The Economics of Low Carbon Cities (original) (raw)
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Options for a Low Carbon Future
This report contains the results of a study, undertaken on behalf of DTI, DEFRA and the PIU, to develop a range of "bottom-up" estimates of carbon dioxide emissions from the UK energy sector up to 2050, and to identify the technical possibilities and costs for the abatement of these emissions. Three levels of abatement by 2050 have been considered: a 60% reduction relative to emissions in 2000 -approximating to the level considered by the Royal Commission on Environmental Pollution (RCEP 2000) 1 -plus 45% and 70% reductions relative to 2000 levels.
Cost-Optimal Policy Strategies for Reaching Energy Efficiency Targets and Carbon Neutrality
Environmental and Climate Technologies, 2022
The TIMES Latvia optimization model was developed to evaluate cost-effective pathways for reaching energy efficiency targets in 2030 and carbon neutrality in the Latvian economy by 2050. The model includes both the end-use sectors such as transport, buildings, industry and agriculture and the energy sector, with a well-developed database of existing and future RES and storage technologies. The modelling framework allows to identify the cost-optimal future energy mix by considering the electrification potential of each sector. Therefore, it allows the analysing of the impact of different policy strategies on sectoral integration levels and the necessity for additional energy storage capacities. The results show that one of the optimal solutions for reaching the energy efficiency targets in 2030 is the wide expansion of heat pump utilization merged with ambitious building renovation policy to increase energy efficiency. The building heat supply transformation also brings higher power consumption and interacts with the wider utilization of wind power. Alternative pathway could rely on increased solar power installation for self-consumption coverage which shows lower costs than building energy efficiency increase.
The Economic Case for Low Carbon Cities Executive Summary
2020
In this paper, we conduct a comparative analysis of the results of five recently completed studies that examined the economic case for investment in low-carbon development in five cities: Leeds in the UK, Kolkata in India, Lima in Peru, Johor Bahru in Malaysia and Palembang in Indonesia. The results demonstrate that there is a compelling economic case for cities in both developed and developing country contexts to invest, at scale, in cost-effective forms of low-carbon development. The studies show that these cost-effective investments, for example in building energy efficiency, small-scale renewables and more efficient vehicles and transport systems, could lead to significant reductions (in the range of 14-24% 1 relative to business-as-usual trends) in urban energy use and carbon emissions over the next 10 years. The financial savings generated by these investments would be equivalent to between 1.7% and 9.5% of annual city-scale GDP. Securing these savings would require an average...
Economic Impact of Energy Efficiency Policies: A Scenario Analysis
International Journal of Economics and Finance, 2022
The number of countries that have pledged to uphold the 2050 decarbonization targets is constantly growing, and many have established strategies and planned related investments for the coming years. The economic impact of decarbonization and energy efficiency policies has become a major topic of discussion in the global effort to mitigate climate change and contain the temperature rise to less than 2 degrees. Previous literature has identified the risks and opportunities of decarbonization policies, especially concerning the rebound effects and the situation that may arise if, due to persistent biases and the costs of fulfilling climate policies, industries were to transfer production to countries where laxer emission constraints are in force. At the core of the 2030 Agenda for Sustainable Development is the Sustainable Development Goals, which are a global call for action regardless of countries' level of economic development. With Goal 12 on sustainable production and consumption and Goal 14 on climate change mitigation in mind, we provide an economic impact analysis of decarbonization and energy efficiency policies. We compare two scenarios based on the Italian context. The reference scenario is a simulation that shows the development of energy-efficient technologies if the targets set in the national energy strategy were to be met without additional binding targets being added. The policy scenario sees energy efficiency as the principal driver of decarbonization in the presence of a national emissions constraint lasting until 2030, as envisaged by the European Commission. The results confirm that certain risks and opportunities arise from effective policymaking. The effects of decarbonization and energy efficiency policies in the reference scenario would increase final demand by approximately €278.34 billion and the policy scenario would increase it by approximately €380.36 billion by 2030.
The Economic Case for Low Carbon Cities. New Climate Economy contributing paper
New Climate Economy and Stockholm Environment Institute, Stockholm, 2014
In this paper, we conduct a comparative analysis of the results of five recently completed studies that examined the economic case for investment in low-carbon development in five cities: Leeds in the UK, Kolkata in India, Lima in Peru, Johor Bahru in Malaysia and Palembang in Indonesia. The results demonstrate that there is a compelling economic case for cities in both developed and developing country contexts to invest, at scale, in cost-effective forms of low-carbon development. The studies show that these cost-effective investments, for example in building energy efficiency, small-scale renewables and more efficient vehicles and transport systems, could lead to significant reductions (in the range of 14-24%1 relative to business-as-usual trends) in urban energy use and carbon emissions over the next 10 years. The financial savings generated by these investments would be equivalent to between 1.7% and 9.5% of annual city-scale GDP. Securing these savings would require an average investment of $3.2 billion per city, but with an average payback period of approximately two years at commercial interest rates. The results therefore show that large-scale low-carbon investments can appeal to local decision-makers and investors on direct, short-term economic grounds. They also indicate that climate mitigation ought to feature prominently in economic development strategies as well as in the environment and sustainability strategies that are often more peripheral to, and less influential in, city-scale decision-making. If these findings were replicated and similar investments were made in cities globally, then we estimate that they could generate reductions equivalent to 10-18% of global energy-related greenhouse gas emissions in 2025. While the studies therefore offer some grounds for optimism, they also highlight the institutional capacities that need to be built and the policy interventions and financing mechanisms that need to be adopted before these opportunities can be exploited. If these were all in place, initiatives to exploit the costeffective opportunities for low-carbon development in cities could build momentum for change in cities that for a time could be globally significant. However, the studies also demonstrate that, in rapidly growing cities, the carbon savings from cost-effective investments could be quickly overwhelmed – in as little as seven years – by the impacts of sustained population and economic growth. They therefore highlight the pressing need for wider decarbonization (particularly of electricity supply) and deeper decarbonization (through more structural changes in urban form and function) if truly low-carbon cities are to emerge.
HAL (Le Centre pour la Communication Scientifique Directe), 2016
In the residential sector it is often observed that savings linked to energy efficiency actions are smaller than estimated inter alia especially due to the rebound effect. Thus, according to the sole energy viewpoint, outcomes of actions can seem low or even negative whereas in taking into account Multiple Benefits (MBs) the conclusion tends to be more positive. Nevertheless, these conclusions are more complex to obtain. To include the MBs in the analysis, we use the functional economy model that focuses on the performance of a response to a functional need instead of the material production. This theory has other specific key features: the incorporation of external factors in meeting functional needs and a deep interaction with local economic development. Thereby, in such a framework, some of the MBs can be taken into account via an estimation of the monetized value of: Impact on household's welfare: Set-temperature increase (willingness to pay for comfort). Green value (building market value linked to energy labelling). Health impacts. Economic development: Disposable income fed back into economy (propensity to consume). Added value created from the local installers. Value creation for utilities (loss margin, Energy Efficiency Obligation if existing). Social welfare: GHG mitigation (carbon price) and other externalities. Social expenditure decrease. To investigate this large field of study, we rely on a French regional energy efficiency programme providing incentive for a wood stove in case of an existing electric space heating system. 45 households were surveyed regarding their energy consumption and their characteristics. Likewise, the survey highlights household behaviours concerning both space heating before and after refurbishment (e.g. declared set-temperature). A three years billing is used to calculate the energy savings. Beyond the electricity savings, we give a monetary value of the MBs considered on a progressively extended assessment scope, starting from a household perspective towards a societal perspective: adding step by step the value of MBs, we explicit the increase of energy efficiency value even if the figures include large uncertainties. We show the interest of such an approach by ranking the MBs and showing that the green value could be the largest MB of the studied programme. a: discount rate (in %) Ai: room area (in m²) Bhh: household budget (in €) CARBV: avoided carbon emission value (shadow price, in €) CC: carbon content of electricity (in gCO2/kWh) COMFV: willingness to pay for more comfort (in €) CVex: carbon value of externalities' study (in €/tCO2) Cx: energy consumption (0 before retrofit, 1 after retrofit, in kWh) ECOV: benefit to the national economy (propensity to consume, in €) ES: energy savings (in kWh) EXi: externalities (in €/kWh) EXTV: externalities value (in €) GDP: gross domestic product (in €) GHG: green house gas (in tCO2) GOP: gross operating profit (in €) GREENV: green value (estate, in €) HDD: Heating Degree Day (HDD norm : normal climate, in °C.days) HI_PART: financial health impact for the participant (in €) HI_SOC: financial health impact for social accounts (in €) INV: household's retrofit investment (in €) Ix: income (0= before retrofit, 1 after retrofit, in €) m: ratio of import expenses MEx: medical expenditures (in €) MSh: electricity supplier market share (in %) n: lifetime (in years) ND: number of heating days (in days) NPVES: Net Present Value of the retrofit according to ES (in €) P: energy price (electricity, in €/kWh) p: public subsidies Pprogram: programme cost (in €/MWhcumac) 2 : ETS carbon price (in €/tCO2) PRODV: avoided electricity production value (in €) : Energy efficiency obligation price (white certificate in €/MWhcumac) s: gross saving ratio TO: turnover (in €) Tx: indoor temperature (0= before retrofit, 1 after retrofit, in °C) Ux: utility level (0= before retrofit, 1 after retrofit) VAC: value added chain (in €) 2 ∶ social willingness to pay for carbon emission abatement (in €/tCO2)
Uncertainties in the evaluation of energy savings potential
The potential of energy savings in the EU has been evaluated in the recent years. On a technical basis, it is frequently said that the amount of energy services delivered could increase by a factor two while using 50 % less energy. The EU green paper for energy efficiency published in June 2005 and the resulting European Action Plan for Energy Efficiency indicate that the economic energy saving potential is higher than 20 % of the total energy consumption in the EU. On the same time, markets face barriers to fill the gap between this economic energy savings potential and the actual observed energy consumption. An investigation of the evaluation methods for assessing the energy savings potential at a global level introduces many assumptions. The paper reports the different issues to be addressed in order to evaluate the energy savings potential at a regional or national level. Results obtained at EDF/R&D on technical potentials of individual energy end uses in France are given. The aggregation and the accessibility of these potentials are discussed but not quantified, while it is considered at the present time that the uncertainty is still too high to enable a consistent quantification.
Climatic Change, 2012
This paper synthesizes the results from the model intercomparison exercise among regionalized global energy-economy models conducted in the context of the RECIPE project. The economic adjustment effects of long-term climate policy are investigated based on the crosscomparison of the intertemporal optimization models ReMIND-R and WITCH as well as the recursive dynamic computable general equilibrium model IMACLIM-R. A number of robust findings emerge. If the international community takes immediate action to mitigate climate change, the costs of stabilizing atmospheric CO 2 concentrations at 450 ppm (roughly 530-550 ppm-e) discounted at 3% are estimated to be 1.4% or lower of global consumption over the 21st century. Second best settings with either a delay in climate policy or restrictions to the deployment of low-carbon technologies can result in substantial increases of mitigation costs. A delay of global climate policy until 2030 would render the 450 ppm target unachievable. Renewables and CCS are found to be the most critical mitigation technologies, and all models project a rapid switch of investments away from freely emitting energy conversion technologies towards renewables, CCS and nuclear. Concerning end use sectors, the models consistently show an almost full scale decarbonization of the electricity sector by the middle of the 21st century, while the decarbonization of non-electric energy demand, in particular in the transport sector remains incomplete in all mitigation scenarios. The results suggest that assumptions about low-carbon alternatives for non-electric energy demand are of key importance for the costs and achievability of very low stabilization scenarios. 2
International consensus is growing that a transition towards a low carbon society (LCS) is needed over the next 40 years. The G8, the Major Economies Forum on Energy and Climate, as well as the Ad Hoc Working Group on Long-term Cooperative Action under the United Nations Framework Convention on Climate Change, have concluded that states should prepare their own Low-emission Plans or Low-emission Development Plans and such plans are in development in an increasing number of countries. An analysis of recent long-term low emission scenarios for Germany shows that all scenarios rely heavily on a massive scale up of energy efficiency improvements based on past trends. However, in spite of the high potential that scenario developers assign to this strategy, huge uncertainty still exists in respect of where the efficiency potentials really lie, how and if they can be achieved and how much their successful implementation depends on more fundamental changes towards a more sustainable society (e.g. behavioural changes). In order to come to a better understanding of this issue we specifically examine the potential for energy efficiency in relation to particular demand sectors. Our comparative analysis shows that despite general agreement about the high importance of energy efficiency (EE), the perception on where and how to achieve it differ between the analysed scenarios. It also shows that the close nexus between energy efficiency and non-technical behavioural aspects is still little understood. This leads us to the conclusion that in order to support energy policy decisions more research should be done on energy efficiency potential. A better understanding of its potential would help energy efficiency to fulfil its role in the transition towards a LCS.