How does the current EU climate policy mix perform? Insights from the CECILIA2050 project CECILIA2050 Mid-term conference Brussels, 6 March 2014 Benjamin Görlach Ecologic Institute, Berlin Project Coordinator
Starting Point: low- carbon economy requires a radical transformation… - 93-99% - 83-87% - 78-82% - 42-49% - 54-67% - 88-91% Source: Roadmap Impact Assessment SEC(2011) 288 ENTRACTE-CECILIA2050 Climate Policy Workshop, Dublin | Benjamin Görlach, Ecologic Institute September 12, 2013 2
… but current policies are not equipped to deliver this transformation Source: “A Roadmap for moving to a competitive low carbon economy in 2050” COM(2011)112 ENTRACTE-CECILIA2050 Climate Policy Workshop, Dublin | Benjamin Görlach, Ecologic Institute September 12, 2013 3
The policy challenge: how to manage the low-carbon transformation? EU and MS already employ a variety of climate policy instruments – but current instruments are not sufficient to drive the transformation to a low-carbon economy Existing instruments need to be scaled up considerably, and new instruments added to the policy mix This raises a number of questions: How is the current policy mix performing, and how far can it be scaled up? What constraints need to be addressed? Which new instruments do we need? How to manage the increasing interactions and overlap of policy instruments? How to deal with uncertainties, where to be rigid and where flexible? What does an “optimal” instrument mix for European climate policy look like – taking into account the real-life constraints and barriers, and the lessons learnt from past successes and failures? In particular – what is the role of pricing tools in this mix? How far will they get us? ENTRACTE-CECILIA2050 Climate Policy Workshop, Dublin | Benjamin Görlach, Ecologic Institute September 12, 2013 4
Tackling the 2050 policy mix – the CECILIA2050 project C hoosing E fficient C ombinations of Policy I nstruments for L ow-carbon development and I nnovation to A chieve Europe's 2050 climate targets Benjamin Görlach, Ecologic Institute - Lessons from the current policy mix 6 March 2014 5
Who we are: 10 partners from 8 countries NL: Institute of Environmental Sciences (CML) at Leiden University NL: Institute for Environmental Studies (IVM), VU Amsterdam PL: WOEE, Warsaw CZ: CUNI, Prague IT: University of Ferrara (UNIFE) ES: Basque Centre for Climate Change (BC3), Bilbao F: SMASH-CIRED, Paris UK : University College London DE: Institute of Economic Structures Research (GWS), Osnabrück DE: Ecologic Institute, Berlin 6 March 2014 Benjamin Görlach, Ecologic Institute - Lessons from the current policy mix 6
The CECILIA2050 project: overview of the project structure Defining “optimal” Taking Stock of the climate policy Current Instrument Mix Evaluating the current instrument mix (EU level, MS and sector case studies) Scenarios for the low-carbon transformation (Integration of models of various levels of detail) International dimension Pathways from status quo to a future policy mix (scenarios, “fit for 2050” interactions (addressing constraints and bottlenecks) EU – rest of the world) Conclusions: Short-term improvements and long-term strategies for policy instrumentation Benjamin Görlach, Ecologic Institute - Lessons from the current policy mix 6 March 2014 7
How has the current EU climate policy mix performed – and what lessons can be learned? What was the aim again? Dealing with a multitude of targets Impacts of current climate policies: are they actually making much difference? The policy mix in different sectors: beyond carbon pricing – and beyond energy & industry Differences across countries: different starting points and their effect on climate policy instrumentation Planning for the future: the difficulty of anticipating surprises 6 March 2014 Benjamin Görlach, Ecologic Institute - Lessons from the current policy mix 8
What was the aim again? Which is the relevant objective of EU climate policy – given that climate and energy policies are becoming ever Reduce more intertwined? GHG emissions GHG Emission reduction should (logically) be the overriding emissions objective of all climate policy efforts EU climate and energy policy: Trias of objectives (GHG Investment Innovation emission target, renewables target, energy efficiency target, Energy plus biofuels target in transport) with only implicit hierarchy Renewables efficiency Employment Technological Environmental leadership Energy policy: Triangle of security of supply, affordability/ sustainability Structural competitiveness and environmental protection Air quality change Wider policy context (e.g. Europe 2020 strategy) – Affordability & Security competitiveness, jobs, innovation, equity, cohesion, rural competitiveness of supply development … Equity Cohesion Policy objectives, or their hierarchy, or the expected link etc … between policy instruments and objectives often vague 6 March 2014 Benjamin Görlach, Ecologic Institute - Lessons from the current policy mix 9
How has the current EU climate policy mix performed – and what lessons can be learned? What was the aim again? Dealing with a multitude of targets Impacts of current climate policies: are they actually making much difference? The policy mix in different sectors: beyond carbon pricing – and beyond energy & industry Differences across countries: different starting points and their effect on climate policy instrumentation Planning for the future: the difficulty of anticipating surprises 6 March 2014 Benjamin Görlach, Ecologic Institute - Lessons from the current policy mix 10
Impact of selected climate policies: a macroeconomic view Counterfactual simulation: how would GDP, employment and CO2 have developed if currently existing policies (Environmental tax reform, EU ETS, renewable support) had not been implemented? What happens if you ‘assume away’ environmental policies since 1995? Simulation carried out by GWS Osnabrück using the GINFORS dynamic input-output model 6 March 2014 Benjamin Görlach, Ecologic Institute - Lessons from the current policy mix 11
Impact of selected climate policies: a macroeconomic view Impacts of Environmental Tax Reform Impacts of the EU ETS 1.00% 1.00% 0.00% 0.00% CZ DE NL UK CZ DE NL UK -1.00% -1.00% -2.00% -2.00% -3.00% -3.00% -4.00% -4.00% GDP Employment Emissions GDP Employment Emissions -5.00% -5.00% Source: Meyer et al. 2013, CECILIA D2-2a 6 March 2014 Benjamin Görlach, Ecologic Institute - Lessons from the current policy mix 12
Impact of selected climate policies: a macroeconomic view Impacts of Renewables Support (Scenario A) Impacts of Renewables Support (Scenario B) 1.00% 1.00% 0.00% 0.00% CZ DE NL UK CZ DE NL UK -1.00% -1.00% -2.00% -2.00% -3.00% -3.00% -4.00% -4.00% -5.00% -5.00% -6.00% -6.00% -7.00% -7.00% -8.00% -8.00% -9.00% -9.00% GDP Employment Emissions GDP Employment Emissions -10.00% -10.00% Source: Meyer et al. 2013, CECILIA D2-2a 6 March 2014 Benjamin Görlach, Ecologic Institute - Lessons from the current policy mix 13
Impact of selected climate policies: a macroeconomic view Climate policies in Europe have achieved their main objective: to reduce emissions. Without environmental tax reform, EU ETS and renewable support schemes, the EU’s CO2 emissions in 2008 would have been about 12-13% higher than they actually were. Impacts on GDP have been modest overall: slightly negative for environmental tax reform and ETS, probably positive for renewable support measures Impacts on employment were equally modest: slightly positive for the environmental tax reform, slightly negative for EU ETS, undecided for renewable support Stronger effects can be observed at the sectoral level (in particular electricity generation, mining, refinineries, chemicals) On balance, if the analysed policies had not been implemented, we would probably have lower – but certainly not higher – figures for GDP and employment 6 March 2014 Benjamin Görlach, Ecologic Institute - Lessons from the current policy mix 14
How has the current EU climate policy mix performed – and what lessons can be learned? What was the aim again? Dealing with a multitude of targets Impacts of current climate policies: are they actually making much difference? The policy mix in different sectors: beyond carbon pricing – and beyond energy & industry Differences across countries: different starting points and their effect on climate policy instrumentation Planning for the future: the difficulty of anticipating surprises 6 March 2014 Benjamin Görlach, Ecologic Institute - Lessons from the current policy mix 15
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