Climate change and EU policy - why has so little been achieved? Bruegel Energy and Climate Exchange October 4 th 2012 Professor Dieter Helm Author of The Carbon Crunch: How we are getting climate change wrong and how to fix it. Yale University Press, 2012
The Questions What are the causes of global warming? Facing up to some inconvenient facts Why has so little been achieved? Recognising current failures How do we make progress? Delivering effective climate mitigation 2
An ever-upward path Atmospheric CO2 (ppm) 400 390 380 370 360 350 340 330 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 4th Source: October US 2012 Department of Commerce National Oceanic Professor & Atmospheric Dieter Helm Administration (NOAA) 3
What causes global warming? The role of coal China Population growth Carbon consumption, not production What is likely to happen before 2020? 4
Historical coal burn vsatmospheric CO 2 (mt & ppm) 6000 400 Coal consumption (million tonnes of coal equivalent) 5000 4000 3000 2000 1000 0 Coal consumption Atmospheric CO2 390 380 370 360 350 340 330 Atmospheric CO2 (ppm) Source: US Department of Commerce National Oceanic & Atmospheric Administration (NOAA), BP statistical 5 review of world energy 2011
World coal demand scenarios to 2035 (mt) 9000 8000 7000 6000 Million tonne es 5000 4000 New policies Current policies 450 scenario 3000 2000 1000 0 1980 2009 2020 2035 Source: OECD/IEA World Energy Outlook 62011
Population growth the projections Source: United Nations 7
What is likely to happen before 2020? By 2020: China X 2 GDP India X 2 GDP 400 600 GWs new coal (if 12 th 5 year plan implemented in China) No further action following Durban 8
Why has so little been achieved? Kyoto is production-based Europe has been de-industrialising Currentrenewables are expensive and contribute little Nuclear is reducing across Europe (especially in UK and Germany) + being replaced by coal in Germany 9
EU Climate Change Package 2020 20 20 It all adds up to 20!!!! World leadership offering 30% at Copenhagen And then. Nuclear exit More coal 2050 Roadmap and 2030 targets 10
Europe: an unviable position Competitiveness Consumption of carbon Costs Current renewables cannot make much difference to global climate change land & shallow sea areas just not big enough Energy efficiency good idea but does not necessarily reduce energy demand 11
How do we make progress? Carbon pricing Carbon consumption and border adjustments Coal gas substitution And then. Enormous scope for new technologies future renewables 12
Carbon taxes v. EU ETS 35 30 A carbon tax alternative Carbon pri ice EUR 25 20 15 10 5 EU ETS futures prices 0 Source: Bloomberg 13
Coal gas for the transition Fossil fuel emissions 1000 800 600 400 200 0 Coal (average) Fuel oil Natural gas Approximate CO2 emissions: grammes of CO2 per KwH of electricity generated Source: International Energy Agency "CO2 emissions from fuel combustion highlights 2011" 14
The new technologies future renewables, active grids and more Next generation solar Smart Meters Storage and batteries Electrification of transport Biotechnologies Nuclear: PRISM, Fast-breeders 15
Conclusions European leadership has failed 2020 20 20 has probably made matters worse Durban will probably lead to 450ppm ++ EITHER: Change tack now Admit defeat 16
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www.dieterhelm.co.uk European Energy Policy, in: The Oxford Handbook of the European Union Edited by E Jones, A Menon, and S Weatherill, OUP, August 2012. The UK s new dash for gas, Prospect, 20 th September 2012. Trade, climate change and the political game theory of border carbon adjustments, with Cameron Hepburn and Giovanni Ruta, May 2012, Grantham Research Institute on Climate Change and the Environment, Working Paper No. 80. Surprise the oil price isn t higher, Prospect, April 2012. The sustainable borders of the state, Oxford Review of Economic Policy, Volume 27 no 4, winter 2012. What next for EU energy policy?, in Green, safe, cheap: Where next for EU energy policy? edited by Katinka Barysch, Centre for European Reform, 2011. The Economics and Politics of Climate Change, Helm, D. R. and Hepburn, C. (eds), (new edition 2011), Oxford University Press. 18