Wuppertal Institut | 1 AbstractThe economic assessment of low-carbon energy options is the primary step towards the design of policy portfolios to foster the green energy economy. However, today these assessments often fall short of including important determinants of the overall cost-benefit balance of such options by not including indirect costs and benefits, even though these can be gamechanging. This is often due to the lack of adequate methodologies.The purpose of this paper is to provide a comprehensive account of the key methodological challenges to the assessment of the multiple impacts of energy options, and an initial menu of potential solutions to address these challenges.The paper first provides evidence for the importance of the multiple impacts of energy actions in the assessment of low-carbon options.The paper identifies a few key challenges to the evaluation of the co-impacts of low-carbon options and demonstrates that these are more complex for co-impacts than for the direct ones. Such challenges include several layers of additionality, high-context dependency, and accounting for distributional effects.The paper continues by identifying the key challenges to the aggregation of multiple impacts including the risks of overcounting while taking into account the multitude of interactions among the various co-impacts. The paper proposes an analytical framework that can help address these and frame a systematic assessment of the multiple impacts.
Energy sufficiency has recently gained increasing attention as a way to limit and reduce total energy consumption of households and overall. This paper presents both the partly new methods and the results of a comprehensive analysis of a micro-and meso-level energy sufficiency policy package to make electricity use in the home more sufficient and reduce at least the growth in per-capita dwelling size. The objective is to find out how policy can support households and their members, as individuals or as caregivers, but also manufacturers and local authorities in practicing energy sufficiency. This analysis needed an adapted and partly new set of methods we developed. Energy sufficiency does not only face barriers like energy efficiency, but also potential restrictions for certain household members or characteristics, and sometimes, preconditions have to be met to make more energysufficient routines and practices possible. All of this was analysed in detail to derive recommendations for which policy instruments need to be combined to an effective policy package for energy sufficiency. Energy efficiency and energy sufficiency should not be seen as opposed to each other but work in the same directionsaving energy. Therefore, some energy sufficiency policy instruments may be the same as for energy efficiency, such as energy pricing policies. Some may simply adapt technology-specific energy efficiency policy instruments. Examples include progressive appliance efficiency standards, standards based on absolute consumption, or providing energy advice. However, sufficiency may also require new policy approaches. They may range from promotion of completely different services for food and clothes cleaning, to instruments for limiting average dwelling floor area per person, or to a cap-and-trade system for the total electricity sales of a supplier to its customers, instead of an energy efficiency obligation.
The implementation of energy efficiency improvement actions not only yields energy and greenhouse gas emission savings, but also leads to other multiple impacts such as air pollution reductions and subsequent health and eco-system effects, resource impacts, economic effects on labour markets, aggregate demand and energy prices or on energy security. While many of these impacts have been studied in previous research, this work quantifies them in one consistent framework based on a common underlying bottom-up funded energy efficiency scenario across the EU. These scenario data are used to quantify multiple impacts by energy efficiency improvement action and for all EU28 member states using existing approaches and partially further developing methodologies. Where possible, impacts are integrated into cost-benefit analyses. We find that with a conservative estimate, multiple impacts sum up to a size of at least 50% of energy cost savings, with substantial impacts coming from e.g., air pollution, energy poverty reduction and economic impacts.
The European electricity market is linked to a carbon market with a fixed cap that limits greenhouse gas emissions. At the same time, a number of energy efficiency policy instruments in the EU aim at reducing the electricity consumption. This article explores the interactions between the EU's carbon market on the one hand and instruments specifically targeted towards energy end-use efficiency on the other hand. Our theoretical analysis shows how electricity demand reduction triggered by energy efficiency policy instruments affects the emission trading scheme: Without adjustments of the fixed cap, decreasing electricity demand reduces the carbon price without reducing total emissions. With lower carbon prices, costly low emission processes will be substituted by cheaper high emitting processes. Possible electricity and carbon price effects of electricity demand reduction scenarios under various carbon caps are quantified with a long-term electricity market simulation model. The results show that electricity efficiency policies allow for a significant reduction of the carbon cap: Compared to the 2005 emission level, 30% emission reductions can be achieved by 2020 within the emission trading scheme with similar or even lower costs for the industrial sector than were expected when the cap was initially set for a 21% emission reduction.
Sufficiency measures are potentially decisive for the decarbonisation of energy systems but rarely considered in energy policy and modelling. Just as efficiency and renewable energies, the diffusion of demand-side solutions to climate change also relies on policy-making. Our extensive literature review of European and national sufficiency policies fills a gap in existing databases. We present almost 300 policy instruments clustered into relevant categories and publish them as "Energy Sufficiency Policy Database". This paper provides a description of the data clustering, the set-up of the database and an analysis of the policy instruments. A key insight is that sufficiency policy includes much more than bans of products or information tools leaving the responsibility to individuals. It is a comprehensive instrument mix of all policy types, not only enabling sufficiency action, but also reducing currently existing barriers. A policy database can serve as a good starting point for policy recommendations and modelling, further research is needed on barriers and demand-reduction potentials of sufficiency policy instruments.
Energy poverty is high up on national and European Union policy agendas. A number of possible indicators to measure the issue have been identified in the literature, but comparable data with European coverage is scarce. The EU Commission thus proposes four independent indicators on the “EU Energy Poverty Observatory” based on self-reported items from the pan-European surveys on income and living conditions (SILC) and household budgets (HBS). It is of increasing public interest to analyse social impacts of energy policies, and quantify energy poverty indicators also from modelling. This paper first shortly outlines how the expenditure-based indicators using HBS micro data may be directly linked to existing macroeconomic models through their defining variables (energy expenditure and income). As endogenous modelling based on micro data is difficult, the link may be country-specific elasticities. The main contribution of the paper is a systematic in-depth sensitivity analysis of the two indicators to changes in income and energy expenditure following varying patterns in the underlying distributions of the micro data. The results may be used by future soft links to models. The results display sometimes counterintuitive effects. We find that whether these indicators increase/decrease after a change of income or energy expenditure largely depends on the specific country-wise income and energy expenditure distribution between households on a micro-level. Due to their definition, the examined indicators are especially sensitive, when income changes alter the indicator threshold values, which in these cases are the median values in underlying distributions. We discuss these findings and relate them to several indicator shortcomings and potential remedies through changes in indicator definition.
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