The real work is just beginning the issues international ... · The real work is just beginning –...
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The real work is just beginning – the issues international climate policy is facing “post-Paris“ to make the Paris
Agreement a success
Prof. Dr. Ottmar Edenhofer
UQEI Energy Express Seminar
The University of Queensland 14 June 2016, Brisbane
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GHG emissions growth between 2000 and 2010 has been larger than in the previous decades.
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Based on Figure 1.3
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A renaissance of coal drives the global carbonization.
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Standard Kaya factors Decomposition of Carbon Intensity
Cheap and increasingly available coal drives
carbonization of the global energy system
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Climate Projections and Associated Risks
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Growth vs. temperature
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China
USA
Brazil
Germany
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Quelle: Nature, doi:10.1038/nature15725
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Risks from climate change depend on cumulative CO2 emissions...
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Based on SYR Figure SPM.10
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…which in turn depend on annual GHG emissions over the next decades.
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Carbon Dioxide Removal
Technologies
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The great transformation
CO2 emissions from fossil fuels
Luderer et al. (2012) 2oC-consistent emissions
Emissions w/o climate protection
mitigation contributions from different technologies
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Global energy system transformation pathways Baseline
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Climate Policy 2oC (50% likelihood)
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All regions see radical transformation of their energy system B
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Primary Energy
EU USA China
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All regions see radical transformation of their power system B
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Electricity
EU USA China
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The climate problem at a glance
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Source: Bauer et al. (2014); Jakob, Hilaire (2015)
Resources and reserves to remain underground until 2100 (median values compared to BAU, AR5 Database)
Until 2100 With CCS [%] No CCS [%]
Coal 70 89
Oil 35 63
Gas 32 64
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The Paris Agreement: INDCs
Data sources: Le Quere et al. (2015), Rogelj et al. (2015), Luderer et al. (2015); Fig. adapted from Jan Minx 2016
• Intended Nationally Determined Contributions are inconsistent with the temperature target.
Remaining carbon budget (range)
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The Paris Agreement: INDCs
Data sources: Le Quere et al. (2015), Rogelj et al. (2015), Luderer et al. (2015); Fig. adapted from Jan Minx 2016
Remaining carbon budget (range)
• Intended Nationally Determined Contributions are inconsistent with the temperature target.
Committed CO2
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The INDCs are inconsistent
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Countries with highest ongoing and planned coal investment
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Minimum Carbon Price and Transfers
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Renaissance of Coal Social Costs vs subsidies
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“one ton of CO2 receives, on average,
more than 150 US$ in subsidies ”
September 2015
Source: Science, 18 September 2015, Vol 349, Issue 6254, 1286ff
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Developing countries face fundamental infrastructure challenges
Electricity
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Water
Telecommunication
Transportation
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Reasonable policy and financing instruments are needed
User charges Land rent taxation
CO2 prices Reduction of subsidies
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Private finance
Public debt
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Carbon pricing revenues with redistribution are sufficient to finance universal access to infrastructure…
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Except for roads where Africa’s & Latin America’s cost still partially exceed revenues
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ETS lack dynamical cost efficiency
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• Falling CO2 price
• No increase expected before 2020
• Market Stability Reserve will be implemented, but effect might be limited
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Nearest contract
December 2020 contract
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Empirical evidence: demand shock
• Consensus that carbon prices are driven to certain extent by demand-side fundamentals related to abatement cost (Hintermann 2010)
• But: EUA price dynamics cannot be solely explained by demand-side fundamentals (Koch et al. 2014)
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EU ETS betting shop for political decisions
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Koch et al. (2016)
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ETS lack dynamical cost efficiency
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• The price expectations for 2020 can serve as a benchmark for the evaluation
of the dynamical cost efficiency of the ETS
• There is a gap between expectations and models showing a cost-efficient price
of more than 20 €/t CO2 in 2020
EUA Nearest Contract and Futures
Cost-efficient CO2 price from models
Knopf et al. (2013)
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December 2020contract
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Introduction of a price corridor
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• Reliable environment for investment decisions • Instrument: Introduction of an auction reserve price
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Thank you for your attention!