Ancillary Benefit Issues of Mitigation: Innovation, Technological Leapfrogging, Employment, Sustainable Development by

Transcription

1 Ancillary Benefit Issues of Mitigation: Innovation, Technological Leapfrogging, Employment, Sustainable Development by Eberhard Jochem 1,2 and Reinhard Madlener 2 1 Fraunhofer-ISI, Karlsruhe and 2 CEPE, Zurich OECD Workshop on the Benefits of Climate Policy: Improving Information for Policy Makers 12/13 December 2002, Paris Presentation Outline ] Traditional conceptual framework of ancillary benefits Enlarged conceptual framework Multi-functional processes, buildings, supporting services - co-benefits at the business economics level and related ancillary benefits Dynamics of policy-induced innovation of new technologies Slow technical progress vs. leapfrogging by foreign trade North/South Additional and decentralised net employment by resource efficiency Conclusions 1

2 A Conceptual Framework of Ancillary Benefits and Mitigation Costs Major attention on: - Ecological / environmental / climate change effects - Health effects - Macro- and welfare economics Not sufficiently covered: - technological changes - innovation dynamics - foreign trade Enlarged Conceptual Framework of Ancillary Benefits Policies supporting sustainable development Climate Policy Mitigation Ancillary Policies environmental externalities (health, corrosion, crops) Production system Services, reduced GHG and other pollutants Ecological system climate change externalities (effects of storm, floods, migration etc.) Institutions private consumption, (decision and consumption patterns) higher product quality, increased capital or labour productivity reduced capital stock by pooling net economic and societal externalities (more employment, faster development of DCs) Gross Mitigation Cost leapfrogging in DCs by imports of resourceefficient technologies Net Ancillary Benefits from Externalities Gross Ancillary Benefits or Co-Benefits Focus of this paper 2

3 Co-Benefits and Ancillary Benefits at the Level of Business Economics Implicitly: traditional concept reflects mono-functional technologies, i.e. energy converting technologies, such as engines, power plants, etc. Multi-functional technologies (buildings, industrial processes): different objectives: increased product quality, or comfort increased labour and capital productivity reduced production defect ratios resulting co-benefits, often not monetised, quantified, identified resulting ancillary benefits, e.g. increased economic efficiency (macro level) Marginal Net Costs of Investments in Insulation and Ventilation Systems heating oil (adapted heating cost) incl. benefits of lower indoor temp. incl. benefits of noise protection, low est. incl. benefits of noise protection, high est. improved indoor air quality, low est. improved indoor air quality, high est. Wall insulation in roof apartments, roof insulation Triple glazing Improved indoor air quality CHF/kWh 0.70 NE Qh=MJ/m2a

4 Services Supporting Resource Efficiency Pooling of machines, appliances and vehicles co-benefits: smaller capital cost, but the same services ancillary benefits: more net employment, more efficient use of materials and the relevant capital stock Contracting of media services (e.g. co-generation, compressed air, solvents) Moving services for single elderly people (experience: 20 m 2 saved per person) Dynamics of Policy Induced Innovations of New Technologies New technologies: expensive and often causing less externalities (e. g. wind energy, foamed plastics) Policy-induced innovations high potentials of decreasing cost by learning and economy of scale effects new incentives for further improvements of traditional competitive technologies (e.g. heat pumps / boilers; fuel cells / combustion engines) These ancillary benefits are not reflected in most macro models! 4

5 Ancillary Benefits in Developing Imports of used machines, dismantled plants, and used vehicles from OECD to DCs: a hundred billion $/a market steel works and refineries from the 1960s starting operation today 1 mio. 10-year-old cars from OECD to DCs p.a. 75% of all investment goods in India have been used in other countries before Hotels and office buildings in warm climates without wall insulation and double glazing Potential leapfrogging for less resource use by modified trade rules: ancillary benefits on resource use and local pollution Impacts of Energy Efficiency Policies on Net Employment in Germany Changes in employment in % 5 4 Welsch, DIW, DIW, 1997 Meyer et al, 1997 Öko-Institut 1996 ISI-DIW, 1995 RWI/Ifo, 1996 Energy savings in relation to reference in % 5

6 Conclusions I Past analyses on ancillary benefits of mitigation focus on environmental, climate change, and health effects (macro view) Co-benefits and ancillary benefits are not only a policy issue, but may be important at the business level (multi-functional technologies, services supporting resource efficiency) Co-benefits and ancillary benefits often not monetised, quantified, or even identified, may have the same order of magnitude as direct benefits Dynamics of policy-induced innovations: unnoticed ancillary benefits Foreign trade of used machinery, plants, and vehicles slow down global resource efficiency Conclusions II Changed boundary conditions of foreign trades open high potentials for ancillary benefits As these ancillary benefits are not adequately covered bv most economic models the results of net mitigation costs are higher that in reality Increased net employment is an ancillary benefit of mitigation important in many countries with high unemployment rates important for many rural and mountainous regions Many ancillary benefits of mitigation are short-term effects, while the objective of mitigation policies is very long term All these aspects of ancillary benefits should support mitigation policies and ought to be understood as a central part of sustainable development policies 6

7 Thank you for your attention! 7