Leakage Implications for climate policy
description
Transcript of Leakage Implications for climate policy
![Page 1: Leakage Implications for climate policy](https://reader030.fdocuments.us/reader030/viewer/2022033101/56816292550346895dd30180/html5/thumbnails/1.jpg)
Leakage Implications for climate policy
IFO-PIK Workshop: Transition towards global carbon pricing and fossil energy
markets
Karsten NeuhoffLeiter Abteilung Klimapolitik DIW Berlin
![Page 2: Leakage Implications for climate policy](https://reader030.fdocuments.us/reader030/viewer/2022033101/56816292550346895dd30180/html5/thumbnails/2.jpg)
Technology „Leakage“ – example RE investment
Karsten Neuhoff, 22.3.20122Source: Bloomberg, New Energy Finance, Jan 2013
1
142.578.3
18.8
9.74.5 1.8 7.6
solar
wind
smart tech
biomass
biofuels
geothermal
small hydro
$ Billion Investment in 2012
16,3
8,36,25,5
5,34,3
2
80,6 JapanUkAustraliaSouth AfricaBrazilFranceMexicoOther countries
67,7
China
44,2
US
22,8
Germany
![Page 3: Leakage Implications for climate policy](https://reader030.fdocuments.us/reader030/viewer/2022033101/56816292550346895dd30180/html5/thumbnails/3.jpg)
Policy leakage - example feed-in tariff
Karsten Neuhoff, 22.3.20123Source: http://www.pv-tech.org/tariff_watch/list
2
![Page 4: Leakage Implications for climate policy](https://reader030.fdocuments.us/reader030/viewer/2022033101/56816292550346895dd30180/html5/thumbnails/4.jpg)
Modernisation leakage – example slavery
Karsten Neuhoff, 22.3.20124
•accurate, publicly available information about the impact of slavery on lives - also against attempts by slavery's defenders
• the role of discounting the value of slave lives•gradually more ambitious action against slavery, penalties
£100/head in 1807 to the death penalty for traders in 1827•compensation for slave owners (£20 million in 1838)•not with a global treaty, but country by country
3
![Page 5: Leakage Implications for climate policy](https://reader030.fdocuments.us/reader030/viewer/2022033101/56816292550346895dd30180/html5/thumbnails/5.jpg)
Cos
t inc
reas
e re
lativ
e to
val
ue a
dded
Cem
ent
Bas
ic ir
on &
ste
el
Lime
Fertilisers & Nitrogen
Alu
min
ium
Other inorganicbasic chemicals
Pulp &Paper
Malt
Coke ovenIndustrial gases
Non-wovens
Refined petroleum
Household paper
Hollow glass
Finishing of textiles
Rubber tyres & tubes manufact.
Copper
Casting of ironImpact from direct emissions
Impact from indirect emissions (electricity)
Flat glass
Veneer sheets
0%
10%
20%
30%
40%
0.0% 0.2% 0.4% 0.6% 0.8%1.0%
4%2%
Starches& starch products
Preparation of yarn
Other textile weaving
Retreading/rebuilding tyres
Commodities with significant carbon cost
Share of GDP of UK
Production/Investment leakage – sectors potentially at risk4
![Page 6: Leakage Implications for climate policy](https://reader030.fdocuments.us/reader030/viewer/2022033101/56816292550346895dd30180/html5/thumbnails/6.jpg)
Ist all about the detail in analysis, model and policy
Karsten Neuhoff, 22.3.20126Climate Policy after Copenhagen – The role of Carbon Pricing, Cambridge University Press
5
0%
10%
20%
30%
40%
50%
0 500 1000 1500 2000 2500 3000
Semi finished Hot rolled Iron and steel
Illustrative for UK
Cumulative gross value added (mio €)
Cos
t inc
reas
e re
lativ
e to
val
ue a
dded
(20
€/t C
O2)
Total cost increase from higher electricity prices
Total cost increase from CO2 pricing
Cost increase from passed on CO2
pricing of first production stage only
![Page 7: Leakage Implications for climate policy](https://reader030.fdocuments.us/reader030/viewer/2022033101/56816292550346895dd30180/html5/thumbnails/7.jpg)
Conditions for green paradoxon (I/II)
Increase production
Investment
5 years
Lower revenue for resource extraction due to carbon price
Strongcarbon price
Time frametoo short?
Uncertaintytoo high?
Demand Response too big?
Difficult to see how this should work
![Page 8: Leakage Implications for climate policy](https://reader030.fdocuments.us/reader030/viewer/2022033101/56816292550346895dd30180/html5/thumbnails/8.jpg)
Conditions for green paradoxon (II/II)
Karsten Neuhoff, 22.3.20128
Requirement IScarce resource/increasing cost curve
Oil - Iran- Saudi - Russia- Stans
Requirement IIOptimizationhorizon
Requirement IIIAbility to control
Coal
No?
Gas Oil
No?
T&T NoAlgeria No
US No US No
Yes?
Difficult to find actor meeting requirements
![Page 9: Leakage Implications for climate policy](https://reader030.fdocuments.us/reader030/viewer/2022033101/56816292550346895dd30180/html5/thumbnails/9.jpg)
Summary on leakage channels
9
6
Country A(with cap)
Country B
Fossil fuel channel• Oil (+)• Coal (0)• Gas (?)• Invest uncertainty(-)Modernisation
leakage
Product./investment leakage
(-)
(+?)
(?)
Climatepolicy
Direct Emission reductions
Potential leakage
Policy leakage
Technology leakage
(-)(-)
Dominant effect: Unilateral climate policy triggers additional international emission
reductions
![Page 10: Leakage Implications for climate policy](https://reader030.fdocuments.us/reader030/viewer/2022033101/56816292550346895dd30180/html5/thumbnails/10.jpg)
Vielen Dank für Ihre Aufmerksamkeit.
DIW Berlin — Deutsches Institutfür Wirtschaftsforschung e.V.Mohrenstraße 58, 10117 Berlinwww.diw.de
RedaktionKarsten [email protected]