIAM-ECN energy system model Reference GHG mitigation scenario Burden sharing schemes Resource sharing scheme Effort sharing scheme Impact of limited certificate trade Conclusions

12 Development of GDP (PPP) GDP(PPP) [trillion US$ Source: IEA 212, own calculations Africa China Europe India Latin America Middle East North America Other Asia Pacific OECD Reforming Economies

13 Climate policy costs as percentage of GDP (PPP) Allocation of GHG emissions allowances [Gt CO 2 e] Certificate allocation under Effort Sharing 9% 8% 7% 6% 5% 4% 3% 2% 2% % % Africa Pacific OECD China Latin America Reforming Economies India Middle East Other Asia North America Europe World average = region's effort-sharing target

14 Carbon certificate net sellings [Mt CO 2 e] Carbon market net revenues [bln USD(25)] Certificate trade and GHG market capital flow under Effort Sharing 1,5 1, , -1, Europe Pacific OECD Latin America India Other Asia Africa China Reforming Economies Middle East North America 2,5 2, 1,5 1, , -1,5-2, -2,5 Europe Pacific OECD Latin America India Other Asia ~15 bln$ p.a Africa China Reforming Economies Middle East North America

15 Agenda Introduction and approach TIAM-ECN energy system model Reference GHG mitigation scenario Burden sharing schemes Resource sharing scheme Effort sharing scheme Impact of limited certificate trade Conclusions

16 Carbon certificates traded [MtCO 2 ] Timing effects of limited certificate trade 6 Resource-sharing 6 Effort-sharing % trade 3-4% trade 4-6% trade 6-8% trade 8-1% trade min. trade

17 Regional sector-average CO 2 certificate price [USD(25)/tCO 2 ] Certificate price effects 1 Resource-sharing 1 Effort-sharing 9 8 buyer's price range 9 8 buyer's price range seller's price range seller's price range minimum among selling regions at 4% trade level maximum among selling regions at 4% trade level range of CO2 price decrease for certificate buying countries range of CO2 price increase for certificate selling countries

18 8% trade 4% trade 8% trade 4% trade 8% trade 4% trade 8% trade 4% trade 8% trade 4% trade 8% trade 4% trade Annual energy system costs undiscounted [bln USD(25)/yr] Effects on policy costs 16, 14, Resource-sharing +4% , 14, Effort-sharing +4% , 12, 1, 8, 6, 4, 2, +2% % 1, , 8, 6, 4, 2, % +1% Climate policy costs at Additional policy costs at reduced carbon certificate trade

19 Conclusions Design of burden sharing scheme determines which regions are compensated for their costs for climate change mitigation 7% less certificate trade under effort sharing (GDP related) than under resource sharing scheme (population related) Until 25, compensation of regions with high population growth (Africa, India, Other Asia) under resource sharing scheme, and regions with strong economic growth (China) under effort sharing scheme Well functioning certificate trade mechanism is required, otherwise additional policy costs to reach climate target up to +2% of policy costs in the medium term (23) Limited opportunities to trade permits influence carbon certificate price in selling and buying regions (23: up to 12 USD/tCO 2 )

20 Thank you! Tom Kober Policy Studies Global Sustainability T: F: Radarweg 6, 143 NT Amsterdam, The Netherlands

21 References Hendriks, C., W. Graus, F. v. Bergen, 24, Global carbon dioxide storage potential and costs, Ecofys in cooperation with TNO, EEP-21, Utrecht, the Netherlands IEA, 212, Energy Technology Perspectives 212 Scenarios & Strategies to 25, International Energy Agency, Paris. UNFCCC, 212, Work programme on long-term finance, COP 18, Doha United Nations (UN), World Population Prospects: The 21 Revision, 211

22 8% trade 6% trade 4% trade 2% trade 8% trade 6% trade 4% trade 2% trade 8% trade 6% trade 4% trade 2% trade 8% trade 6% trade 4% trade 2% trade Carbon certificate net sellings [Mt CO 2 /yr] Regional effects of limited trade under Resource Sharing 6, 4, 2, -2, -4, -6, Europe North America Other Asia Middle East India Reforming Economies Latin America China Pacific OECD Africa

23 8% trade 6% trade 4% trade 8% trade 6% trade 4% trade 8% trade 6% trade 4% trade 8% trade 6% trade 4% trade 8% trade 6% trade 4% trade Carbon certificate net sellings [Mt CO 2 /yr] Regional effects of limited trade under Effort Sharing 2,5 2, 1,5 1, , -1,5 Europe North America Other Asia Middle East India Reforming Economies Latin America -2, -2,5 China Pacific OECD Africa

24 CO2 storage potential 87 Europe North America 131 Latin America Africa = 1663 GtCO Middle East China 77 Other Asia India Pacific OECD Reforming Economies Source: Hendriks et al. 24